Unit 1

Business activity is about different working styles of producing goods or services. Goods is a fyical thing that you can feel with your hands while a service is something that the seller do for the buyer. Everyone who buys goods or services is a customer, even a company or business can be a customer.

The aim and objective (goals) of most business companys is to make a profit. When you equal the difference between how much the goods/service cost with how mucho it cost to produce them. But not all business is profit making there is non-profit making like the police and charity organisations. You usually say that there is two gruops, The profit sector and the non-profit sector. The profit sector can be any company that you have to buy the product or the service while the non-profit sector can raise money to give away.

Both groups have different business objectives and I will here take up some example of what a profit maiking company could have as their business objectives:
¤ Expanding the business, making their business larger. Like start new offices around the country or likeness.
¤ Increasing the share of the market. The business will set up a plan that they will sell more % of the product/service in the comming years.
¤ Breaking into new markets. A great example of this point is Nokia who started making rubber products but today they are a leading company in the mobilephone market.
¤ Survival. This have to be one of the main objectives. Why would you start a busniness if your point is to not survive? This might also be an objective for a serious non-profit business.
¤ Environmental and community support. This point is all about the image of the business. If the business is in good hands with the community and the customers people will buy from them.

One thing you might think of when you buy a product is how it became just the product you've bought. Like a chocolate bar is a mixture of cocoa, sugar and other raw materials. They're mixed in a factory and then you can buy it in your nearest shop. But you must also recoginze that there is a lot of transport, first the transport with raw materials, then the transport of the ready product. The factory might even use a middleman and then there have to be a transport between the "middleman-storage" and retailers. Another example is paper who is made by trees. The tree is taken down, then transported to a factory, some parts of the tree will be transported to special paper factorys, where the tree is mixed with different chemicals to became the paper. Then it has to get out to all retailers. All of this is called the chain of production.

But this chain will be broken if the factors of production is incomplete. The factors are:
Land and raw materials, Labour and Capital.
These three factors stands for what you need to make a product. The raw material is needed to get the physical product. The labour is the people who are working with the raw materials it can be manual workers, office workers or managers. The capital is all the buildings/factorys, machinery and equipment that will be used. Different things (buildings, workers, equipment) might be needed for a specific product but these three factors are always the same.

There is three different kinds of economies on the business market. The first is Planned economies. A planned economy is when the state/central authority controll the import and export of products/services. They also controll how much of the product that will be produced. Some good things with planned economies is that you won't produce too much of a product, there is no private monopoly but there is a governmental monopoly. But there is also negative things, it's very hard to calculate exactly what the people need so products might be under or overproduced. There is also no freedom of choise among the people cause everything is owned by the state.

Next we have the free-market economies. This is a market where no authority controll the production. In a free-market economy the price will always be high on a product or service that there is high demand on. The good things with this type of economy is that there is a lot of competition on the market and the people can choose between different companys who make the same product. But then it might not be so good with to much competition because the product quality might get lower.

The third is mixed economies which is the most common even in some communist ruled countries. The mixed economies means that there is a part of planned ecomony and a part of free-market economy. The balance between the economies that are mixed depends on the government. In Sweden we have this type of economy.

Unit 2, 3, 4, 5

It's easy to start an own business if your idea is good, the competition is low and if you have a good economy/much money. But it is much more that you have to think of before the start up because you don't want to end up in bankrupsy like many other business. Your main objective will be survival (read Unit 1) for a start. Now what you have to do is to make up a business plan. One of the first questions you will deal with is what you will produce or what service you will distrubute. You have to find out if there is a demand from customers for your product or service, this is called finding a market. It's harder to find a market for your product if the product is absolutly new or just a rip-off/similar to an other product because the customer will, in genral, buy the more famous product.

It's very important that your idea is exclusive because if it is like any other product you will not sell. It is also important that your product have a large market and that you produce one of the best product in your market or else your business might fail. I think that a new started business need to have planned economy so you don't waste your money on overproducing the product.

Next thing to do is a market research, which is one of the most important thing to do. To do a market research you can do a questionnarie. You send out some questions to some of your customers. Then when you got your answers you will find out what the customers think in general. This is best made if you send out the questionnarie to as many people as possible and to the age group (the age of people most likely who will buy the product). A market research is very important for a new started business because here you can find out what you will produce for style of the product. But you also have to make research on your compeditors and the quality of their product/service so you can match your product/service with theirs.

One thing you have to decide about the ownership is if it is going to be a sole owner, partnership or a private limited company. The most usual to have when you start a business is sole ownership. The positive is that you can decide who you wants to employ, and how much employees you want to employ. One ting who can seem as negative is that you have all the responsibility of your busniness and if the business economy goes bad your own personal income will have a large negative affect, but if the economy is going good you will have a large positive effect on your income.

The partnership is when the business is owned by two or more partners, who can decide how many people that should be employed. The negative is if the partnership is broken, usually the whole business will die out and if a decision made by one partner is binding on all the other partners. One other negative thing is that you have to share the income with all the other partners, you cannot decide by your own how long holiday you will have and how much capital you have to spend in the business. Everything is made up by all the partners and not only you.

The third one is private limited companies (ltd.). With this the company can be set up by a minimum of two people. The owners are the shareholders. To be a shareholder you have to own at least one share. These shares cannot be sold to the general public on the Stock Exchange and they cannot be transferred to other people without the permission of the directors. The positive thing with this is that if the company goes bankrupt you only loose the value of your shares, not any personal money. The power does not lie on the directors but at the shareholders who can appoint the directors. The shareholders shall also get a copy of the accounts and these must also be sent to the Register of Companies where they can be viewed by anyone. 

If you buy a shirt the cost might be 198:- but in the "business language" the shirts price might be 198:-. Cost in business terms means that the cost of the shirts production. The profit is the difference between the price and the cost, in business terms. There is also two kinds of costs, fixed and variable. The fixed costs remain the same regardless of how many are produced while variable costs are those costs which increase with the amout of produced.

A revenue is the amout of money a firm gets from selling products or services. You get the revenue when you take the price of the single item and multiplying by the number of units sold. The break-even point is when the revenue and cost are equal and that the net is zero. The loss of a firm is when the firm sell less than the cost, the total cost is greater than the revenue. The profits before overhead payments have been made are called gross profit while net profits are what is left when all costs have been met.

Some of the items you might have will remain permanently in your business, the money you buy those with is called fixed capital. And the money for other items that will be used up is called working capital. To raise money for your business there's a couple of options. But the most common is to borrow a lot from the bank.

There's two kinds of borrowing from the bank, overdraft and loan. An overdraft is useful for cash flow problems when your business run short of cash even if you sell things to customers. The interest is only charged on the amount by which the account is overdrawn. The other option is to take a loan. To get this, the bank will have some kind of guarantee that you will pay back the money. If you use an item (house, car, stocks etc) the item is called a collateral. If you cannot pay back the loan the bank will have the rights to sell the guarantee. The loan is paid back with interest over an agreed period of time. But to get the loan you have to make an presentation of your company and if this presentation statisfy the bank you can loan a certain amount of money.

But there are other ways to get money. You can get money from the state if you are unemployed and want to start a new business, this is called in swedish "starta-eget-bidrag". There is also some charity organisations that might help you with the start of your business. You can also pay your equipment with hire purchase. This means that she pay s for the equipment over a period of time. The negative is that the total cost of the hire purchase is a lot more than the cash price.

One thing that you need to structure up is what you are going to use the money for (equipment, materials etc), the cost of the finance (the interest and loans) and how much you're going to loan. It's imporant that you don't loan to much so you can be on the safe side with the payback.

Now I've written some things that you might've use of when you're going to start a new business...
Good luck... and remember to never give up!