Exploring business activity - Oxfam and Audi.

There are three types of business activities. The type of business that only serves the local community such as your local corner shop is known as a local business, which is the smallest type of business activity. Another type of business activity is known as a National business. National businesses trade all over the country with their major branches in the main cites and towns, this type of business can also be Internet based. An example of this business would be the well-known supermarket Tescos where we can drive to the nearest store or order our groceries online. The biggest type of business activity is international and global businesses. These types of businesses operate in more than two countries and mainly all around the world. An example of a global business is Audi as I will go into more depth in the next section.

Audi is in the private sector; it is a global and international business as it has dealers all over the UK and the rest of the world. Audi is classed as a global business as it operates in more than two countries.

Oxfam is in the voluntary sector; they are also a global and international business, with offices and shops all around the world mainly in the UK, United States of America and parts of Europe. However the volunteers primarily work in third world countries giving education and health to people who need it funded from the profit made in the shops.

The next step of this investigation is knowing about sectors of the business. There are three main types of sectors in business with sub sectors. The first sector is the primary sectors, which are businesses that extract raw products from nature such as oil refinery, fisherman, and farmers. The next sector is the secondary sector where businesses transform the raw products into finished and part finished goods such as BP who get raw oil and turn in into petrol and diesel. The third and final main sector is the tertiary sector where businesses provide services to people such as call centres, banks and car mechanics. There are also sub sectors such as manufacturing where the business manufactures the raw products; this sector is part of the secondary sector. Another sub sector is retailing where businesses sell goods in small quantities, this sector are shops based in the tertiary sector.

Audi is in the tertiary, secondary and manufacturing sector as it manufactures the quality parts needed such as the engine and body parts to compile the car. The cars are then put through the manufacturing stage where controlled robotic arms assemble and paint the car. Human workers then paint and weld where the robots cannot reach. They then transport the cars to the dealers. Then sales team then use their persuasive skills to sell the product (cars) to the public and businesses.

The purpose of this business is to make profit. Profit is the difference between revenue (money coming in) and costs paid out, such as fixed costs (rent). Profit could be used to increase growth of the company or higher development of their products for example increasing the amount of branches. Audi's products are sold to individuals, businesses and the government. The amounts of cars produced are in response to demand. The higher the demand the higher the profit as Audi can increase the price but this can be risky.

In contrast Oxfam is in the tertiary, retailing sector as they sell donated products to raise money to create solutions for poverty and starvation. The volunteers work at the branches all around the world. The purpose of the businesses is to fund the charity and to pay for fixed costs such as rent and utility bills for the branches. Products are sold for profit, at cost and below cost. Products may be sold at cost or at below cost to raise interest into Oxfam or to create some income.

Businesses need owners to run it.

* Private - private businesses are owned by individuals and shareholders. Their main purpose and driving force is to create profit.

* Public - public businesses are owned by the government. Their main purpose is to provide social services such as the NHS.

* Voluntary - voluntary businesses are supervised by trustees. Mainly set up to provide a social service to the wider community.

In the private sector business the owners of the business are the people to whom the business belongs. For example Jerry owns Jerry's plumbing, as he is a sole trader. A sole trader is a business owned and controlled by one person. This type of business is the most popular as it can be found in a wide range of activities. They are very easy to set up; customers can have a good relationship with the trader, as it is one to one. Also all the profits go to the sole trader.

A disadvantage is that the sole trader may have to work long hours and also you do not have the protection of limited liability. This meaning the sole trader is responsible for all debts of the business and may have to sell personal possessions to pay creditors.

What if a group of accounts wanted to create their own business?

They would usually create a partnership, which is formed by signing a deed of partnership while being supervised by a solicitor. This deed of partnership allows a maximum of 20 people to come together and share the workload and responsibility of the business. The deed also sets out profits and duties for each person. The main disadvantage of a partnership is that workers may fall out.

This is a problem as large amounts of capital can rarely be borrowed.

A limited liability partnership can increase the amount of partners as can reduce the risk of debts for individual partners. Similar types of business known as worker co-operative where its workers own the company also have limited liability. To become a member you must buy a share in the organisation in reward you receive a share of profits and one vote in making decisions. This is also know as a private limited company where shares can only be sold within the company.

Audi being one of the largest cars manufactures give you the choice of purchasing shares it their business. This type of company is known as public limited company. This can be useful as large amounts of capital can be raised.

In contrast Oxfam are charitable trust, when profit is used to help a good cause. The charity work is overseen by a group of trustees who are volunteers with a reputation as responsible citizens. There are other types of company in addition such as franchises where somebody can open a ready-made business. Franchisees usually pay a fixed sum for using the established brand and business model such as McDonalds.

People with an interest in a particular business or organisations are known as stakeholders. For example if a person likes Audi's cars and buys them, they are known as the customers. Customers are key stakeholders in the running of the business, as they expect nothing more than high quality cars and value for money.

Companies need employees so they provide them with their livelihood to create a successful company for example Audi may give a discount to their employees.

If their any problems for the employees they can ask for help from their trade union. The trade union's main job is to secure higher wages and better working conditions. However employers also need guidance when they have problems so they have the employers associations. They are equivalent to trade unions.

Owners such as stakeholders are regarded as the most important stakeholder. As they are risking their finical life by setting up the company and like to see their share of the profit increasing. Suppliers are another key stakeholder, as they want steady orders and prompt payment to create a successful business relationship.

Governments are in favour of new businesses as they create jobs and pay taxes. However local and national communities and pressure groups are an external risk to any company as something may be non-environmentally friendly.

In conclusion to my investigation good stakeholders are the main bases of a good business.

By Kishan Chamber