Sectors of the Economy

Year 10 students will hopefully be quite familiar with this concept at the moment. The UK economy (the whole business system) can be divided into three sections where businesses operate. Those three sections are Primary, Secondary and Tertiary. You might remember this from geography lessons!

Imagine how the process a product will go through to be made. It starts off being extracted from the land - e.g. oil for plastics, metal, wood from the forests. These items are known as raw materials. Simply, they are things within their orginal form which have been extracted from the land (e.g. through mining or tree felling). Those businesses whose job it is to extract these materials are all in the Primary Sector. They are primary sector business. A local farmer, for example, extracts food from the land using his tractor and other forms of machinery. The farmer is therefore a primary sector business.

Now lets move on to the second stage of the product's progress. Those raw materials will typically get sent to a factory or manufacturing plant where they will processed or manufactured into final products, ready to sell to the customer. BMW Mini, in Oxford, will take steel and turn it into a lovely sparkley new Mini. These businesses who convert raw materials to finished products are known as Secondary Sector businesses.

And finally, now we have to sell our final product to the customer. This will be often be done in a shop of some sort. So, we are providing a service to the customer. Any business which provides a service directly to the customer or consumer is know as a Tertiary Sector Business. The Tertiary Sector is all services. Other examples include the leisure industry - cinemas, gyms, holiday companies all are part of this sector.

What you need to find out - is what has happened in the last couple of decades to the amount of people working within these sectors? Where have the number of UK workers declined and where have they grown? There are several key reasons behind these changes. I'll give you a clue - foreign competition from overseas is one of the major reasons as well as the advancement of technology.

Communication: Meetings

Many people in business complain that they have far too many meetings and that there are just 'meetings, for the sake of meetings'. This is a fair point, but if planned and managed correctly, face-to-face meetings can be a very effective form of communication within a company.

A meeting needs to have some kind of shared purpose which is relevant and useful for those attending. This can be achieved by ensuring that an initial agenda is sent to those who will be attending, in advance. The agenda will outline what the meeting is going to be about, in what order and what it is hoping to achieve.

The agenda should be closely followed and somebody, usually a manager or team leader, will have the responsibility of ensuring that it runs smoothly, timely and that everybody gets their say. Meetings, if not controlled effectively, can overrun massively which disrupts every body's day!

The best meetings I have attended are the ones where workers have to come up with a new idea to help improve something or for a new product or service. When everybody is together, face-to-face, they can share new ideas and expertise instantly, to help make a business more efficient and better for the customers. This can be achieved through 'brainstorming'.

Meetings are also great for getting instant feedback from people. A manager who has an announcement to make can get a really good idea as to how popular the announcement is from instant feedback and even the way the people in the room respond non-verbally (e.g. facial expressions).

So, overall, meetings are effective when organised and planned in advance and are also a great way of sourcing new ideas for a business. And if people don't fancy the journey to head office for a meeting - then there is always telephone conferencing (although you don't get to see those non-verbal reactions!).

Business Communication: Sending Emails

Year 11 students studying on Unit 4 will be very aware of the different ways in which a business communicates, both internally and externally. However it is also crucial to understand why businesses communicate the way they do.

Emails:

Sending an email to a load of your colleagues a once is great because it is so quick and simple and saves you lots of time to do other important things - it is also very cheap and easy, no need for a stamp! But should you send them all of the time? Of course you shouldn't! Emails are only worth sending when you need to convey information to a large amount of people at the same time and also when you need to send a written request, information or confirmation to somebody in the shortest amount of time possible.

The problem with emails is, or course, sometimes people simply don't read them and they go straight into the junk box - this is a popular method used by customers when receiving emails from businesses! Another problem is that the person you are sending the information to may be away from their computer which is not very useful if the matter is urgent. You might even send it to the wrong person which can be hugely embarrassing and unprofessional, especially if sending anything confidential.

What if you are seeking immediate feedback from the person you are sending it to? You don't get to see their immediate response and have no idea what their non-verbal response would be (e.g. body language, expressions etc).

So overall, it's worth having a think about when you should and shouldn't send an email - if its confidential information you are dealing with, it might just be worth sending a letter instead. Or how about a nice simple telephone call if you need an immediate response or feedback? Could you imagine the dire consequences if you send an incorrect email to a customer?!

Business Aims and Objectives

Business aims and objectives are very important for a business's success. Without them, a business lacks purpose and direction and consequently its workforce may lack the required motivation and drive. They are also important for the different departments within a business because they ensure that each business function, such as finance or marketing, are aware of their responsibilities in achieving the overall business aims.

One common mistake that business students make is to confuse the difference between an aim and an objective. I always use the example of a mountaineer. His/her aim will be to get to the top of the mountain. The objectives of the mountaineer will be how to get there, for example, to climb 500 metres in 2 hours. Therefore, we can say that a business's aim is what it is hoping to achieve, overall, typically within the long-term and its objectives are the steps that it needs to take to get there.

It is very important to remember that all objectives must be SMART (Specific, Measurable, Achieveable and Time-bound). An objective which is not SMART will come across as vague and non-specific to a business's stakeholders which means that employees, for example, will lack focus and may be confused about what they have to achieve within the business. It is important that an objective can be measured to determine whether or not it has been successful towards meeting the aim of a business and a SMART objective will allow this.

Business aims and objectives can mostly be found on corporate websites - a lot of these are linked to the mission statement of an organisation (see my blog below about mission statements). Some businesses may want to keep their objectives private from their competitors.

A very typical business aim will be 'to improve profits' and its SMART objective may be 'to increase sales by 10% over the next 6 months'. However, its important to understand that there are many different types of objectives and aims because these must be relevant to all of the different activities, types and sizes of business. Therefore, not all aims and objectives will be the same!

Tasks:

1. Explain in your own words what the differences are between a business aim and objective - use examples to help explain your answer.
2. Discuss the importance of having aims and objectives to a business. Write down your thoughts.
3. Identify a local business and find out from the owner/s what their overall aim is. Once you have identified this - come up with three SMART objectives that the business can use to help it to achieve this aim.

Mission Statements

A mission statement is a short written statement which outlines the purpose of a business or organisation. It is designed to determine and influence the following factors:

• The overall goals of the business
• The direction of the business
• Management's decision making
• Provides the work force with a sense of purpose or direction

Examples of mission statements:

'Our mission is to be the consumer’s first choice for food, delivering products of outstanding quality and great service at a competitive cost through working ‘faster, simpler and together’.

(Sainsbury's PLC)

Our mission is to grow rapidly and profitably through innovation in mobile internet. In pursuing this mission, we will deliver value:

• to shareholders through superior returns
• to customers through solutions and devices that enhance their quality of life and
• personal effectiveness
• to staff through a stimulating environment that encourages innovation

(Psion plc)

"To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete."

(Nike)

Tasks:

1. In your own words, explain what you think a typical mission statement should contain
2. Research the internet and find 10 examples of mission statements -copy them down and test a classmate - see if they can guess whose mission statement it is.
3. Produce a mission statement for a local business of your choice
4. Explain how a mission statement is linked to the aims and objectives of a business