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elcome to Let’s Do Business, a b and ne te tboo o t e ne enio cle siness specification in p epa ation o t e ea in e tificate is boo ll eets all t e ne ea nin tco es in t e four strands ploring the usiness nvironment , nderstanding nterprise, eading in usiness, eing Informed and aking Informed Decisions, and the nifying Strand Investigating usiness .
Let s Do usiness places the student and the centre of learning and emphasises the importance of engaging with business in the real world. It uses a wide range of approaches to teaching and learning, helping students develop competencies. The programme fosters critical thinking and problem-solving skills in students, and contains a range of active learning methods to help develop digital literacy and collaborative skills.
Student-centred features in each chapter include ase studies based on Irish and international businesses
Interesting Did ou now facts and key terms
Stop ollaborate activities for students working in pairs or groups
Stop Research activities where students independently investigate business policies, regulation and eal li e financial and econo ic c ent a ai s
Stop atch bo es with relevant supplementary videos nd-of-chapter revision uestions, and those that further develop student knowledge
Store it earn it revision references hapter checklists am tips for answering e am uestions and e am-style uestions
The tudent cti ity provides supplementary e ercises to complement course material and a template for the Business li e n esti ati e tudy.
igitalResources
Teachers and students can access the Let s Do usiness digital resources via the Let s Do usiness interactive e-book, which is available at .edc learnin .ie inks to the digital resources are referenced throughout the te tbook using the following icons
PowerPoints ditable ower oint presentations for each unit.
Videos A wide range of videos to enhance learning.
Weblinks A host of weblinks to illustrate real-life e amples of business theory.
Document Solutions to end-of-chapter te tbook uestions will also be available on the dc learnin website.
ross cuttin themesinSenior ycle usiness
There are fourcross-cuttingthemesinSenior ycle usiness.Thesethemesare interwoven acrossall four strandsof study. They canbeusedas a lensthroughwhichthematerialcanbe e aminedand e plored.
with
Ethicsandsustainability
Engagementwith the real world ofbusiness
Ethics andsustaina ility
thics refers to moralprinciples whatismorallyrightandwrong a system of valuesorprinciplesthat we canuse to udgeor evaluate decisions.
hen werefer to sustaina ility, we aretalkingaboutsomething beingmaintainedorbeingable to continue overaperiodoftime.
usinessesshouldconsiderthelong-termimpactoftheiractionsonall stakeholders,includingtheenvironment. nvironmentalsustainability meansthattherewillbelittleornodamage to theenvironment,sothatit cancontinue forfuture generations.
na ode n o ld,b sinesses stbalancet ei need to ene ate p ofits alongwitha responsibility to followlawsandbe fairandhonestinalltheiractions.
Successfulbusinessesmustconsider ethicsandsustainabilitywheninteractingwithsocietyandthe environment.Organisationsshouldbehave ethicallyandhonestly.Theyshouldbetransparentwith all stakeholdersandconsiderhowtheirdecisionswillimpactontheirconsumers,employees,local communityandtheenvironment.
Theme
thicsand ustaina ility
u illseethis utt n here erthereis alin t ethicsandsustaina ility.
Entrepreneurialthin in
hen we considerentrepreneurs, we thinkofpeoplewho takerisks,showinitiative,are resilientandareinnovativeand creativeproblem-solvers.
ThroughoutSenior ycle usiness youwillbeencouraged to developanentrepreneurialmindset, considerarangeof viewsandperspectives, recogniseandtakeopportunities, show resilienceandanability to diversifyandadapt to change. ouwilllearn to considerrisk, reachinformed concl sionsand to e ecton o e pe iencessot at o canlearnfromthem.
Theme
ntre reneurial Thin in
Business andfinancialliteracy
sinessandfinanciallite ac isani po tants illt at illbenefit you throughout yourlife. achchapter has a Store It earnIt section to highlightthe key words andconceptsinthat chapter. The c ec list at t eendo t ec apte b ie s a ises at o need to know aboutthe topicscovered.
p o in o b sinessandfinanciallite ac isane po e in e perience,providing youwiththeskillsandabilities to make in o edb sinessandfinancialdecisionst o o t o li e
u illseethis utt n here er thereisalin t entre reneurial thin in .
Businessand FinancialLiteracy
u illseethis utt n here er thereisalin t usinessand financialliteracy.
i italtransformation
Developmentsandimprovementsin technology have transformedthebusiness world.
The term di italdisru ti n refers to changes inbehavioursincultureormarketsdue to technology,theimpactof technologyon businessmodels,the valuepropositionof goodsandservicesandma orchangesin businessmodelsandprocesses.
e elop entss c asdi italisation, tificial ntelli ence andbi datai pactonbot b sinesses andhowcustomersengagewithbusiness,the worldof workandhowdecisionsaremade.
Digitaltransformationisa strategythatincorporatesdigital technologiesacrossallareasofan organisation, to embracethepowerandinnovationofdigital technologywhilealsoaddressingthe challengesitbrings.
Theme
Theme i ital Trans rmati n
u illseethis utt n here erthereisalin t di italtrans rmati n.
ction er s
Thisglossaryisdesigned to clarifythe earningOutcomes. ach Action erbisdescribedin termsofwhatthe learnershouldbeable to dooncetheyhave achievedthe earningOutcome.Thisglossarywillbealignedwiththe command wordsusedinassessment.
Acknowledge sources e pressly recognisesourcesofinformation
Analyse studyor e aminesomethingindetail breakitdowninorder to bringouttheessentialelements or structure identifypartsand relationships andinterpret information to reachconclusions
Appraise evaluate, udgeorconsiderinformationorapieceof work
Appreciate recognisethemeaning, valueorimportanceofa topic orhave apracticalunderstandingof Assess udge, evaluate orestimate the valueofsomething alculate obtainanumericalanswer, showing relevant stagesinthe working ommunicate presentusingappropriate languageinasuitable format omparegiveanaccountofthesimilaritiesand ordifferencesbetweentwo ormore itemsorsituations, referring to both all ofthemthroughout onductperformanactivity
Demonstrate prove ormakeclear by reasoningor evidence,illustratingwith e amplesorpracticalapplication
Describegiveadetailedaccountofthemainpointsofa topicusing words,diagrams, e amplesand or imageswhereappropriate
Discussofferaconsidered,balanced reviewthatincludesarangeofarguments, factorsor hypotheses andissupported by appropriate evidence
Distinguishmakethedifferencesbetweentwoormoreconceptsoritemsclear valuate data collect and e aminedata to make udgementsandappraisals describehow evidencesupportsor doesnot support a conclusioninanin uiryorinvestigation identifythelimitationsofthedata
aminelookclosely at arguments,data,information,conceptsand or storiesinorder to uncoverorigins, assumptions,perspectives,trendsand or relationships
Suggestproposesolution s , hypotheses,or otherpossibleanswer s
Synthesisecombinedifferentideas to create neworenhancedunderstanding
outthe uthors
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he nifying St ra nd: nve st igatingBusiness
ou will build on many of the skills we introduce in this chapter throughout your learning across the two years of Senior ycle usiness. These skills relate to the four strands of the course and you will have numerous opportunities to develop and improve your investigation, planning, analysis and evaluation skills throughout your studies. This nifying Strand is designed to inspire an entrepreneurial mindset, encouraging you, the student , to think like an entrepreneur, to be innovative and creative, to ma imise opportunities, to analyse risk, to develop resilience and to adapt to change.
The t esearch and t lla rate activities in this book will provide you with opportunities to develop your research, planning, analysis and evaluation skills alongside your ability to work with others.
On completion of this strand, students should be able to
U1 e el in uesti ns t research
1.1 develop a range of uestions to research.
U2 ana in in rmati n
2.1 identify relevant data, evidence and or information on business-related issues from a range of sources.
2.2 assess the accuracy, credibility and reliability of sources.
2.3 accurately record and acknowledge sources of data, evidence and or information being used.
2.4 identify the key points or ideas in each source.
2.5 analyse their sources of information to determine the importance of an issue for different individuals and or groups.
2. identify any gaps in information and data and assess the impact of this on drawing informed conclusion s
U3 r ect lannin
3.1 demonstrate understanding of the i po tance o clea l defined p pose, goals and criteria for success in a pro ect.
3.2 outline the main elements of a pro ect plan and develop a pro ect plan which includes these main elements.
3.3 demonstrate understanding of the importance of monitoring and evaluating pro ect progress.
U4 nalysin and e aluatin in rmati n
4.1 analyse and interpret information and data.
4.2 evaluate the range of perspectives within the findin s
4.3 s nt esise findin s to c eate ne o en anced understanding.
4.4 appraise the value of this information.
4.5 e al ate findin s to a e in o ed decision s , reach informed conclusion s or make recommendation s
U5 Presentingfindingsandperspectives
5.1 use appropriate forms of communication oral, visual, written, multimodal for different purposes and audiences.
5.2 use graphs charts diagrams graphics to s ppo t t e p esentation o t ei findin s
5.3 identify how and why their perspectives may have changed based on their research.
5.4 present conclusion s , perspective s and or recommendation s clearly and logically using business terminology and concepts correctly and effectively
U6 c n led in s urces
.1 clearly and accurately record and acknowledge all sources of data and information.
hat isresearch
esearch is the systematic investigation into and study of materials and sources in order to establish facts and reach new conclusions. It is the process of investigating something in a planned and methodical manner.
eveloping uestions to research
A research uesti n is a uestion that an investigation or research pro ect aims to answer. It can often be an issue or problem which the author will try to answer by analysing information and data and reaching a conclusion.
t can o ten be ite di fic lt to co e p it a esea c estion ollo in t ese steps a elp denti y a broad topic or area of study that you have studied or are currently learning about.
2 s y ursel
a hat do I already know about this topic hat do I want to know
c o do find o t o e abo t t is topic
Find ut information about the topic, keeping it general but looking to identify trends in the research or uestions raised by authors and other researchers.
4 arr d n o a ea o esea c o topic and oc s on o e specific a eas
s y ursel an I identify a uestion I have on this topic issue
Is there a problem I can identify that I will address Is there an issue I would like to investigate
Types of research uestion vary they could, for e ample, compare two different factors or e amine the relationship between two different factors elements or e amine the reason why something has occurred or the conse uences of a particular action or event.
ample: ou might decide to loo at the broad area of human capital management. ou could then narro do n that topic to organisational culture. his topic is also uite large, but as you read about it o a find a s ecific a o estion de e o in in o o n ind e ha s o i ht find an article that uestions ho leadership styles used in organisations can impact on organisational culture. his could form the basis for your research uestion.
opic
orkingknowledgeofthetopic n rro eddo n rou ini i rese rc orking uestions s o in s re so in eres
Research uestion s te efinin or in ues ions
e o rese rc ues ion ro ro d o ic t e ifi ue ti n
At this point you may have a number of potential research uestions to choose from. ou will need to efine and e al ate t ese ood a o anal sin and efinin a esea c estion is b sin c ite ia ob ecti e is one t at is pecific, easurable, chievable, elevant and Time-bound.
Specific
The research uestion should be detailed and clear, not general or vague.
easura le Set out a clear target that can be calculated and measured.
Achie a le
The ob ective must be possible. ow will you answer the uestion ill you be able to get data to answer it ow much data will you need hat type of data will you need
Rele ant The issue is of interest and aligns with the overall theme or topic.
ime und e ob ecti e s o ld a e a specific time and date by which it should be achieved. It should have a clear deadline and time plan.
ample: Let s ta e an e ample of a potential research uestion and criti ue it using the A criteria.
‘Tolearnmoreaboutorganisationalculture’
S -It’salittle vague A –Itisachievable(Iwillbeable to getthisinformation)
M -It’shard to measurein termsofsuccess R –Itis relevant
T -Itdoesn’thave acleartimeline
➜
Let s ma e this a A research uestion ‘Toidentifytwo factorsthatimpactonorganisationalcultureinanorganisation’ his is ch o e s ecific and eas a e and can set a c ea dead ine fo co etin e o t
Developing a research uestion is an iterative process we will learn about iterative processes in hapter 11 Idea Development . This means you might evaluate your potential research uestions and realise you need more information. ou will need to go back a few steps in the process and repeat so e steps be o e o can ll de elop t e best esea c estion o o rainstorming or brain dumping , mind maps and concept maps are useful tools to help you start developing a range of research uestions.
rainstormin and raindumpin
Brainst rmin isap oble sol in tec ni e e e o p e be spoolt ei ideas to finda solution to aproblemorcomeupwithanewidea.
rainstorming harnesses the power of syner y where a group is collectively greater than the sum of its parts so one person s idea may spark an idea in someone else.
isuals can help, so writing ideas on a ost-it and putting them on a wall can help people to see things in a different light. It s also important to respect every person s voice, so remember one voice at a time
Brain dum in is an individual version of brainstorming where individuals write their ideas on a board large piece of paper or on ost-its stuck on a wall. It should be done in silence over a set time period, e.g. three minutes. hen the time is up the ideas can be evaluated and discussed.
ind maps
ind maps, an idea introduced by Tony u an, are a graphical representation of a topic or idea. The main topic is in the centre. ranches are added to the image to represent the main themes related to the central topic. Smaller branches can be added to each theme. ind maps usually contain key words, pictures and colour and have cross-links between themes.
oncept maps
hatistheCentral dea
for example
Important oncept (hashighestnumber ofincomingand outgoinglinks)
forthe purposeof
will ensure mayleadto shows determined by leadsto RelatedIdea1 (definitionif needed)
defined as Su node
Important oncept (hashighestnumber ofincomingand outgoinglinks) includes involves implies needfor
RelatedIdea4 (definitionif needed)
Sub-node Sub-node
important because
A concept map is another way of graphically or visually representing information. They were designed by oseph ovak. They are similar to mind maps in that they are both hierarchical, use key words and show links between key themes within a topic. oncept maps are a good way to develop logical thinking skills and can help you to see a topic as a whole.
hat makes a concept map different is that the central topic is at the top of the page and it has linking words and arrows between themes to show the relationship between them. These linking words might include implies , attracts , produces , for e ample , increases , causes , contains .
anaginginformation
Information should be gathered from a wide range of sources. The following may assist you in your research
ord i
www.bordbia.ie
ent l t ti ti O fi e O www.cso.ie
Ci i ens n or ion www.citi ensinformation.ie
Co e i ion nd Consu er ro ec ion Co ission CC C www.ccpc.ie
De r en o n er rise r de nd o en D
De r en o in nce
cono ic nd oci ese rc ns i u e
n er rise re nd
https enterprise.gov.ie en
o ie en o anisation depa t ent o finance
www.esri.ie
www.enterprise-ireland.com uro e n nion https european-union.europa.eu
i e re nd www.failteireland.ie or es ine
www.forbes.com
D re nd ndus ri De e o en enc www.idaireland.com
ntelle tu l e t O fi e el n
www.ipoi.gov.ie
n ern ion one r und www.imf.org
ris e s er rc i e e c ers nd sc oo s e ccess o e ris e s er rc i e rou coi ne
O D file el n O ni ti n or cono ic Co o er ion nd
De e o en
n ine nc c o edi ri nic i coi ne
l nte i e O fi e
e ese rc Cen er non r is n c n ro ides in or iononissues nd rendsin eric nd e or d
o ersees e ui din o or d
c ss ur er duc ion r inin sec orin re nd
is oo or d science nd s is ics
e e ision curren irs ndne s ro r es c n ro ideuse u in or ion
www.irishnewsarchive.com
www.oecd.org en countries ireland.html
https school.eb.co.uk levels advanced
www.localenterprise.ie
www.pewresearch.org
www.solas.ie
www.statista.com
ample: www.rte.ie learn senior-cycle can be accessed via Scoilnet
ere our one oes www.whereyourmoneygoes.gov.ie
or ce e ions Co ission C www.workplacerelations.ie or d n www.worldbank.org or d r de r nis ion www.wto.org
Someresearchtips
Be sa e nline look at the ebwise website for information and tips on being safe online.
se ey rds to search for information and avoid using linking words such as and or not.
ariety ather information from a variety of sources to ensure you are getting accurate information and a wide range of views and opinions. Take note of the key message from each source. ow valuable or useful will this source be
uthenticity heck all sources of information to ensure they are reliable and trustworthy. ot everything we see online is true. heck the website of the source and look at the About s section to make sure they are a reliable source of information. Ask yourself Is this source credible
2 Is this source reliable
ould this source be biased Does it represent the views of one particular stakeholder
4 Do I need to get more information to support this view or look at alternative views
hen was this written hat was happening at this time This will provide conte t to the data you have gathered.
ec rd y ur data eep track of each website and source you use. One ote or oogle eep can allow you to bookmark and record your sources.
Investi ative older
t is eco ended t at o eep an n esti ati e olde o o t o ea s o st d is co ld be either digital or physical or both . se it to compile a collection of information, data and research from a an e o edia ac oss t e o st ands o lea nin e ect on t e in o ation o at e and se it to inform your learning. Apply the theory you are learning in class to the real-life e amples you gather and lea n abo t t o t e an esea c oppo t nities o ill find in t is boo
ypes of informationand data
rimary research is new information gathered to ans e specific estions econda esea c is findin e istin in o ation t at as al ead been gathered for a different purpose. ou will learn more about primary and secondary research in apte
rimarys urces involveoriginal doc entso fi st andin o ation andcanincludeinterviewsand surveys,while sec ndarys urces ofteninterpret primaryinformation. ic l pecification
oth primary and secondary research generate two main types of data
ualitative data
This is descriptive data.
It may provide a range of ideas and feelings about a topic and reveal different perspectives and opinions.
It can help to generate an understanding of a topic from a range of perspectives and views.
amples: information from focus groups, observation and interviews
ow to analyseanarticle
uantitative data
This is numerical data. It is based on statistics and fi es
It is gathered from surveys and e periments. The information collected can be measured and counted.
It allows comparisons to be made between time periods or other factors.
amples: data, fi es o o e n ent o state agency reports
ead the article, hi hli htin or underlinin t e e points i li t statistics o fi es in one colo and key stakeholders mentioned in another colour. Take note of the link and save it in your Investigative olde ncl de t e date o accessed t e a ticle o t e e e ence
Answer these uestions. se the template worksheet on pages of your Student Activity ook to help you.
ho wrote the article ho published it
2 hat is the headline hat is the central topic or theme hich stakeholders are mentioned
4 oes t e a ticle e e to statistics o fi es o epo ts hose views are represented in the article Is it ob ective or biased
Are any stakeholders or groups shown in a positive or negative light
Is any information left out
Does the article raise uestions for you
9 as t is a ticle in enced o t in in in an a
Is this a reliable and credible source ow can you tell
Activity
Take a look in your Student Activity ook to complete the ewspaper Analysis on pages .
ro ectplanning
Analyse current knowledge and resources
utline success criteria 2 Set o ectives
utline resources
mplement and monitor
4
Allocate roles and responsi ilities
ndertake risk assessment valuate
nalyse current n led e and res urces Assess your knowledge of the topic or pro ect assignment task ou could do a brainstorming activity, or draw a mind map or concept map ook at the resources and information currently available to you. hat do you already know
2 et ecti es lea l define t e p pose o t e p o ect hat is it you are setting out to do hat are you in esti atin at a e o t in to find an ans e to et out your aims and ob ectives, and remember, these should be ob ecti es o ill need to e al ate eac o these aims and ob ectives at the end of the pro ect.
utline success criteria Success criteria are the standards or measurable factors that determine the success of the pro ect. In other words, what does your pro ect need to have achieved to be considered successful our teacher may set success criteria for a piece o o , o e a ple i e it a title se t o so ces o in o ation incl de a e ection They will use these criteria to udge and evaluate your work. ou must do the same for your p o ect a ples i t incl de settin and stic in to a ti e sc ed le a in a clea l defined research uestion selecting a variety of sources of information correctly acknowledging sources o in o ation t e p o ect as oals eac oal as a clea concl sion t e p o ect incl des a e ection and e al ation and o e s eco endations o t e o
4 ll cate r les and res nsi ilities a p a list o specific tas s is s o ld incl de t e t in s t at ill need to be co pleted in o de to lfil t e assi n ent p o ect e i e ents o can use this checklist to keep you on track with your pro ect timeline. In group pro ects each of these responsibilities should be allocated to a different group member according to their skills and abilities o e a ple, so eone it a tistic o c eati e s ills co ld loo at o e all p esentation, someone with good numerical skills could gather uantitative data and create graphs. ho will take on the role of pro ect co-ordinator
utline res urces ist the resources available, for e ample laptops, printers, access to information, people or other resources that may be valuable sources of information.
nderta e ris assessment Assess the possible risks that the pro ect might be e posed to at the very start of the pro ect. hat could go wrong hat can we do to prevent it , minimise it or avoid it altogether The risks should be listed and the method of managing each risk outlined in your pro ect plan. This will allow you to deal with unforeseen circumstances. e will learn more about risk management in hapter 1 .
m lement and m nit r Set a clear schedule, setting a deadline for completing each element or stage of the pro ect. onitor the timetable closely to keep the pro ect on schedule. our risk management plan should have a clear outline of what to do if something does go wrong that might delay your pro ect.
aluate This is the process of measuring the success of the pro ect. The success criteria outlined at the start of the pro ect will be used to evaluate it. valuation should take place at different points throughout the pro ect, not ust at the end, to make sure the pro ect is on track.
Analysingand evaluatinginformation
hen you have gathered a wide range of data and information you will need to analyse and interpret it o ill be as ed to e al ate t e an e o pe specti es in o findin s o a be as ed to s nt esise t e findin s and to app aise t e al e o t is in o ation
e e action e bs o s o ld loo o t o a e and o bac to o ction e bs section to note t e eanin o eac o t ese e bs
hen analysing data, remember
TIME ear month of the statistics
TREND hat happened to the data Increase decrease
WHY ive a possible reason as to why this might have happened.
THEORY If you can, link it to some business theory you have learned about.
or e ample:
uantitative data could be presented in a graph or table.
Study and e amine the information. ook at any trends in the data. as there been an increase o dec ease so, b o c e e to t e dates in o ap and t e t end t e fi es a e taking.
State a possible reason why this might have happened. ink this data to a topic that you have studied on the eaving ert usiness course. This will show that you can apply real-life e amples to theory. at is o concl sion at is t e in o ation tellin o at a e t e e findin s o o research hat has happened hy has this happened ho has been affected and how in o findin s bac to o ai s and ob ecti es an o no p o ide an ans e to eac ai In other words, does each aim have a conclusion
Are there other contributing factors that have presented themselves during the course of your research
Does your research raise new uestions hat are your recommendations hat should happen ne t
emem er very conclusion or evaluation should be supported by e amples, facts or information. o e a ple
In my opinion, is effective. The evidence [state the evidence] shows that …
It is my conclusion that The data shows that … The current approach is effective because
My research shows that I believe this to be true because
am ip
o stlin o findin stooneo t e o c oss c ttin t e es t icsand stainabilit , nt ep ene ial in in , sinessand inancial ite ac ,and DigitalTransformation.
e en in fin in n e ec i e
ral communication
planation The e change of information using speech.
amples: meetings, telephone calls, video conferencing.
Advantages ast and pe sonal Any issues or misunderstandings can be cla ified i ediatel
isadvantages
There is no record it is only useful for a short time. ou are relying on people paying attention while you are speaking.
ritten communication isual communication
sing the written word to transfer information. sing images, graphs and pictures to give information.
amples: letters, reports, emails.
amples: posters, adverts, social media.
There is a permanent record of the information. It can be referred to if needed. It is accurate and avoids misunderstandings. asy to understand and recall and useful when presenting numerical and categorical data.
It can be slower to get feedback. Security should be considered if the information being sent is confidential
They cannot be used alone and should not be over-used.
ultim dalc mmunicati n uses a variety of methods, for e ample speaking oral , writing and non-verbal communication such as facial e pressions and body language. It can also include the use of technology
harts, graphs, diagrams and graphics can be very useful methods to present your information and findin s in a is al a e can s ppo t o findin s and i li t t e e points e a e eat ways to present uantitative data in a way that is easy to understand and analyse.
Types of
emem er very graph chart or diagram should have a title and be clearly labelled.
C co s ou d e consis nsis en
o ill be as ed to a e eco endations and to e ect on t e lea nin s o o p o ect o will need to demonstrate how your perspective and opinion has changed because of this pro ect and esea c o s o ld e ect on t e s ills o de eloped and o o be a io and pe specti es a e c an ed as a es lt o o in esti ation o a find t ese p ases se l a no ch o e a are of i o ed s i s because .
o f t e in esti ati e st dies i de e o ed a eate understanding of ained insights into fo nd cha en in t ea ned to i o e it a in in esti ated i no y opinion on has chan ed as of the belief that t eca se of no e ie e
emplates
Businessletters
etterhead of thesender (theirname, address and contact details)
eference num ers areused forfiling purposes
Thesu ect hatthe letteris a out
The ody of the letterusually contains at least threepara raphs: penin para raph hattheletter isa out iddle para raph(s) detailed information losin para raph statin hat shouldhappen ne t
emos
The addressee theperson to hom theletteris sent penin Salutation
Use earSir adam if you don t no the person sname losin Salutation
Use ours aithfully if you don t no theirname
Si natureand title of person sendin the letteron ehalf of the usiness
A memo is a short , informal message sent from one person to another in the same organisation. The sender can keep a copy of the memo.
MEMO
o: Mary O’Brien, Managing Director
Su ect: Sales Promotion Incentives
rom: Peter Murphy, Marketing Manager
ate: 9 June 2025
Could we organise a meeting to discuss the sales promotion strategy for the new Super Styled hair products? I’m available all next week.
Signature: Peter Murphy, arketing anager
emo
Advantages
Ine pensive no postage or telephone costs
Briefand concise A no-frills form of communication where the message gets straight to the point
isadvantages
Restriction annot be used for e ternal communication
imited use ot appropriate for discussing serious or comple situations
Encl:any documents thatareenclosed iththeletter
Reports
Thereason for compilin thereport It details ho commissioned thereportand ho rotethe report
Thisisthe main ody of thereport
ppendices may eincluded at theend of the report hich ill includeadditional relevant documents (such as accounts, sample uestionnaires ivenetc)
i lio raphy mayalso e included
Thislists the mainsections of thereport andrelevant pa enum ers
Setsoutthe purpose of the report
statement y theauthor of thereport onthe course of actionthat should e ta en
rief outline of the mainfindings and conclusion of thereport
mail is an abbreviation for electronic mail. essages can be sent electronically around the world. An email is similar to a letter.
From: Thomas urphy,
To: Subject:
Salutation
essa e content
nature
I
T anager All mployees pcoming Sales romotion ampaign
Dear Sales Managers,
I hope this message finds you well. I am writing to remind you that we will be launching a promotional campaign across all stores next week. This campaign is a significant opportunity for us to boost our sales and engage with our customers more effectively.
Please ensure that all necessary preparations are completed in advance. If you have any questions or require further information, do not hesitate to reach out to me.
Thank you for your cooperation and support.
Best regards,
Thomas Murphy ICT Manager
Acknowledging sources
e erencin is a standardised method of acknowledging information that is the intellectual property o anot e a t o t s o s e e o in o ation ca e o e e encin in o ation acc atel ill help you to avoid plagiarism. lagiarism is presenting someone else s work as your own work.
e e encin s o s t at o a e esea c ed in o ation on t e topic and ill ill st ate t at o o is based on theory It is standard academic practice.
All research sources used books, articles, websites, person-to-person interviews, etc. must be acknowledged. The arvard referencing style also called the author date system is a commonly used referencing style.
irect uotation
o a ll ote o a boo o a ticle a definition, o e a ple rite the words e actly as they appear in the book or article. se uotation marks around them or put the uote in italics.
rite the author s surname, year of publication and the page number in brackets after the uote
ample: All organisations, regardless of si e or whether t e a e co e cial o not o p ofit , st a e effective governance. enehan O eeffe, 0 1
Paraphrasin
This means that the author s words are summarised rather than written down word for word. The original meaning of the author s words is the same.
Summarise the words and write the author s name and year in brackets beside it.
ample: et s sa a epo t p blis ed on t e ebsite states t e ollo in ate ial dep i ation the share of individuals in households unable to afford two or more items from a list of ten essentials ose o in to in o t ose a ed nde
In my report , I don t want to use the e act uote but I would like to refer to the statistic. I might say something like this cco din to the the e centa e of indi id a s na e to affo d o e than t o ite s f o a ist of ten rose by 2.4% in 202 . ,
i lio raphy
A bibliography is a complete list of sources of information and data that you read or used for your investigative study. It is included at the end of your report. ach source of information should be listed in alphabetical order. se the following format to reference each source accurately.
o all itten so ces
Author s name ear of publication
Title of the book or article
lace of publication
ame of the publisher yperlink and date read or downloaded if published online.
ample: enehan, . and O eeffe, . 0
Let s Do usiness. Dublin The ducational ompany of Ireland.
o a ebsite o online so ce
Author s or organisation s name ear of publication
Title of the page or article ebsite add ess o
Date on which the material was read or downloaded.
ample:
u, ristal 0 OpenAI closes . bn funding haul with investment from icrosoft and vidia , ish i es. Available https www.irishtimes.com technology big-tech 0 10 0 openai-closes-billion-funding-haul-with-investment-from-microsoft-and-nvidia Accessed October 0
ploringtheBusiness nvironment
hapter 2 ey Stakeholders inBusiness
earningoutcomes Strand
At the end of this chapter you should be able to: the key internal and external stakeholders in a business and demonstrate their importance in the business environment.
2 S RA how stakeholders interact and identify potential conflict between stakeholders.
S GG S appropriate ways of avoiding and resolving conflict between stakeholders.
4 C C stakeholder mapping and explain the importance of prioritising different stakeholder interests.
Case Study: D re nd
A DI was established in 191 in ssen, ermany by the entrepreneur/business owner Anna Albrecht. Since then, A DI has e panded its operations into many countries all over urope, arriving in Ireland in 1999.
eland as o e sto es t establis ed its fi st e ional dist ib tion cent e in aas, ounty ildare in 00 . Rapid growth and an increase in demand from consumers led to the introduction of a second regional distribution centre in itchelstown, ounty ork in 01 .
A DI has been in the unday Independent s est mployers list for three consecutive years, from 0 to 0 . In Ireland, it has over , 0 employees ac oss its sto es, o fices and e ional dist ib tion cent es t is also t e fi st Irish supermarket to receive the eep ell ark, a workplace wellness accreditation awarded by I the Irish usiness and mployers onfederation that recognises and rewards employers for their commitment to workplace health and wellbeing. In 0 1 A DI launched its mbrace Strategy to ensure its business remains a diverse, inclusive and supportive place to work.
eland s b in o fice, based in aas, so ces p od cts ac oss a an e o categories from 0 Irish suppliers. The new product development team scopes out new market opportunities using a variety of market research techni ues and benchmarking. Suppliers performance is monitored and reviewed continuously to ensure product sales are meeting targets.
A DI Ireland has a detailed sustainability strategy that focuses on a number of key areas including human rights, biodiversity, health, climate and community engagement. The company supports a number of charities and local causes, including arnardos and ood loud.
ey stakeholders in usiness
ta eh lders areallthepeopleororganisationsthatplayapartinabusiness andthatareaffected by itsdecisions.A stakeholderisanindividualor organisationwhohasanyinterestinthebusinessandthedecisionsitmakes.
nternal sta eh lders arepeoplewithinthe companywhoaredirectlyaffected by all decisionsmadeinthe company. They are focused ondirect employment, investment or ownership. Theyinclude business owners entrepreneurs , employeesand investors.
ternal sta eh lders arethoseoutside thecompanywhoareindirectlyaffected by thedecisions thecompany makesand anyoutcomes fromthem. Theyinclude consumers, government agencies, suppliersand community groups.
To help you remember the different types of stakeholder groups, think about it logically. If you were setting up a business, what items services would you need for it to survive ut yourself at the top of the list and work your way down it is more common sense than you think
Business owner entrepreneur
This is the person who bears the risk bot pe sonal and financial s o ld t e business fail. They are the person who has spotted a gap in the market and decided to capitalise on it by establishing a new b siness ofit is t ei e a d
Entrepreneurial Thin in Theme
nvestors
Often an entrepreneur won t have the money to fund the business themselves so they ac uire it from another source investors. In return for investing money, investors will look for a return on their investment , also known as a dividend.
ample: ALDI often invests up to 10 million in the local area hen building a ne store in Ireland.
ample: ALDI Ireland is part of the ALDI outh roup, hich as founded by the Albrecht family.
The investment known as capital can come from three different sources.
L an s o one p o ided b a financial instit tion, s c as a ban e a o nt bo o ed ill need to be epaid in ll, o e an a eed pe iod o ti e, it inte est
G➜
➜
ner ca ital e uity capital money provided by individual people or other o anisations o t en beco e pa t o ne s o t e co pan s a e olde s e ill t en be entitled to a s a e o t e p ofits in t e b siness, no n as di idends
rants s o one p o ided b state a encies s c as nte p ise eland, eland o a ocal nte p ise fice e ant does not a e to be epaid as lon as ce tain te s and conditions a e et, o e a ple e plo in local people o i in t e cleanin cont act to a local co pan
mployees
plo ees a e ec ited b a company to work in their business in et n o a a e o sala plo ees it a a iet o s ills and alifications ill be needed across all areas of business operations.
Consumers onsumers are the people o b oods services for their own personal use. ithout consumers there would be no business. They ant ood alit at co petiti e p ices a c sto e is satisfied with the product or se ice t is ene ates repeat custom and revenue for the business.
Governmentagencies
ample: ALDI Ireland employs over 4,650 people across 160 stores, its head office and distribution centres in Ireland.
ample: As part of its sustainability strategy, ALDI has committed to have 85% of its sales tonnage come from healthy products by 2027
e o e n ent acts as a sta e olde on be al o t e ene al p blic ts ain ai is to ensure businesses create employment. ll b sinesses st pa ta es, incl din co po ation ta , and t e o e n ent ses t is ta e en e to i p o e o in est in in ast ct e and se ices sc ools, ospitals, etc e o e n ent e i es b sinesses to act as a ta collecto on be al o t e state it e a d to and e ill lea n o e abo t late in t e co se
o e state a encies, s c as eland, nte p ise eland and s, p o ide s ppo t to b sinesses in t e o o finance, t ainin and ad ice
Suppliers
very business needs suppliers. They provide raw materials and services, e.g. information technology, electricity, that a business needs to produce their own product or service. Suppliers and t e fi o to et e to ensure a fair price and gooduality products or services supplied at the right time.
Stop Research
ample: ALDI Ireland spent over 1.1bn ith Irish suppliers in 202 . It or s ith over 0 Irish food and drin producers providing over 2,400 products across ALDI s stores.
se either the A DI website see link below or the ord ia website see link below to answer the following uestions hat is the row with A DI campaign hat will A DI provide ist three recent winners of the programme and give a brief description of one of these companies.
edco.ie/p2xw A DI website
ocal community
The local community is the individuals, households and organisations in the vicinity of the business. usinesses impact on the local community in a huge way, for e ample creating employment waste disposal and sponsorship programmes.
edco.ie/xu2p ord ia website
Stop Research
ind o t fi e inte estin acts abo t ood loud. hat community groups are operating in your local area reate an infographic that you can share with your class.
ample: ALDI partners ith ood loud to distribute surplus food to local charities and community groups.
It is in the long-term interests of every business to pay close attention to the needs of each stakeholder.
Stakeholder
hat they ring to the usiness
hat they want fromthe usiness
ntrepreneur Ideas the brains behind the business ont ol, p ofit , independence
nvestor inance et n on in est ent , p ofit
Suppliers Raw materials, essential services ast payment , loyalty
Consumers oney sales revenue , loyalty ood- uality products services at a reasonable price
Government egislation, advice, stability
ocal community ustomers, support
Activity
an you think of an e ample for each of the stakeholder groups mentioned above omplete a Diamond 9 activity worksheet see page 1 of your Student Activity ook and rank the stakeholders in order of importance. ompare your ranking with a partner s. Are they similar or different Discuss why you made your choices and see if you can reach a compromise.
Stakeholderrelationships
Ta es collected, compliance with legislation
Social and environmental responsibility
Stop Colla orate
Class discussion topic!
ow might individual stakeholders needs c an e o e ti e o ld a fi p io itise different stakeholders at different stages of business development , i.e. start-up, growth, maturity, etc.
The relationships between all stakeholders is based on mutual need. veryone has something to offer and ants so et in in et n o e a ple, an ent ep ene o e s ideas and finance b t ants p ofit in et n i e ent sta e olde s a o to et e on so e iss es b t a a e con ictin inte ests on others.
Relationships between stakeholders are either competitive or co-operative. Stakeholders in a business both co-operate for the business to function properly and compete with each other each trying to get the most they can from the business
Co
operative e een s e o ders
A win win situation. Stakeholders work to et e o t ei t al benefit and towards a common goal.
Competitive
e een e usiness ndi s s e o ders
A win lose situation. ach stakeholder pursues different aims in an effort to achieve things at the e pense of one another Only one party can win, so they compete to gain a commercial advantage.
Dynamic relationships: These are constantly changing. Sometimes stakeholders co-operate and sometimes they compete with each other. or e ample, producers and consumers will co-operate when producers make a product that consumers want and the consumers receive a good product. This would become a competitive relationship if consumers felt the product was overpriced or of poor uality
Dependent relationships: The stakeholders need each other to be successful. or e ample, entrepreneurs and the government have a dependent relationship. ntrepreneurs need support from state agencies and government bodies to start their business. The government needs entrepreneurs to set up new businesses to create obs and provide ta revenue, which the government uses to provide essential services.
Interdependent relationships: ese a e t all beneficial Stakeholders work together to get what they want , but help other stakeholders get what they want at the same time. They can accomplish more by working together than they can alone.
et s take a closer look at some relationships between different groups of stakeholders.
Entrepreneurandinvestor
Co operative
The entrepreneur comes up with the idea and provides the information to the investor which will encourage the investor to invest in the business. In return the investor will o e finance in e c an e for shares in the company. This is a win win for both stakeholders.
ample: eil and Laura est ood pitched their product he agic hiteboard in the television series Dragons Den. o of the dragons, heo aphitis and Deborah eaden, invested 100,000 for a 40% sta e in the company. he company is no e porting to over 20 countries and had a sales revenue of over .5 million in 202 . Competitive
n ent ep ene a ant to se b siness p ofits to e pand, e eas t e investor would prefer a return on their investment. The proposed e pansion plans may be too risky for the investor
Supplierandthe usiness
Co operative
The supplier will supply and p o ide finis ed oods to the business, which in return will pay for the items in full, on time, at a price agreed by both parties. This is a mutually beneficial elations ip to bot parties as both are getting something from it.
ample: ALDI Ireland agreed a 7.5 million deal ith Dublin based confectioners roderic s to give the company the opportunity to stoc their goods in 00 of ALDI s 2,200 strong store net or .
Competitive
A supplier and a business may compete with one another with regards to the finis ed p od ct s pplie a p od ce oods ic a e not o t e i est uality and in return the business may choose to take their business to another supplier
usiness andemployees
Co operative
Competitive
The business pays for training and upskilling employees. A highly skilled and t ained o o ce benefits t e b siness and e plo ees no a e i e ea nin potential. If the business pays its staff a decent wage the employees will be more oti ated and illin to o o t e benefit o t e b siness
A business and its employees usually compete over pay. The business will want to keep wage rises to a minimum, whereas the employees will want to ma imise pay rises. If an employer begins to change work practices without consulting the employees beforehand this may lead to con ict it t e b siness
ample: ocial media giant i o has announced that it ill be laying off Irish staff as part of a global restructuring plan aimed at reducing costs.
Stop Colla orate
There are several other e amples of co-operative and competitive relationships that can e ist between stakeholders. orking in small groups, complete the activity page on relationships in the workplace on page 1 of your Student Activity ook. e ready to report back with what you have decided.
Stop Research
Take a moment to research a business in your local area. an you name the stakeholders for this business ow does it impact your local area
Theme
Ethics and Sustainability
e e c n ic
on ict can also a ise bet een sta e olde s in a b siness con ict is not esol ed it can a e an i ense i pact on t e b siness on ict can be esol ed in a le islati e le al o a non le islati e a
Legislative: using e istinglawsorinvolving anoutsideagency
t is also possible to a oid con ict b simply communicating with one another and through active listening.
Active listening is essential to effective communication and a key component in con ict esol tion is in ol es showing empathy and being willing to listen, not umping to conclusions and understanding others viewpoints.
Non-legislative: usingnegotiation, compromiseormediation,whichdoes not relyonthelaw
argaining involves trying to resolve a dispute before it escalates.
A shop steward union representative may be involved.
The two sides may make offers and counter-offers, leading to a compromise. oth sides must be happy with the outcome.
ample: An employee is loo ing for a age increase. his may involve going bac and forth ith the manager to find a sett e ent that is acce ta e to both parties.
ediation
Mediator: Anindependentpersonwhobringsdisputingparties together andactsasa go-between to help stakeholders resolvetheirdifferences.
hen there is no movement in the dispute an agreed mediator will suggest proposals to move things on , hoping that one side will agree and resolve the dispute.
ediation can involve either conciliation or arbitration
ample: An investor, such as a ban , may have a dispute ith a customer over a loan default. he ban and the customer may have to engage the services of a mediator to try to resolve the loan repayment issue before it escalates.
onciliation
Conciliation: Athirdparty,agreed to by bothdisputingparties,listens to bothsides.Theirmain aimis to encouragebothparties to listen to oneanotherand to reachanagreement.
A conciliator s recommendations are not legally binding. The conciliator helps both parties reach a decision but does not impose a solution on them.
The orkplace Relations ommission R offers a conciliation service to employers and employees when industrial disputes occur
ample: anai co ained to the ffice of the ess ds an about a ne spaper article headlined assengers facing chaos as anai st i e oo s hich it said inacc ate e ected the t e situation. he complaint as resolved hen the ne spaper published a letter from the complainants.
r itration
An arbitrator isimpartialandindependent.Theymakea recommendationonhowadispute shouldbe resolved.
efore arbitration begins, both parties may agree that they will carry out the arbitrator s decision.
The main type of dispute dealt with by arbitration is industrial relations agreements between employers and trade unions employees .
ample: he Labour ourt provides an arbitration service and can hear appeals from the on cases such as unfair dismissals. he Labour ourt ill ma e a determination on the case. In some cases these determinations may be appealed. l e el ti n i i n n ne u e
Stakeholder mapping
Stakeholdermapping istheprocessof identifying,visualisingandprioritising stakeholdersinanorganisation by e a inin t ei in enceandinte estina particularpro ect.
To manage their stakeholders effectively, businesses need to make choices. ach decision they make will affect all stakeholders, but the company needs to decide which stakeholder s needs should be prioritised. Stakeholder mapping is an important part of stakeholder management.
Some stakeholders have more power over the company than others. The map looks at the power each stakeholder holds and the level of interest each stakeholder has.
ample: A company that has high levels of debt and o es the ban a considerable amount of one i io itise the an and financia instit tions as the a e the sta eho de s ith the ost po er. epaying the loans is a priority because the business may not survive if it doesn t.
There are a number of stakeholder mapping tools. The most common is a power interest grid.
er refers to how much a stakeholder can affect the outcome of a decision or pro ect. The position of the stakeholder in the organisation, t ei a t o it o e t e p o ect and t e in ence t e a e o e ot e people with high power should be considered when determining the level of power.
ou can use this in hapter 1 .
nterest refers to how much a stakeholder cares about the outcome of a pro ect decision. actors to consider when determining a stakeholder s level of interest would be how the outcome of the pro ect will affect the performance of the stakeholder and how much the success of the pro ect relies on their assistance.
Stop Colla orate
ork in small groups and list the companies in your local area. hoose one or two and list their stakeholders. an you categorise the stakeholders hich stakeholders would you give priority to and why
Recap
Remember the Diamond 9 activity you completed earlier in this chapter This might be useful here.
o to dosta eholder mappin
Identify sta eholders rainstorm all the people or organisations that have an interest in the business and are affected by decisions the company makes.
2 Gradetheirlevel of po erandinterest ather data relative to each stakeholder to help you assess their level of power and interest.
Ploteach sta eholder on a stakeholder mapping matri , like the diagram below..
4 nalysetherelationships et eenthe sta eholders It may be possible to identify clusters of stakeholders with similar power and in ence le els
ollo in analysis, strate ies should edeveloped to en a e ithdifferent sta eholders The relationship between stakeholders and the key players should be considered at this point.
Strate iesshould eimplemented and then monitored and evaluated to ensure the mapping remains effective and up to date.
i o o Interest i h Po er:
These stakeholders will need to be ept satisfied and in o ed beca se, although they are not that interested, they have a lot of power and could yield this power to affect the outcome of the pro ect. overnment agencies would be in this uadrant.
o Interest o Po er:
These stakeholders should be monitored but will not re uire a lot of communication. embers of the public and customers who will not purchase the product would be in this uadrant.
i h Po er i hInterest:
These stakeholders have the largest impact on the pro ect and its success. It ill be i po tant to eep t e satisfied and work closely with them. Investors and pro ect managers may be in this uadrant.
er Interest o i o er in eres rid
o Po er i hInterest:
These stakeholders will need to be kept informed of the pro ect status and communicated with to ensure there are no issues. They will be concerned about the pro ect but won t have a lot of control over decisions. ustomers and end-users of a product or service may be in this uadrant.
ample:
et s consider a situation where A DI are planning on opening a new store in Donegal and complete stakeholder mapping for this pro ect.
et s begin by listing our stakeholders
ead o fice senio ana e ent
2 A DI Real state department R department
4 Regional distribution centre ocal council
ocal residents
ocal companies overnment
9 Suppliers.
here might we place each of these stakeholders on a stakeholder map i o i h Po er o Interest ational government i h Po er i hInterest Senior management team A DI Real state department ocal authorities o Po er o Interest ocal companies o Po er i hInterest ocal residents Suppliers R department Regional distribution centre
A number of other tools can also be used to conduct stakeholder mapping
Power/influencegrid: Stakeholders are grouped based on their level of power and their active involvement in t e p o ect in ence
Salience model: Stakeholders are categorised based on t ei po er abilit to a ect the outcome they have a lot of decision-making po e , urgency ic stakeholder s needs s o ld be p io itised fi st , and legitimacy t ei conce ns and interest are reasonable .
iscretionary ana e ominant
an erous ependent emandin on sta eholder eettheir needs areful mana ement ocal,need attention t e l e in
Socio ram: This can be used to visually represent the structure of stakeholder relationships. It can show which stakeholders are connected who has more impact on others and who is being i pacted t e st en t o t at in ence and o s ppo ts t e p o ect and o is a ainst t e pro ect.
Benefits of stakeholder mapping
a es estuse of limitedresources: dentifies t e sta e olde s t at a e t e ost po e and in ence dentifies e e a co pan should spend most time resources so that it will not be wasting scarce resources.
Theme
Ethics and Sustainability
2 Avoids conflict: Individual stakeholders can be managed more effectively, resulting in improved co nications and bette elations ips, elpin to a oid sta e olde con ict
uildstrust: uilding trust between the company and its stakeholders means that stakeholders will be less resistant to change. The business will be able to progress pro ects and initiatives with less con ict
4 etter ualityproductorservice: A better understanding of stakeholders needs means that the company will deliver a better- uality product service, improving the company s reputation and inc easin sales and p ofits
Stop Research
Research a company of your choice. ho are their stakeholders Draft a stakeholder map for a recent pro ect this company undertook. hich stakeholder did they prioritise hy do you think they did this hen you have completed your research, share it with your teacher and class. ile it in your Investigative older for future reference
Chapter uestions
Stop Check for nderstanding
1. in what is meant by a stakeholder Support your answer with relevant e amples.
2. Dis in uis between internal and e ternal stakeholders.
3. De i e the role of an investor as a business stakeholder
4. u ine the role of suppliers in a business. Support your answer with relevant e amples.
5. in what is meant by a co-operative relationship.
. Dis in uis between co-operative and competitive relationships that may e ist between stakeholders in a business.
. e n nt t the different sources of capital available to investors.
. u ine o et ods o a oidin and esol in con ict
. in what is meant by stakeholder mapping.
1 . u ine the steps involved in stakeholder mapping.
11. Dis in uis bet een conciliation and a bit ation as et ods o esol in con ict
evelopin your no led e
1. n se t e i po tance o fi e di e ent sta e olde s in t e b siness en i on ent
2. De n t te the important role the local community can play as a stakeholder in business.
3. De i e the types of relationships that may e ist between stakeholders.
4. n se the relationships that may e ist between stakeholders in a business of your choice.
5. u ine the steps involved in active listening.
. e the case study and answer the uestions that follow.
Case Study: i e tle il e n
irecastle is a small family-owned business located in the heart of the market s uare in ildare town. The owners and entrepreneurs behind the business, aul enehan, Ronan insella and their wives, are no strangers to the food scene, having run three successful restaurants in ounty ildare artes of ildare, the Dew Drop Inn rewhouse and the allymore Inn. ith the support of a private investor, who in return for investing would receive a regular dividend on their investment , and backed by ank of Ireland, the dream of irecastle was born. In late 019 aul and Ronan identified a ap in t e a et to cate to t e e e inc easin n be o isito s o travel to ildare to visit ildare illage shopping outlet or the vast array of amenities in the surrounding area.
In September 0 0 they embarked on an e citing new venture and irecastle opened as an artisan grocer, bakery, caf , delicatessen and gift shop, with ten bouti ue guest bedrooms. The store is a food lovers paradise. onsumers are spoilt for choice.
At the heart and soul of the irecastle brand lies the irecastle resh range, a range of esta ant alit ead eals, ic a e a fi a o ite o t ei cons e s e s el es a e b i in it t e finest a tisan ood p od cts e sto e as one o st en t to strength and now employs people, from chefs to sales assistants, full-time cleaners to deli staff
Sourcing local products from local suppliers has always been a priority for irecastle. ei eals a e p epped it t e finest e o a local e etable s pplie , oone s e , and their meat is sourced from aynestown eats. Small local producers, such as Tower iew oney and ildare andle arn, are given the opportunity to stock their produce in the store.
s a e iste ed co pan i ecastle is obli ed to pa ta es, so t e o e n ent benefits o t e p ofits o t e b siness, alon it t e ta es t ei e plo ees pa e ta e en e generated helps the economy to grow and develop.
Supporting local community pro ects is of huge importance to irecastle. Since it opened in 0 0 it has supported local sports clubs, a drama group and schools, with fundraising and sponsorship. In a constantly changing economy and the everyday pressures of nnin a b siness, i ecastle as to a e di fic lt decisions ee l aintainin positi e relationships with its employees, suppliers, customers and the local community will always be of the utmost importance to irecastle.
a ist all the stakeholders involved with or affected by the daily running of irecastle.
b i Distinguish between a dynamic relationship and a dependent relationship in business. ii Outline how a dynamic relationship and a dependent relationship could impact on the running of irecastle.
c The owners of irecastle are considering e panding the business in the ne t few years. This could either be through product ranges, bedroom facilities or e pansion overall sing your knowledge of stakeholder mapping, draft a stakeholder map for one of these three areas.
. Di u t e benefits o a fi en a in in sta e olde appin . in the importance of prioritising different stakeholder interests.
r itration: hen an impartial, independent third party, called an arbitrator, enters a dispute. The arbitrator will make a recommendation on how the argument should be resolved.
ompetitiverelationship: A win lose situation. ach stakeholder is pursuing different ob ectives in an effort to achieve things at the e pense of another
onciliation: hen a third party, agreed by both factions, enters the dispute process, listens to both sides and encourages them to listen to one another and to reach an agreement before the situation escalates.
onsumers: The people who buy goods services for their own personal use. ithout consumers there would be no business.
o operativerelationship: A win win situation. oint action or effort is re uired, so stakeholders work together for their mutual benefit and to a ds a co on oal
Employees: mployees are recruited by companies to work in their business in return for a wage or salary. mployees with a variety o s ills and alifications a e needed in all areas of business operations.
Entrepreneur: The brains behind the business. They spot a gap in the market and capitalise on it. They bear the risk both personal and financial s o ld t e b siness ail
ChapterChecklist
plainwhat ismeant y a stakeholder efinition
nternal vs e ternal stakeholders efinitions amples identify needs and wants of each stakeholder at different stages of business development process
usiness owners
Investors mployees onsumers
Suppliers ocal community overnment
Importance in business environment ypes of relationship e plain o-operative, competitive, dynamic, dependent , interdependent
Governmenta encies: The government acts as a stakeholder on behalf of the general public. Their main aim is to ensure businesses create employment.
Investor: The person institution providing the sta t p finance o a b siness n et n o investing money, investors will look for a return on their investment , also known as a dividend.
ediation: hen there is no movement in a dispute an agreed, neutral mediator will make proposals to move things on with the aim of resolving the dispute.
e otiation: Resolving disputes in a low-key, uick manner before they escalate includes the process of bargaining. ompromise is key.
Sta eholder: Stakeholders are all the people or organisations that play a part in a business and are affected by its decisions. Stakeholders depend on one another to survive in the business world.
Sta eholder mappin : This involves considering the main stakeholders and t ei po e and in ence, ile lea nin about the range of stakeholders and the need to consider a range of perspectives. A stakeholder map can be written or visual.
Suppliers: They provide the essential raw materials or supports to business customers.
Stakeholder mapping plain
Stakeholder mapping tools
Analyse relationships between any two stakeholders n ic e een e e denti so ces o con ict et ods o esol in con ict negotiation, mediation, conciliation, arbitration
Outline how a business would engage in stakeholder mapping
ower interest grid to show how a business prioritises different stakeholders needs see also hapter 1
onduct stakeholder mapping enefits o sta e olde appin
orms of Business
earningoutcomes Strand
At the end of this chapter you should be able to:
2 S G S between public, private, semi-state and not for profit enterprises and analyse the contribution of each of these types of enterprise both locally and nationally
2 2 how business ownership differs between different types of organisations and how ownership can change over time.
Case Study: l u i l nte i e
In 01 Iseult ard and Aoibheann O rien were students at Trinity ollege Dublin. oth had a passion for food and could not understand why so much food went to waste, especially when there were so many people who couldn t access enough food to survive. y 01 , with the help of the aunchbo programme in Trinity ollege, ood loud was born. Their vision was for a world where no good food goes to waste, with a mission to create a socialenterprise that would transform surplus food into opportunities to make the world a kinder place. ood loud redistributes surplus food from food businesses across the supply chain to community groups who can use it.
ood loud collaborates with food businesses, working together to reduce food waste and e ficientl edist ib te as c ood as possible n eland, its bs in blin, o and alway collect and redistribute large volumes of surplus food from across the food supply chain. ood loud s food rescue platform, oodiverse, connects food businesses with surplus food, directly to local community and voluntary groups who can use it. ood lo d s tec nolo sol tion is no bein sed in fi e a ets, in eland, t e nited ingdom, Slovakia, ech Republic and enya.
Since 01 , through its solutions in Ireland and internationally, ood loud has redistributed more than million meals. That is over 1 , tonnes of surplus food shared with over ,000 charities and , tonnes of O e uivalent emissions saved from going to waste.
Stop atch
atch this short video from RT s ation ide in which ood loud creators discuss their latest pro ect, leaning.
edco.ie/jfaz
am ip
Improve your business and financial lite ac ta e note of new key words in this chapter as you are studying, check the Store It earn It section at the end of the chapter and include them in your own definitions noteboo
ic i e n n f fi en e i e
Pu licenterprises
wnership The government urpose roviding essential and societal services to the public without necessarily oc sin on p ofit tate p blic a encies p o ide bot ealt e and education services. ublic companies are companies owned by the state which run an essential service such as transport or communication, e.g. RT , Iarnr d ireann, Irish ater. These are also called semi-state companies.
fi n p ofit is eit e et ned to t e government in the form of a dividend or reinvested in the company.
Regulation Regulated by the ompanies Act 01 .
anagement Owned and controlled by the state Any public company must have a company secretary, who must be at least 1 years old and be able to uphold the duties re uired of them. They operate under the aegis protection and support of an appointed government minister.
Contri utionofpu licandsemi stateenterprises
Employment: Over 00,000 people are employed in the public sector in Ireland. It is the single biggest employer in the state This cuts the unemployment rate and reduces government e penditure on social protection. ocally, increased employment rates result in increased spendin in local a eas, es ltin in inc eased sales and p ofits o local b sinesses is is called the multiplier effect.
Essentialservices: Publicenterprises provide se ices t at p i ate ente p ises o ld find commercially unviable, e.g. bus routes to rural areas provided by us ireann. This is called a public services obligation.
Stop Research
ake a list of enterprises in the public sector in Ireland. hat sectors are they based in hat contribution do they make in your local area
Governmentrevenue: ublic enterprises provide revenue for the government through ta es. This revenue is used to fund essential government services such as ealt and ed cation, benefitin all citi ens ocal a t o ities also benefit o t is e en e, enablin t e to improve facilities and services, e.g. to improve parking and roads.
Private enterprises
wnership rivate individuals or companies.
urpose o a i ise p ofits o t ei s a e olde s and o ne s e p od ce o supply a range of products and services that customers re uire.
fi n p ofit is eit e ein ested in t e co pan o paid o t to t e s a e olde s in the form of dividends.
Regulation The rules and regulations outlined in the ompanies Act 01 .
anagement Owned and controlled by private individuals called shareholders. A registered company must have a company secretary who is at least 1 years of age and able to uphold the duties of a secretary as outlined in the ompanies Act.
Contri utionofprivateenterprise
reatesemployment: nterprises in the private sector provide employment opportunities for workers, which decreases unemployment and government spending on social protection. mployees spend their earnings locally, contributing to the economic growth of business in the local economy.
Encoura esinnovation: any privateenterprises invest in research and development R D to develop ne tec nolo ies ic ill benefit societ and i p o e the standard of living for all.
Encoura esenterpriseculture: Successful private enterprises may encourage other prospective entrepreneurs to set up new enterprises. This creates a positive enterprise culture, which encourages further economic growth.
Provides oodsandservices: rivate enterprise provides consumers with a range of goods and services. The enterprise anticipates consumer demand and decides what goods and services are to be produced and at what prices.
Not-for-profitenterprises
Not-for-profitenterprises aremotivated by social ob ectives.Theyincludecharities,socialenterprises and non-governmentalorganisations Os .
wnership o one pe son o o p o people o ns a not o p ofit o anisation
urpose
ocuses on a particular social cause, e.g. a sports club s purpose is to provide sports services for its members. All the money earned or donated is used in pursuing its ob ectives and meeting operational costs.
fi All money earned through business activities or donations goes back into running the company.
Regulation harities Regulatory Authority also called the harities Regulator , which is responsible for ensuring that all charity organisations are compliant with guidelines outlined in the harities Act 009
anagement sually controlled by a board of members who are elected by members. Anyone who sits on a board does not have ownership of the organisation.
u el n i n e le n t fitente i e
Socialenterprises
A socialenterprise isanenterprisethatputspeople andcommunityaheadofpersonalandprivate gain. Theirmainob ectiveis to tacklesocial,economicand environmentalissues.They work togetherwithdifferent organisationsandbodies forthe goodofsociety.
i e e ent ti e i l ente i eint e e u li el n
ey oints:
Social enterprises trade like any other business, but with a different focus they strive to make the world a better place.
e p io itise a i isin benefits to societ a ead o ene atin p ofit o t e sel es
e a o it o t e p ofits ene ated o social ente p ises a e sed to nd social p o a es across the country
ocial ente p ises obtain t ei finance b sellin oods and se ices to cons e s They differ from charities in that they generate sustainable revenue.
They try to use as many volunteers as possible to keep their wage costs low. They engage with government bodies and prioritise hiring workers on obseeker s Allowance, when needed.
e e is no specific le al co pan o at o a social ente p ise ei constit tions a e o ten based on at t e o i inal o nde s o t e ente p ise decided as t e best fit
Social enterprises can vary in format. They can be a company limited by shares, a company limited by guarantee, or can have charitable status.
Stop Research
id ou now
There are over ,000 social enterprises in Ireland at present, employing ust over of the workforce. A staggering ,000 people volunteer with a broad range of social enterprises.
on governmentalorganisations G s
s strive to change government policiesand to shareinformationwiththe aimofencouragingpeople to improve certainareasinlife.Theyare nda entall non p ofit,co p isin voluntarygroupsthatareorganisedona localornationallevel.
ey oints:
Os are steered by people who share a common interest and goal. They carry out a lot of humanitarian work and strive to represent people who face ine ualities.
ost Os are established using the framework of a company limited by guarantee e plained on page 0 .
e will see these terms again later in this chapter.
Research a social enterprise of your choice why not choose a social enterprise that works in your local area . repare a report to share with your classmates outlining the work they do and including e amples of pro ects they have worked on. Include an evaluation at the end of your report. Does this organisation make valuable contributions, both locally and nationally Support your points with evidence.
amples of Os in Ireland include the ational outh ouncil of Ireland, the ational omen s ouncil of Ireland and the Irish Red ross.
An O must have a emorandum of Association and Articles of Association.
Companieslimited y guarantee C G
A CLG is a type of private company. This form of company is used primarily for nongovernmental organisations that require a legal personality
The key difference between a CLG and other private companies is that there is no share capital in the company. The members are known as guarantors as opposed to shareholders The only requirement of a guarantor is their commitment to pay a nominal amount , usually €1, towards the winding-up of the company.
No profits are distributed to the guarantors/members and it has the authority to apply for charitable exemption from the government.
Stop Colla orate
o plete a place at acti it in o ps o t ee to fi e loo in at t e cont ib tion o not o p ofit ente p ises hen you have completed your placemat, share your findin s it o class ates at social ente p ises and Os are there in your local area ow do they contribute to the community
harities
A charity or charitableorganisation issetup to promote ac a itablep pose tp o idesap blicbenefit benefit to society andcanonlypromote thatparticularcharitable purpose.
ey oints:
there were over 0, 00 registered noto p ofit o anisations in Ireland.
There are over 11, 00 registered charities in Ireland.
In Ireland, all charities must register with the harities Regulator. harities can range in si e from small, local charities run by volunteers to large, national or even international organisations with hundreds of employees.
Schools, universities, hospitals, family resource centres and community centres are all usually registered charities.
There are four main types of charities a , an unincorporated association, a trust or a school. An organisation that wants to register as a charity must pass a charity test It cannot be on the list of e cluded bodies e.g. a political party, a trade union or a chamber of commerce .
Its purpose s must be charitable e.g. to improve education or relieve poverty and all its activities must promote charitable purposes.
t st p o ide a p blic benefit ic s o ld be eco nisable to e e one It must operate in Ireland.
ll c a ities a e not o p ofit b t not all not o p ofit o anisations a e c a ities o e a ple, a not o p ofit to is o anisation is not a c a it as to is is not a c a itable p pose Business
heCharity est
Not an excluded body Charitable purpose only All activities promote charitable purpose
Contribution of not-for-profitenterprises
Provideessentialservices: rovide services that others in the private and public sectors, with purely p ofit oti es, a not, and tac le social o environmental issues.
Provideemploymentopportunities: Offer valuable employment and volunteer opportunities, enabling people to de elop and i p o e a an e o s ills ic can benefit both them and society
Promote sustaina ility: romote sustainable practices and encourage a more sustainable use of the world s scarce resources.
ommunityspirit: Their work helps to create community spirit by encouraging communities to work together and promoting a policy of self-help.
eductioninanti social ehaviour: any provide valuable services to young people and marginalised groups in society The services they provide encourage people to take pride in themselves and their local area, reducing anti-social behaviour
ypes of ownership structure
Stop Research
actors affectin thechoice of le al structure
hen starting a new business, every entrepreneur will have several important decisions to make, including which type of ownership structure to choose. ach business is uni ue, and its structure will depend on what kind of business it is. Some of the criteria that entrepreneurs use when choosing their ownership structure are
ia ility: ow much personal responsibility the owners will have for business debts.
ccess tocapital: ill it be possible to aise finance en needed
ontrol: o c cont ol in ence ill o ne s a e on t e da to da nnin o t e co pan
Ta ation: Sole traders and limited companies have different ta liabilities, so this can have a ma or i pact on t e p ofits inco e t e o ne ill ecei e
ost: A private limited company can be more costly and more legally comple to set up.
E pansion: Some structures make it easier for the company to e pand.
ontinuity: If the entrepreneur wishes the company to continue to e ist after their death they must choose a suitable structure.
orking in pairs, analyse the various types o not o p ofit o anisations ope atin in your local area. an you provide e amples of services they provide or pro ects they have been involved in Entrepreneurial Thin in
efore we move on to look at ownership structures in detail, here is some key terminology which will make it easier to understand the content that follows.
nlimited lia ility
imitedlia ility
Separate legal entity
Continuity of e istence
Companies Registration ffice
ith unlimitedliability, the owners of the business are personally liable for any debts that occur if the business goes bankrupt. This could mean that any personal savings the owners have or property they own may have to be used to pay off any business debts should the business fail.
Limitedliability means the owners only risk losing the money they invested in the business They will not have to sell personal assets to pay business debts.
This means the business e ists independently from its owners. It can be sued and can sue in its own right.
hen the business and its owners are independent of each other, there is continuity of e istence. This means that should the owner s die or retire, the business will continue to e ist. Their shares will pass to another person.
The Companies RegistrationOffice (CRO) is an organisation that stores information on all Irish companies and businesses. It is used to register a company and a company name.
ompany structures
Soletrader
rivate limited company
ranchise Co operative
u licsector organisation artnership
u lic listed company
Abusinessthatis ownedandoperated by oneperson.
o formalities are re uired to register a s letrader business e cept registration of a business name if you are using a name other than your own. Sole traders tend to be small businesses, often with family involvement. They are the most common type of legal business structure in Ireland. A sole trader must register for self-assessed income ta SAIT and also for AT, if their sales e ceed a certain value.
id ou now
As at the beginning of 0 there were over , 00 sole traders registered in Ireland.
Soletrader
ey oints:
ersonal savings can be used, along with loans and grants, to set up the business.
A sole trader has unlimited liability. They have complete control over the business.
A sole trader company will cease to e ist if the person dies, retires or closes down the company there is no continuity of e istence.
enefi f e e
Set up Straightforward, few regulations ust registration , and it is easier and cheaper than other ownership structures.
Control Owner has full control, doesn t need to consult with other shareholders, makes all the decisions.
fi As the sole owner, the sole trader will receive all t e p ofits
Graw acks of soletrader
Risk ecause the owner has unlimited liability they carry all the risks involved with the business if it fails. This could potentially lead to the loss of personal assets.
inance otential shortage of capital and lack o financial e pe tise
Stress A heavy workload and a lot of pressure on the owner aving complete responsibility for all areas of the business can be overwhelming.
rivate limited company company limited y shares
sinesses e iste ed it t e o panies e ist ation fice thatare owned by investorscalledshareholders. oney raisedfromsaleofshares to theseshareholderinvestors is sed to financet eb siness ofits adea edi ided amongshareholdersinthe formofdividends iflossesoccur, shareholdershave theprotectionof limitedliability.
ey oints:
inance can be raised by selling shares.
Shareholders have limited liability
One share one vote
Dividend received is based on the number of shares held.
Ta paid at 1 . corporation ta . o authorised share capital is re uired, so there is no limit on the number of shares that a business can have at any one time. ompany is dissolved through court order or bankruptcy.
rivate limited companies account for appro imately of companies in Ireland.
ot obliged to hold an Annual eneral eeting A .
enefi f i e i i e c nie
Continuity of e istence
ompanies are legally independent of their owners. They can continue to e ist even if a shareholder dies.
Access to capital o panies can aise finance for start-up and e pansion by selling shares to a ma imum of 1 9 shareholders. The initial costs of setting up a business are high, so having this potential access to finance can be e beneficial
imited lia ility
Shareholders have the protection of limited liability This means that they are not personally liable for any losses the company makes and will only risk losing their initial investment should the business risk failure.
a ation rivate limited companies are sub ect to lower ta rates they pay 1 . corporation ta on all t ei p ofits
Stop Research
Read the article below and complete the following ist an fi e p i ate li ited companies mentioned.
hat sectors of the economy are they dominant in Research one of the companies and epo t bac it fi e e facts about it
edco.ie/6gfz
raw acks of private limited companies
ormation Re uirements to have special documents e.g. a emorandum of Association make it time-consuming and comple .
ocumentation A lot of paperwork is needed, e.g. annual audit , annual report , which is time-consuming. aying accountants and auditors to p epa e and file t ese documents is an e tra e pense.
fi ofits st be shared among all the shareholders, depending on the number of shares held by each shareholder
ormation
The rules for setting up and running a private limited company are set out in the ompanies Act 01 . These include rules about ow many shareholders and directors are re uired ow to run an A ow to elect directors, etc.
To form a private limited company you must draw up the following documents
This is a document saying that the company will obey the ompanies Act. It must list the company name, with details of all directors and the company secretary
The company must also draw up a statement of share capital stating that the company is limited by shares and that the liability of its shareholders is limited. All shareholders and the details of their shares must be included.
It will also state which activity the company is being registered to en a e in, e to p o ide financial se ices
n tituti n
A stands for Annual eneral eeting. It is a meeting held once a year that all shareholders in the business can attend. The board of directors will report to all shareholders about the company s performance.
A constitution is a formal document that sets out the name of the company and states that it is a company limited by shares. It will also include any other regulations that the company may wish to include. The constitution replaces the need for a emorandum of Association or Articles of Association under the ompanies Act 01 .
All of the above documents are sent to the RO ompanies e ist ation fice , ic ill iss e a e tificate o nco po ation
This is the birth cert of a private company.
The company becomes a person in the eyes of the law separate legal entity .
The company can sue and be sued in its own name.
The shareholders have limited liability
esi nated activity companies
A designatedactivitycompany DA is a type of private company that was introduced by the ompanies Act 01 , with its provisions coming into effect on 1 une 01 . The structure of a DA is very closely linked to that of a limited company, but with some distinctions.
ey oints:
An Irish company can also put Teoranta or Teo at the end of the company name. This is the Irish word for limited
A DA is appropriate for companies who wish to outline e actly their type of business in their constitution rather than having unlimited powers, as a limited td would have
A TD company can carry out different business activities, but a DA can only operate within its stated ob ectives.
A DA must hold an A
e learned about orm A1 on page .
e n u i ti n
This shows the e ternal rules of a company
The name of the company with td or Teo Teoranta after it
The aims of the company
A statement saying that the company has limited liability
A statement of the authorised share capital
The signatures of each shareholder opposite the number of shares.
ti le i ti n
This shows the internal rules of the company
The name of the company
The share capital e uity
The procedure for calling company meetings the uorum oting procedures
o p ofits a e di ided a on s a e olde s
The procedure for winding up the company.
u liclisted company C
Theseare formedwhenaprivate limitedcompanyor other formof businessseeksa stock e changelistingor uotation.Shares forpublic listedcompaniescanbeboughtandsold by the generalpublic.
Shares can be bought on the stock e change. All publiclistedcompanies have after their name and must have at least seven shareholders. A must start off as a private limited company before applying to the stock e change for a listing also called a uotation . ost Irish s are listed on the Dublin Stock change bigger companies are listed on the ew ork or ondon stock e changes . Shareholders in s have the protection of limited liability s are incorporated in a similar way to private companies and so re uire a emorandum of Association and Articles of Association.
ill ecei e a t adin ce tificate as ell as a ce tificate o inco po ation o t e o panies e ist ation fice t can sell its s a es to the public and or institutions banks, etc. . Some notable public listed companies include rimark, erry roup, Ryanair and lanbia.
enefi f raw acks of Cs
arket access s have the ability to access larger markets due to their increased si e and greater access to capital. This can result in increased sales and p ofitabilit
mage eing listed on the stock e change is seen as prestigious and improves the image of a company.
Cost
Credit rating
Gimited lia ility
Seen as less risky and therefore likely to attract investors. sually have a very good credit rating, making it easier and cheaper to borrow money.
It is e pensive to set up and run a . loating on the stock e change is very costly and the number of documents re uired adds additional costs for the company auditors, solicitors, etc. .
Regulations A lot of laws and regulations are associated with listing on the stock e change. The formation process and the information that has to be published is uite onerous and doesn t allow for privacy.
akeovers s can be vulnerable since they are valued by the stock market potential bidders can see the value of the company.
Individual shareholders are only liable for debts up to the amount that they have invested. They are not personally liable for any additional debts the company may incur fi ofits a e to be s a ed between shareholders.
ey oints:
la e a o nt o finance can be aised b iss in s a es sold on t e stoc e c an e
Shareholders have limited liability.
ofits a e s a ed a on s a e olde s in t e o o a di idend is is based on t e n be o shares held by each shareholder orporation ta is paid at a rate of 1 . .
Stop Research
ook up the ondon Stock change and put together a list of Irish companies that are c entl t adin t e e to find o t t e current value of their shares.
id ou now
Over Irish companies are currently listed on the ew ork Stock change. They include Ryanair oldings and Aer ap oldings.
ranchise
Franchising is a business arrangement whereby a licensed, well-established and reputable business the franchiser rents a complete business idea, including name, logo and products, to someone else the franchisee . This is a sophisticated form of licensing and a growing method of e pansion. amples include ddie Rocket s, cDonald s and agel actory.
A franchiser isthepersonorbusinesswho sells alicence to replicate their system. A franchisee isthepersonorbusinesswho buys alicence to replicate abusiness system.
or the franchiser:
Advantages of franchising isadvantages of franchising
llo srapide pansion: y using the franchisee s capital, the franchiser can establish a large number of outlets in a short time. Rapid e pansion can be achieved without incurring the overheads and costs associated with opening company-owned restaurants, etc.
o capitalinvestment: The capital used to e pand the business comes from franchisees. opular in the current economic climate as a form of e pansion.
o ris : If a franchisee breaks the conditions, their contract can be cancelled and the franchiser will not lose out.
i herreturnoninvestment: ecause there is less capital e plo ed, t e anc ise s p ofits a e generated on a much lower capital investment.
or the franchisee:
Profits: ranchisers receive lo e p ofits t an i t e an the franchise themselves.
ontrol: o day-to-day management of the premises. ontrol is lost over the day-to-day management of the franchise businesses.
eputation: If unsuitable franchisees are selected the reputation of the whole business could be damaged by the actions of one franchisee, e.g. poor uality standards, staff problems.
Advantages of franchising isadvantages of franchising
eco nised randname: Since the franchise has a proven track record it is more likely to succeed. onsumers are always more comfortable purchasing a brand they know, which gives the franchisee an advantage.
Supportandtrainin : The company that owns the franchise will offer support , training and advice throughout the process, e.g. in marketing.
ost savin : e anc isee benefits o economies of scale when purchasing their a ate ials e ill also benefit o an marketing promotional campaigns that the company launches.
id ou now
Profits: anc isees ill ecei e less p ofits than if they owned the outlet themselves. hen taking out a franchise the franchisee will also have to pay an annual royalty to the franchiser.
ontrol: As it is part of a franchise the franchisee will not have complete control over the business. They will be restricted in what changes they can make and will have to follow the guidelines in their contract as to how the business should be run.
The franchise industry in Ireland has created more than ,000 full-time obs. The current annual turnover of franchise businesses in Ireland is worth more than . billion. The most attractive sector to franchisees is the food and drink industry.
Stop Research
atch this interview with Supermac s franchisee iaran Stewart. hy did iaran become a Supermac s franchisee ow many stores does he have hat advantages does iaran give for being a franchisee
edco.ie/kvm4
Co operatives
Co-operatives co-ops arebusinessesthatare democratically ownedand cont olled b t ei e be s t efi s o e s,s pplie so c sto e s e ope ate t eb siness o t albenefitand a e s a ed oals
This is a common type of business structure in Ireland. amples include Tipperary o-op, credit unions, Dublin ood o-op and many more. embers of co-ops have limited liability and work to et e o t e benefit o t e o anisation and its e be s pes o co op incl de
Producer co ops: sually found in the agricultural agribusiness sector e.g. Dairygold . Owned by p od ce s a e s, fis e s , e dai a e s set p a plant to p ocess and a et il and il products. These co-ops help guarantee demand for the farmers produce.
2 or ers co ops: ned and n b o e s in a b siness o p o o e s pool t ei finances and start a business together or buy out an e isting one. They usually come about if the owners eti e o i t e e is so e financial di fic lt in t e co pan and t e o e s a e in a position to b it , e.g. the reat are o-op.
onsumer co ops: Retail businesses owned by their consumers. They are formed when a group of consumers come together and buy goods direct from producers, taking out the middleman, and in turn securing lower prices. oods are then sold in the co-op s retail outlet, e.g. Dublin ood o-op.
4 inancial co ops creditunions: Owned and managed by their savers. They are set up by members who share a common bond, such as where they live. They save and lend within the credit union to their members at a reasonable and fair rate of interest.
Case Study: D i l e ti e
Dairygold o-operative was formed in 1990 with the merger of allyclough o-operative reamery td and itchelstown o-operative, creating Ireland s largest farmer-owned co-operative. rom 000 it began seeking new opportunities and adding value to its products for its shareholder farmers. It established long-term partnerships with international brands and began selling on international markets. milk uotas were abolished in 01 , creating further opportunities for Dairygold to e pand production, and it began investing heavily in research and innovation. Its products are made in stateof-the-art processing facilities where uality assurance, nutritional value and compliance are closely monitored at all stages. Dairygold is part of the Sustainable Dairy Assurance Scheme as well as being an Origin reen ompany. Dairygold has over ,000 shareholder members, employing over 1, 00 people across its divisions It has a retail network of stores across unster that trade under the o-Op Superstores and o-Op Stores brands.
ey oints:
To have limited liability a co-operative must, by law, apply to register with the Registrar of riendly Societies as a co-operative and have a minimum of seven members embers are protected by limited liability embers own and control the co-op a management committee is appointed to run it. o po ation ta is paid at and co ops st s b it an ann al a dit and file ann al et ns
enefi f c e i e raw acks of co operatives
ia ility imited liability members are not responsible for business debts and are only liable for the amount they invested into the company. o personal assets can be used to pay business debts.
a ation
1 . lower than a sole trader would pay .
Gecision making
One member, one vote. reater incentive for members to work, produce, shop or save with the co-op than with other business structures.
Registration an be time-consuming, comple and more e pensive than a sole trader to set up.
Shared fi ofits st be s a ed bet een the members in the form of a dividend.
ack of capital An annual audit and an annual return must be made to the Registrar of riendly Societies. t can be di fic lt to find t e finance needed o s stained o t o e s co ops find it tough to make survival decisions, e.g. wage cuts.
Stop Research
atch this video about Dairygold and answer the following uestions edco.ie/jkqs
hat was the turning point in 01 for Dairygold and its shareholders
ow much has been invested in Dairygold hat arrangement did it make with Ornua in the astlefarm plant
ow much has been invested in the agribusiness and retail sector of the business hat does the decade ahead hold for Dairygold
ow do the shareholders feel about being part of the farmers co-op ame three of the areas that have kept the ourney of Dairygold alive.
u licsectororganisations
Publicsectororganisations are owned,fundedoroperated by the government.
is secto ope ates ac oss a n be o ind st ies and is not d i en b p ofit in t e sa e a as private sector businesses usually are. Instead the public sector provides essential services and infrastructure.
ey oints:
Stop Research
orking in pairs, make a list of the public sector organisations operating in your locality. Then have a class discussion about their importance to your local area.
ublic sector organisations can be set up using special laws and are known as statutory companies , or can be registered with the RO, e.g. I , S , RT .
ach state-owned company is responsible to a particular government department , e.g. us ireann reports to the Department of Transport.
The relevant government minister will also appoint the board of directors to oversee the management of the company.
e o e n ent p o ides t e sta t p finance o t e b siness and a a ee to s bsidise losses should they occur. It sometimes agrees to repay any loans that may be re uired.
ofits t at a e ade a be ein ested in t e state ente p ise o paid o t in di idends to t e o e n ent idelines o ld s est o a te ta p ofits
Any losses occurred means the ta payer is losing money.
ainly involved in transport I , communications RT , energy S , development Industrial Development Agency IDA . Some are commercial .
Stop Research
se this SO infographic to research the following uestions
ow many local authorities are there a e fi e o t e cent al o e n ent depa t ents
The thirty one local authorities, covering city and county councils, are under the instruction of which government department an you list the main categories of central government hat is the purpose of the social security funds sector
enefi f ic ec organisations
raw acks of pu licsector organisations mployment ublic bodies employ almost ,000 people in the country, which helps to reduce unemployment.
Services rovide essential services that private enterprises would find np ofitable, e al b s routes.
ncome The government receives inco e o p ofitable state enterprises, which helps to finance a eas s c as education and health.
oss making Several state-owned companies are loss-making and end up costing the government and ta payers money.
ecision making Decisions are sometimes made by directors with little or no industry e perience who have been given the role for political reasons.
ack of innovation
There is little or no incentive for management to run the co pan as e ficientl as it should be. State companies are often accused of being a waste of ta payers money. This can lead to a lack of innovation.
artnerships
e pa tne s s a e in t e p ofits and losses o t e co pan a tne s ips can eit e be li ited o general and responsibility is shared between members, allowing for increased capital and also ta benefits
Ina partnership twoor morepeople butnot morethan 0,or 0 for financialpa tne s ips formabusiness relationship togetherin o de to a eap ofit
ey oints:
A deedofpartnership is a writtenagreement containingtherulesand conditions for running a businessas a partnership. Itisused to preventfuture disagreements.
ofits a e s a ed e all o as set o t in t e deedofpartnership
All partners have unlimited liability.
artners are likely to have access to larger amounts of capital. The partnership can be terminated if one person dies or becomes bankrupt or if the partners agree to dissolve it or continue with a new partnership.
ormation is simple the partnership must register with the Revenue ommissioners for ta . t is ad isable t at t e pa tne s a e t ei a ee ent in itin in case o con ict
enefi f ne i raw acks of partnerships
Set up asy to set up and run can be set up orally or in writing. oth parties complete a deed o pa tne s ip is confi s that all parties are aware of what would happen in various situations, e.g. if the partners were to disagree on something or if someone wanted to leave. artnerships must register with the Revenue ommissioners.
ecision making Decisions are shared among all partners, reducing the pressure on all parties the combined skillset of the partners gives access to a wider pool of knowledge.
nlimited lia ility
Access to fin nce asier than for a sole trader as it s easier to source and raise finance en t e esponsibilit isn t solely on one person. a e p ofits, d e to co bined skills and talents of the partners. ay also be able to achieve economies of scale.
ecause the business does not have a separate legal entity, all partners are personally liable for any debts or losses, i.e. creditors can sue each of the partners individually for all the money owed. This means that if the business runs into trouble any personal assets the partners own will be at risk of being sei ed.
ecision making If partners have different viewpoints it can lead to con ict n a la e pa tne s ip decision-making can be slower as all partners will need to be consulted. Resolving disagreements can lead to delays and frustration and missed business opportunities.
fi a tne s st s a e t e p ofits e ually This can sometimes be a cause of contention between e be s as it can be di fic lt to value all partners worth and determine whether everyone is contributing e ually.
: orms of
id ou now
hatsApp was founded by two former colleagues and friends who had left ahoo to travel the world. Their inspiration came from the old i hone App Store. hatsApp now has a user base of over billion people worldwide and was ac uired by acebook in 01 for more than 1. billion.
The legal structures of a business can be compared under the headings ormation and dissolution Ownership and control ana e ent and finance ofits and is
Stop Research
se your research skills to come up with a list of successful partnerships.
ormationand dissolution wnershipand control anagement n fin nce
Soletrader asy Register for ta with the Revenue ommissioners usiness dies with the owner eases to e ist if owner retires
artnership asy Register with Revenue ommissioners ay have to register business name
Owned and controlled by the sole trader
rivate limited company ore comple Register with Revenue ommissioners Register with RO usiness continues after death of shareholder s Documents emorandum of Association orm A1 Articles of Association
Owned and controlled by partners Shareholders appoint a board of directors and a hief ecutive fice anaging Director
Decision-making shared among the partners
Owned by shareholders ontrolled by board of directors elected by shareholders one vote per share st file ann al accounts with RO
Decisions made by sole trader Raising e tra finance can be di fic lt it o t partners, etc. se personal savings, loans and ants to finance the business
Decisions made by partners an raise finance b b in in in new partners but this dilutes the partnership
Sole trader keeps all t e p ofits b t pays income ta on earnings nlimited liability
artners share all t e p ofits and pa income ta on their earnings artners have unlimited liability
Decisions made by board of directors with shareholders approval tra e uity finance can be raised by selling shares
In time, can decide to become a public limited company to raise more money on the stock market
ofits s a ed among shareholders according to number of shares held ompany pays corporation ta embers pay income ta on dividends Shareholders benefit o li ited liability
ormationand dissolution wnershipand control anagement n fin nce fi n risk lia ility
Co operative ore comple than other business structures
Register with Revenue ommissioners
Register with RO usiness continues after death of member s
At least seven members re uired
State owned company Set up by law ust be registered with the RO overnment can sell a state enterprise
Owned by members, who are the shareholders ontrolled by management committee elected by members one member, one vote
Decisions made by management committee with members approval t a finance can be raised by bringing in new members, but sums are often small
ofits s a ed e ually between members o-op pays corporation ta . embers pay income ta on dividends e be s benefit from protection of limited liability
The state is the owner or the ma ority shareholder
u lic limited company ust have trading ce tificate inimum of seven shareholders a imum number of shareholders determined by the authorised share capital
ertain level of ministerial responsibility, but day-to-day running done by managers inanced by the e che uer
oard of directors elected by shareholders O and a management team run the company day to day Shareholders vote at A unded by share issue sold on stock e change oan capital
ofits o to t e e che uer in the form of a dividend iability is limited
Dividends paid to shareholders iability is limited
Entrepreneurial Thin in Theme
hy usinesseschange structure overtime
ost businesses start as sole traders. As they grow their level of risk and financial e i e ents can c an e e could change their structure and become co-ops or limited companies. If they continue to grow their legal structure may also have to change to become public limited companies.
easons for chan in le al structure
Raisingfinance: The most common reason for changing structure. Sole traders can raise additional finance b oin into pa tne s ips, ic can t en p o ide t e finance e i ed ole t ade s and partnerships can become private limited companies so t at t e can sell s a es to aise o e finance a p i ate li ited co pan needs o e finance t e can apply to the stock e change or become a . hanging structures will allow them ac uire partners who have capital.
educeris : As a business grows and possible risks increase sole traders and partnerships can become limited liability companies to get the protection of limited liability This is an important acto in att actin finance and enablin a b siness to o
e s ills e pertise: ole t ade s beco e pa tne s ips to s a e t e o load and benefit o t e s ills and e pe tise o ot e pa tne s i ited co panies a also a e t e stat s and finance re uired to hire e perienced managers.
Ta ation: sinesses a c an e st ct e to benefit o lo e ta ates on t ei p ofits o e a ple, a sole trader pays self-assessed income ta at either 0 or 0 , whereas a private limited company will only pay corporation ta at a rate of 1 . .
e ain control: Some businesses, when they turn their business into a limited company or to raise finance, e et t e loss o o ne s ip and cont ol involved. They might buy back the shares they sold and turn the business back into a private limited company.
ar etin : hanging the legal structure from a sole trader or a partnership to a private limited company, or from a private limited company to a , can enhance their image and make advertising, R, etc. easier.
rivatisationand nationalisation
Privatisation occ s ena state o nedfi issold to p i ate ente p ise b eanso as a e otation ne s ipandcont ola et ans e ed o t e o e n ent to p i ate in esto s
The government receives revenue from t e sale o state o ned fi s beca se it is the owner or main shareholder of that company. It may have decided that it is in the best interests of the country to sell all or part of the company to private s a e olde s to aise additional finance State companies or public assets are sold into private ownership, usually by selling shares, e.g. Aer ingus was sold for over 0 million. The company is then owned, financed and ope ated b p i ate in esto s
ample: i co as sold to in esto s on t e stoc a et to aise finance o t e o e n ent and an as sold di ectl to a tc fi
Government revenue
ncreased efficiency
Reduces political interference
pansion capital
enefi f i i i n
The government receives money from the sale, which can be used to fund essential services, reduce ta ation or repay the national debt.
e o e n ent s financial co it ents a e ed ced en np ofitable fi s a e p i atised
Selling a state-owned company can eliminate a monopoly situation, ic leads to inc eased e ficienc , i p o ed se ices and lo e p ices e ne o ne s ill be oti ated b p ofit and ill ationalise and c t costs e e possible to inc ease e ficienc
overnment control, political interference, etc. can result in slow decision-making and poor management , e.g. ircom. The argument is that private entrepreneurs should run businesses, not the government the government should not be both a player and a referee at the same time.
rivatised companies are free to take out loans or sell shares to raise t e finance needed o e pansion t e a e no lon e dependent on t e state o ndin o app o al to aise finance is ill also lead to an increase in wealth for the economy and, in turn, higher employment.
ati nalisati n is the process of transferring the ownership of a privately owned asset or company to the state. Ownership and control are transferred from private investors to the government.
Stop Colla orate
orking with a classmate, try to identify at least three companies in Ireland that have been privatised. rite a short note summarising your research. In eac case, o benefited o t e p i atisation
This usually occurs when the state wishes to gain control of valuable natural resources. In December 010 the Irish government nationalised AI with an initial in ection of . bn into the bank through the national pension ese e nd as t e o t is ban to be nationalised ollo in t e financial crisis of 00 . Anglo Irish ank, Irish ationwide uilding Society and S uilding Society had all been taken over by the government. The government was also a ma or shareholder in ank of Ireland. In 0 1 the government began reducing its stake in AI .
enefi f n i n i i n
u lic interest ey public services such as transport are controlled by the state rather than private investors, whose primary ob ective is p ofitabilit tate o ne s ip enables eate e alit and access to state services and ensures essential services will be p o ided e a dless o p ofitabilit i atised co panies a be unable or unwilling to provide important but potentially lossmaking social services, e.g. railways.
mployment security orkers in state-owned companies have greater employment security mployees pay, pension and working conditions are usually better than in private enterprise.
onopoly power In some industries a small number of companies may control a very large share of the market , which means possible higher prices and consumer e ploitation. State ownership ensures that consumers have greater protection against this.
Government revenue i idends o t e p ofits o state o ned fi s a e sed to nd essential state services. hile there may be a cost in the initial nationalisation, t e o e n ent can benefit o e la p ofits o t e co pan s o ld t e contin e to a e a p ofit
Chapter uestions
Stop Check for nderstanding
1. in what is meant by the term unlimited liability .
2. u ine one advantage and one disadvantage of a sole trader as a type of business organisation.
3. in the documents re uired for a private limited company, limited by shares.
4. lete the missing words in the following sentences.
a The constitution of a DA has two documents the of Association and the A of Association.
b A s -owned e is a business organisation set up and run by the government.
c Any business in Ireland which has its own legal entity will have a c of i , otherwise known as the birth cert of the company.
d A c - is owned and controlled by its members rather than s
e A sole trader has u l
5. O rien s Sandwich af is an Irish e ample of a franchise. us r e your understanding of the term franchise and give one other e ample of a franchise in Ireland.
. olumn 1 is a list of business terms. olumn is a list of e planations for these terms. One e planation has no match. atch the two lists by placing the letter of the correct e planation under the relevant number below.
Column 1: Business Terms
Column 2: Explanations
1. e tificate o Incorporation . A document that outlines the rules and regulations for the management of a company.
2. Articles of Association B. A business owned and operated by a single individual.
3. rivate imited ompany . A document that establishes a company as a legal entity
4. Sole Trader . A type of company that limits the liability of its shareholders.
5. emorandum of Association . A document that outlines the company s ob ectives and powers.
. u ine the advantages of a private limited company by shares. . us r e the different types of co-operatives.
. u ine your understanding of a partnership.
1 . in the term deed of partnership .
evelopin your no led e
1. u ine the different types of private company that can be registered with the RO
2. den i the purpose of a company s Articles of Association. Outline three pieces of information o o ld e pect to find in t is doc ent
3. De i e the stages involved in the formation of a private limited company.
4. e n nt t a social enterprise with an O with regard to their purpose, ownership and p ofit
5. u ine your understanding of the term partnership and give two advantages and two disadvantages of a partnership.
Store t earn t
CompaniesRegistration Office(CRO):
The central body for public incorporation of companies. It registers business names, receives and registers post-incorporation documents, and enforces the ompanies Act in elation to filin obli ations and a in information available to the public.
o operatives: usinesses that are democratically owned and controlled by their members. These members are the fi s o e s, s pplie s o c sto e s t e ope ate t e co op o t al benefit and have shared goals.
eed of partnership: A written agreement containing the rules and conditions for running a business as a partnership. sed to avoid future disagreements.
Designated activity company(DAC): A type of private company introduced by the ompanies Act 01 . It closely resembles the private company limited by shares but with the distinction that its constitution limits it to trading in accordance with its stated ob ectives.
ranchisin : A business arrangement in which a licensed, established and reputable business the franchiser rents a complete business idea, including name, logo and products, to a franchisee.
imitedlia ility: If the company goes bankrupt the most you can lose is the money invested in the business. ou cannot lose private property, such as your house. ou are only responsible for the amount invested in the business.
ationalisation: The process by which private companies become owned and controlled by the government.
Non-governmentalorganisation(NGO):
A voluntary group of individuals or o anisations, o a e not s all a filiated with the government , that is formed to provide services or to support a public policy.
Not-for-profitenterprises: nterprises motivated by social ob ectives. They include charities, social enterprises and Os. Partnerships: A form of business ownership where two or more people or entities but not more than 0 form a business relationship in o de to a e a p ofit
Privatisation: The transfer of ownership, property or business from the government to the private sector. The government ceases to be the owner of the entity or business, which is transferred to private ownership.
Private enterprises: Industries and businesses owned by individuals or commercial companies, not by the o e n ent o an ot e o ficial bod
Private limited company: A business organisation owned by one or more shareholders limited by shares.
Pu licenterprise: A business owned by the government.
Pu liclisted company: ormed when a private limited company or other form of business seeks a stock e change listing or uotation. Shares for public listed companies can be bought and sold freely by the general public.
Pu licsectoror anisations: Organisations that are owned, operated and funded by the government rather than by private-sector individuals or businesses
Socialenterprise: An enterprise that puts people and community ahead of personal and private gain. Their main ob ective is to tackle social and environmental issues. They work together with different organisations and bodies for the good of society.
Soletrader: A business owned and run by one person.
Sustaina ility: The ability of something to be maintained at a certain rate or level. It means avoiding the depletion of natural resources in order to maintain ecological balance. The nited ations defines s stainabilit as meeting the needs of the present without compromising the ability of future generations to meet their own needs .
Unlimitedlia ility: The owners of the business are personally liable for any debts that occur if the business goes bankrupt. This could mean that any personal savings the owners have or property they own may have to be used to pay off any business debts should the business fail.
ChapterChecklist
ic e i e i e n f fi enterprises plain each ample s of each
Distinguish between ownership purpose p ofit e lation ana e ent
Analyse contribution of each both nationally and locally ypes of ownership structure
e able to outline each type under the headings ormation and dissolution
Ownership and control anagement and finance ofits, is and liabilit
Sole trader artnership
rivate limited company
Designated activity company
ublic listed company ranchise
o-operative
ublic sector organisation
Analysewhy companieschange structure overtime
ationalisation vs privatisation
andGovernance
earningoutcomes Strand
At the end of this chapter you should be able to:
2 the purpose of regulation in business and investigate how organisations are regulated both internally and externally
2 4 A what is meant by governance in an organisation.
2 the three factors considered in an ESG report.
Business regulation
A re ulati n isaruleordirectiveimposed by governmentthatcontrolsand governsthe behaviourofbusinessesandorganisations.Itisamechanismdesigned to ensure fairness andsustainability forall stakeholders.
irms should be open and honest in interactions with their sta eh lders Accounts must give a true and fair view. They should be transparent and be open to being audited and monitored by regulatory bodies.
irms should have clear codes of conduct and practice that govern how individuals should be a e is s o ld o pa t o a fi s ris mana ement strategy e ill learn more about ris management in hapter 17.
Policies that outline procedures for dealing with various situations should be developed to a oid con ict, e fi s a a e policies on ec it ent , se o co pan assets o grievance policies.
e o panies ct sets o t clea di ections on t e le al st ct e o fi s t sets o t les and regulations for the appointment of directors, A s and publishing accounts. irms must obey all legislative requirements to ensure they are compliant with the law.
id ou now
There is a difference between business regulation and professional regulation. The Teaching ouncil is an e ample of a professional regulation body. They set down rules for all teachers in Ireland. They ensure that teachers meet certain alifications and ollo a code o p o essional cond ct which upholds the integrity of the teaching profession.
The purpose of these bodies is to ormulate goals standards rules that control fi s be a io is is an essential o o ris mana ement o fi s and o t e o e n ent , minimising potential damage from harmful behaviours. onitor, scrutinise, inspect and audit businesses to ensure they are adhering to the law. nforce and apply rewards sanctions to companies to encourage compliance
id ou now
The word compliance refers to the act of doing something that you are supposed to or told to do. In this case it means following the law around business regulation and governance.
Stop Colla orate
A regulatorybody isa state agencythat has statutorypowers.Thesearepowers granted to theorganisation by law.
u t e llle i l ti e e ui e ent t en u et e e li nt it t el
e ulatory odies
Enactla s to re ulate activities Inspection to ensure compliance ith standards e istration orlicensin to improve services
se the link below to look up some of the state agencies responsible for regulation in Ireland. ork in pairs to prepare a short presentation for your classmates outlining the important work of these bodies.
edco.ie/qa63
hy regulate
usinesses are regulated for a variety of reasons.
inance
Business and Financial Literacy
e o panies ct and o panies e ist ation fice RO have a range of legal rules and regulations around the setting up of companies and how they should be organised and run.
All businesses, households and organisations must pay ta . ow these ta es are charged and paid is regulated by Revenue ommissioners.
Employment
mployment laws set out the rights and responsibilities of both employers and employees.
The ensions Authority regulates a variety of pension schemes including personal retirement savings accounts RSAs . They provide advice and guidance for those who manage and administrate pension schemes
ealthand safety
The ealth and Safety Authority SA regulates and promotes work-related safety. It provides a national accreditation service and regulates the behaviour of all those at work to ensure health, safety and welfare for all. As well as providing advice and guidance to companies on how to ensure safe work practices, it also monitors workplaces to ensure compliance with relevant legislation.
Environmental
The nvironmental rotection Agency A was established with the purpose of protecting, improving and restoring our environment. It does this through regulation, promoting positi e cli ate action and p o idin scientific in o ation It licenses and monitors businesses to ensure they are not harming their local environments. id ou now
In 0 telecoms company ir were investigated and fined , b o e e e e o nd to have had a policy that deliberately prevented customers registering complaints. Read more about it and watch the short video.
edco.ie/7su4
am ip
If you are asked for the purpose of regulation, you are being asked the reasons for regulation.
Stop Colla orate
ave a class discussion on what you have learned so far about business regulation. Do you think it s effective here in Ireland an you identify areas where further regulation is needed
onsumers
egislation such as the onsumer rotection Act 00 and 01 , the Sale of oods and Supply of Services Act 19 0 and the onsumer Rights Act 0 regulate the behaviour of businesses to ensure that consumers are not e ploited.
The ompetition and onsumer rotection ommission is the state agency responsible for enforcing consumer law in Ireland. It provides information and support to consumers and businesses as well as investigating complaints made against retailers.
Theme
ata protection
All organisations collect data about their customers, employees and suppliers. ow they collect and store that data, and what they do with it , is regulated by legislation, e.g. the Data rotection Act 01 and the s D R eneral Data rotection Regulation .
The Data rotection ommissioner is responsible for monitoring and investigating data regulation in Ireland.
Business governance
Governance refers to how anorganisation ismanagedor controlled.
i ital
Trans rmati n
Corporate governance isa systemorprocessthatensures organisationsaremanagedeffectively,withintegrity, fairnessand t anspa enc tidentifies o asa t o it to a edecisionsina fi , ocanactonbe al o t eo anisationand oisacco ntable forhowanorganisationanditspeoplebehave andperform.
ffective governance will enable the board of directors and management team to run the organisation le all , et icall , s stainabl and e ecti el , o t e benefit o all sta e olde s
haracteristics of good governance
lear decision-making processes
Open reporting by organisations on their activities
ngagement with stakeholders
ood risk management processes
igh ethical standards
Sustainable approach and awareness of the organisation s impact on the environment pholds all legal responsibilities to employees.
id ou now
nte rity means to be honest and have strong moral values and principles. Transparency means the uality of being easy to see and perceive. In other words, the company isn t hiding what it is doing.
ll o anisations, e a dless o t ei si e o et e t e a e co e cial o not o p ofit , st a e effective governance. In large companies, responsibility for good governance will be shared between the board of directors and e ecutive management team. Some companies recruit a governance p o essional o is an e pe t in t is field and ill ens e t at t e co pan is eetin all le al re uirements.
Company secretaries are specialists in corporate governance. They work in private enterprise as well as c a ities, p blic and not o p ofit o anisations e co pan is e i ed b la o panies ct 01 to have a company secretary The diagram on the ne t page illustrates a company secretary s sphere of activities.
A companysecretary isapersonorcompanyappointed to overseethecompany s ad inist ationand oactsinacco dance it t edi ecto s inst ctions e specificall ensurethatthecompanyabides by thelawandobserves regulations.
Board committees
ider governance community
Board of directors or trustees
Consultants and advisers
ecutive or management group
Company secretary
Government and regulators
Shareholders or donors nternal teams e g legal risk fin nce
Clients and customers nvestors
Corporate nforcement Authority
This agency, established in 0 , is responsible for ncouraging compliance with company law ublishes information and guidance material and has this information on its website. Investigating suspected breaches of company law It can re uest documentation from any relevant third party and has the power to search and sei e relevant material. It also has the power to make arrests.
Taking appropriate enforcement action in situations of non-compliance.
It can apply to the igh ourt to have company directors dis alified o , in ce tain sit ations, to have the company li uidated.
It can issue warnings and re uire evidence that matters of nonco pliance a e been ectified
It can initiate legal proceedings in the District ourt and refer serious matters to the Director of ublic rosecutions D .
Stop Colla orate
In uly 0 a crisis began in RT with a statement about the under-declaration of presenter Ryan Tubridy s earnings This led to intense scrutiny of the accounts of the public services broadcaster. Resignations followed and a review of governance and culture at RT ensued. The report on this investigation was published in ay 0 . orking with your classmates, research this event.
hat were the main failings in corporate governance at the state broadcaster hat was the plan to rectify this situation and has this been effective
nvironmental socialand governance SG reports
reportingisthedisclosureofinformationaboutbusinessoperationsin relation to environmental,socialand governanceareasofthebusiness.Itprovidesamoreholisticassessment o anente p iset anp el financial epo tin
ompanies must gather data and measure how environmental, social and governance initiatives in their organisation compare with their sustainability goals and targets. The S report can be used by stakeholders to assess company performance and make informed decisions. Stakeholders can use the report to highlight potential opportunities and threats and plan accordingly
Environmental: easures the company takes to minimise any potential negative impact it may have on the environment. It will look at issues such as greenhouse gas emissions, biodiversity, waste management and pollution.
Social: ow the organisation manages relationships with relevant stakeholders employees, customers, suppliers, etc. . Includes issues such as diversity, inclusion, e uality and human rights.
Governance: ow the organisation is controlled and directed. Issues include board of management practices, whistleblower policies, safeguards against bribery, anti-corruption measures, e ecutive bonuses and pay, data management , security and fraud.
ample: he uropean an ing Authority published a oad a on s staina e finance in ece e
id ou now
The orporate Sustainability Reporting Directive SRD came into effect on anuary 0 . member states had 1 months to transpose this into law. It re uires companies, on a phased basis, to publish S reports. y 0 , almost all companies will be re uired to produce and publish an S report.
Chapter uestions
Stop Check for nderstanding
1. in what is meant by regulation.
2. Dis in uis between internal and e ternal regulation.
3. u ine the three factors in an S report.
4. u ine the purpose of business regulation.
5. Regulatory bodies work in a number of key areas. De n t te your understanding of the role of three regulatory bodies. . in what is meant by corporate governance.
evelopin your no led e
1. lu te the role of the orporate nforcement Authority.
2. Di u the role of a company secretary
3. ssess how S reports can impact on how a business conducts its day-to-day activities.
4. Di u how business governance helps a board of directors manage an organisation effectively
5. u ine the characteristics of good governance in an organisation.
Store t earn t
ompanysecretary: A person or company that oversees a business s administration. orporate overnance: The system that ensures that organisations are managed fairly
Environmental, socialand governance(ESG): usinesses may in some cases be e pected to report their performance and progress under these three pillars.
Governance: The act of overseeing, controlling and running an organisation.
e ulation: n o ficial le t at st be followed.
ChapterChecklist
Businessregulation
plainwhat ismeant y regulation
Outline how organisations are regulated plain why organisations are regulated
Governance
plain what is meant by governance
Outline the role of a company secretary
Outline the role of the orporate nforcement Agency
Outline each factor in an S report
hapter ey conomic ndicators
At the end of this chapter you should be able to: A how economic indicators can impact on business development and growth.
2 the value of the business economy in Ireland. earningoutcomes Strand
hat iseconomics
conomists analyse the choices that consumers and businesses make about the items they spend their scarce resources on. The concepts of scarcity and choice are central to economics eople and businesses must make choices because they do not have enough resources to satisfy all their needs and wants. These choices lead to opportunity cost in other words, we lose the item we had to do without .
n econo is a s ste t at t ies to sol e t e p oble c eated b infinite needs and ants and scarce resources. Since resources are limited, decisions must be made about what type of goods and services are produced or provided. ho makes those decisions determines the type of economic system operating in a country
In economics we put all resources into four categories and we call them factors of production.
conomicindicators
An economicindicator isa statisticorpieceofdataorinformationthatmeasuressomeelement ofaneconomy sperformance.Thesemeasurementsor statisticscan tellusiftheeconomyis performing wellorcanbeanindicatorthatcertainelementsintheeconomyareconcerningand re uireintervention.
Stop Research
Take a moment to look up the current statistics for these economic indicators. Take note of these in your notes and remember to note any changes over the course of your studies.
Take note of the economic terms in this chapter to improve your business and financial lite ac
Inflation
Inflation isasustainedincreaseinthe le elo sellin p ices o e aspecified period.It reducesthebuyingpower ofeacheuro.Itismeasured by the onsumer riceInde I .
n ation eas es t e p c asin po e o people s one It is a measure of the cost of living. or e ample, in the early 1990s a packet of Tayto cheese and onion crisps cost around 1 pence or 1 cent. Today the same packet of crisps costs appro imately 1. .
e ent al tatistics fice eas es t e p ice o a e la basket of goods that an average consumer would spend their money on. The SO records the price of these items every month and measures how they change. ach product is given a weight , ic e ects its i po tance in t e bas et o oods o e oods are weighted more heavily than others i.e. given more priority because more of a consumer s income is spent on them e.g. energy . The basket of goods is updated regularly to accurately e ect t e spendin abits o is cons e s
id ou now
The uropean entral ank monitors prices across the euro one area. It likes to maintain price stabilit and eep in ation at appro imately . The eas e o in ation in the euro one is called the armonised Inde of onsumer rices I .
Demandpullinflation occurs when there is an increase in the aggregate demand for goods and services. The demand for the good outweighs the supply of it. This is more likely when the economy is doing well.
Costpushinflation occurs when the cost of producing a good increases and pushes up the price of an item. Increases in electricity, oil and the minimum wage would ca se cost p s in ation
c fin i n
i in ti n
igher cost of raw materials results in i e sellin p ice is fi s become less competitive compared to imported foreign goods . Domestic sales may decrease and obs may be lost.
heaper raw materials may be sourced from abroad. This can have an adverse effect on the balance of payments.
The cost of living will rise and people may e perience a lower standard of living. nions will look for wage inc eases to atc in ation t is occurs without any increase in p od cti it , it a lead to t e in ation and ill inc ease costs o b sinesses
ports become less competitive. Irish products sold in foreign markets may see a decline in e port sales as their prices are more e pensive. This will have a negative impact on the balance of trade. The government may have to increase wages for public sector workers. This will create an opportunity cost and they may have to reduce spending on other services, e.g. transport.
rices and wage increases are kept to a minimum. overnment spending is reduced. rice increases will be minimal, which will have a positive impact on business costs. The cost of running e penses and sourcing raw materials will not increase too much.
Employment
Fullemployment: Allthosewhoare seeking workareemployed at e isting wage rates.Infullemployment,about 9 9 ofthelabour forceisemployed.
Labour force: veryonebetweentheages of1 and whois workingor available for work.Itincludesbothunemployedpeople andthoseinthe workforce.
Unemployment: henpeoplewhoare available for workandofemployableage areoutof work.Theunemploymentrate measuresthepercentageofthelabour forcewhoarecurrentlyunemployed out of work .
Stop Research
o to t e n ation alc lato at t e lin belo , choose different time periods and calculate how the value of money has changed over that time.
edco.ie/xk rc
and Financial Literacy
Stop Colla orate
orking with a classmate, look at the SO s labour force survey at the link below and in the infrographic above and answer the following uestions about employment in Ireland in 0 . at as t e e plo ent pe centa e o t o bot ales and e ales in t e fi st uarter of 0
hat percentage of the 0 age group were in employment during the second uarter of 0
hat age bracket has the highest employment rate
hat sectors of the economy have seen the highest level of employment growth hy do you think this is ow many people were employed in the second uarter of 0 edco.ie/nxq5
t t e ei t o t e financial c isis ecession in 01 , Ireland s unemployment rate was 1 . This period of economic uncertainty and high unemployment brought high levels o e i ation, ed ced o e n ent finances and reduced levels of consumer spending. In contrast, in early 0 Ireland s unemployment rate was appro imately , lower than the average of . This period of full employment resulted in improved o e n ent finances, inc eased cons e spending and less emigration, but it can also result in labour shortages and increased rent and property prices.
u
Business
Theme
Stop Research
The unemployment rate soared during the O ID-19 pandemic. Research the changing rates of unemployment during this time. esent o findin s in a s itable c a t o ap at et ods did the government use to combat unemployment at this time Business
Government fin nce
mpact of changinglevels of employment
High employment means increased ta revenue for the government from a range of ta es including ay As ou arn A , alue-Added Ta AT and ay Related Social Insurance RSI . This can be spent on improving infrastructure and government services.
High unemployment means reduced government revenues from ta and increased government e penditure on social protection.
Low unemployment and increased demand for labour pushes wages up as fi s a e o ced to co pete to att act and etain s illed o e s
emand for goodsand services
High employment results in increased aggregate demand and more money bein spent on oods and se ices is eans inc eased sales and p ofits o fi s, b siness e pansion and t e ob inc eases
High unemployment means a reduction in disposable income for consumers. ons e s a ed ce t ei spendin and fi s a see a dec ease in t ei sales and p ofits
Social enefi costs
High employment may come with a cost to the environment with increased t a fic con estion, noise poll tion and dis ption to t e p sical landscape, all negatively impacting on the environment.
High unemployment rates may result in increased anti-social behaviour and other social problems, e.g. increased crime rates.
nterprise Recruitment
High employment i t a e it di fic lt o fi s to find s itable sta ertain industries may e perience labour shortages.
High unemployment eans fi s a e a ide pool o s illed o e s to recruit from.
Interest rates
nterest isthecost ofborrowingmoney. Theamountofinterest charged by abankor ot e financialinstit tion foraloanistheprice thattheborrowerhas to pay fortheuseofthe money. Interestisalsothe return forsavingmoney. Itis e pressedasa percentageoftheamount borrowedorsaved.
Ireland s interest rates are set by the uropean entral ank because we are part of the euro one. Increasing interest rates will help to contract the economy. It makes borrowing more e pensive and encourages people to save rather than spend. It is a monetary policy mechanism to cont ol in ation and eep p ices stable n t e base inte est ate as set at
mpact of interest rateson usinesses
Consumer spending
High interest rates: consumers are less likely to borrow This means a reduction in demand for goods and services e.g. cars as consumers are less likely to take out personal loans or buy on hire purchase.
Low interest rates: borrowing is cheaper onsumers are more likely to borrow to pay for goods and services houses, cars, holidays, etc. , thereby inc easin sales and p ofits o fi s
Government fin nce i h interest rates and the resulting reduction in consumer spending reduces ta revenue for the government e.g. AT .
L interest rates encourage businesses to e pand, increasing employment. This will increase ta revenue for the government.
pansion
ortgage repayments
i h interest rates increase the cost of borrowing money. As debt capital loans is o e e pensi e, fi s a postpone e pansion plans e a find it di fic lt to so ce potential in esto s, o a opt to in est t ei one in safer options e.g. deposit accounts .
L interest rates reduce the cost of borrowing. As borrowing is cheaper, fi s ill be enco a ed to e pand sin debt capital epa ents on loans and borrowings will be cheaper, meaning business costs are lower.
i h interest rates result in higher rates and repayment for mortgageholders. This reduces disposable income.
L interest rates result in reduced rates and repayments for mortgageholders. This increases disposable income.
Stop Colla orate
isc ss o c an es to in ation, e plo ent and inte est ates o ld i pact b sinesses in o local a ea an o find s itable e a ples
Economic ro thanddevelopment
Economicgrowth isanincreaseingross nationalproduct perheadwithoutany changesinthe structureofsociety.In other words,anincreaseinthe valueof goodsand servicesproducedinaneconomyfromone period to thene t.
Economicdevelopment occurswhenthe standardofliving or perperson ina countryincreases, togetherwithafundamental changeinthe structureofsociety.
Economicgrowth is measured by year-on-year changes in . It is a measure of the total value of goods and services produced by Irish citi ens and businesses, regardless of whether they are located in Ireland or abroad. is different from D gross domestic product . measures the total value of goods and services produced in Ireland. It includes the value of goods and services produced by foreign multinational corporations s . In Ireland, D is higher due to the large number of foreign s in the country. is p obabl t e most widely used economic indicator.
In an open economy like Ireland where s play an important role particularly via e ports , the di e ence bet een and can be si nificant is is d e to t e act t at p ofit o t o s o multinationals can be much higher than income received from abroad by Irish companies.
Therefore, is a better indicator of the level of economic activity in the country, while is a better indicator of the standard of living in the country
conomic activity in all countries changes over time. Times of economic prosperity and times of economic hardship occur in economic cycles. A continuous period of economic growth is described as an economic boom. Ireland e perienced an economic boom during the eltic Tiger years 199 00 . An economy that e periences negative economic growth for two consecutive uarters is said to be in a recession n a ecession de and o oods and se ices alls, b siness p ofits a e lo e and ne plo ent is i e eland e pe ienced a ecession ollo in t e financial c isis o
conomic activity in every country will rise and fall. neconomic oom is when the level of activity in an economy rises rapidly neconomicrecession is when the level of activity in an economy slows down.
Economic oom
This occurs when economic activity is increasing rapidly, e.g. greater than D growth. or e ample, Ireland s D growth in 01 was 1. , whereas in 1999 D growth inc eased b , e ectin t e boo o the eltic Tiger years.
During an economic boom
There is an increase in demand for goods and services roperty prices rise nemployment levels decline.
mpactofeconomicgrowth
i heremployment: Increased demand for goods and services means an increased demand for workers to produce them.
Economicrecession
This is when D growth is negative and falls for two consecutive uarters, i.e. si months. or e ample, Ireland s D growth rate was - . in 00 and further decreased sharply b in , e ectin t e econo ic recession that occurred after the boom of the eltic Tiger years.
During an economic recession
The demand for goods and services falls nemployment levels rise ons e confidence alls
Improved governmentfinances: An increase in spending will mean an increase in indirect ta revenue AT and direct ta revenue A . Spending on social protection should fall. Social rotection provides support to people who are vulnerable and cannot work, or can only work parttime, for various reasons. This includes illness, disability or caring responsibilities.
i her standard of livin : conomic growth will result in higher incomes in the economy, meaning an improvement in standard of living. This may help to alleviate poverty for some citi ens.
Higher business salesandprofits: onsumers will increase spending, which will increase sales and p ofits o b sinesses
Investmentopportunities: conomic growth creates confidence in t e a et is a enco a e entrepreneurs to invest further, particularly in more sustainable and environmentally friendly technologies.
E chan e rates
The exchangerate isthepriceof onecurrencyin termsofanother currency,e.g. 1 1. meansthat oneeurocanpurchaseone Sdollar and cents.Insimple terms,it determineshowmuch yourcurrency is worthinanothercountry. or e ample, at theendof une 0 , the S e changerate was1.0 . Thatmeansoneeurocouldbe e changed for 1.0
change rates can play a very important part when it comes to trading with another country The strength of the e change rate can affect business transactions, tourism and even the prices consumers pay for imported goods. A relatively stable and predictable e change rate makes b siness plannin easie and boosts b siness confidence e st en t o t e e o ill dete ine how much the government pays for imports from outside the euro one. If it falls imported goods will become more e pensive.
mpact of e change rateson usinesses
Cost of e ports
Cost of imports
If the value of the home currency falls against other currencies, e ports will become cheaper for foreign buyers, which could lead to an increase in demand. usinesses may have to recruit more staff.
If the home currency increases in al e, t e fi s p od cts may become more e pensive in foreign markets, which may reduce demand.
A fall in the value of the home currency will make imports more e pensive. This will increase the costs for businesses that rely on foreign goods or raw materials.
If the home currency value increases, imports will be cheaper
Competitiveness
hen the value of a currency falls in a home country this will make the goods it produces cheaper on the global market , potentially increasing co petiti eness n t e ip side, so e b sinesses a find it a lot harder to compete on an international scale because their goods and services have become more e pensive.
Conversion rule
When converting € to a foreign currency you multiply by the exchange rate When converting foreign currency to € you divide by the exchange rate
ample:
A tourist in rance ants 200 e changed to euros on their arrival in rance. If the current rate is 1.05, 200 ill give the tourist 1 0.48 in return foreign currency dollars divided by the e change rate 200 1.05 1 0.48. hen their holiday is over the tourist has 65 left in their allet , hich they ant to change bac to dollars. hen converting to a foreign currency you multiply by the e change rate 65 1.05 68.25.
Consumer confidence
Consumerconfidence isa statistical measureofconsumers feelings aboutcurrentandfutureeconomic conditions.Itisusedasanindicatorof the overall state oftheeconomy.
onsumer mood and spending habits are closely linked. Tracking consumer confidence can i e b sinesses a bette understanding of consumers views and enable them to predict economic trends. A consumer sentiment inde is a statistical measure of how optimistic or pessimistic consumers feel about the state of the econo and abo t t ei finances, and it can
rovide more detailed information for businesses than ust statistics. onsumer surveys can i li t easons o pa tic la t ends o fi es
elp business and governments forecast future economic activity, which in turn helps them to plan. Since 0 the Irish eague of redit nions has partnered with ore Research to produce and publish the Irish onsumer Sentiment Inde . The redit nion Irish onsumer Sentiment Survey is a monthly survey of a nationally representative sample of 1,000 adults.
ample:
In arch 2024 the onsumer entiment Inde stood at 6 .5. here had been a slight drop from the previous month, hich suggested that consumers ere cautious and concerned. Increases in the cost of living and rising fuel costs ere eighing on consumers minds. onsumer entiment Indices from , and across the suggested similar concerns from consumers across these e ions he fi e of s ested cons e confidence as s d ed hen co a ed to the ten year average of 84.6.
Stop Colla orate
orking in pairs, look at the graph of the onsumer Sentiment Inde in Ireland over the period arch 01 to arch 0 . at do o notice t at points as cons e confidence at its highest hy might this have been the case hen were the low points hat was occurring in Ireland at this time
This is the process of analysing data
ons e confidence pla s a e ole in eac o t e econo ic indicato s elo is a s nopsis o o cons e confidence can a it eac indicato
Stop Research
se t e lin to find t e ons e enti ent epo t o a ea o o c oice not c oose a si nificant ea in Ireland s recent past ompare your thoughts with the economists predictions at the time
edco.ie/2h9v
nterest rates
Low inflation consumers have more disposable income and will spend it in the Irish economy.
High inflation consumers are more price-sensitive and likely to shop around for the best prices. This can result in a fall in sales.
High inflation increases the price of goods and services and therefore reduces demand for them.
i h interest rates bo o in is o e e pensi e o fi s and cons e s is p s es p costs and nde ines p ofitabilit
L interest rates mortgage interest repayments are reduced. o o in is c eape o e pansion fi s and p c ases cons e s siness confidence is e oded en t e cost o bo o in is anticipated to become becomes more e pensive.
nemployment
Low unemployment people have more disposable income to spend on discretionary items, e.g. holidays.
High unemployment more people have relatively small incomes to spend, which reduces overall demand.
mployment
a ation
Gchange rates
High employment people have more discretionary income to spend on lu ury items, e.g. new cars, foreign holidays
According to the Society of the Irish otor Industry SI I , new car registrations rose from ,1 1 in arch 0 to , 0 in arch 0 an increase .
VAT increases lead to more e pensive goods and services for the consumer, which causes demand to fall as they don t have the discretionary income to afford these lu uries.
High PAYE income taxes reduce the amount of disposable income available to consumers, which reduces demand.
Low levels of income tax consumers will have more disposable income to spend on goods and services.
An increase in the value of the euro Irish people will have greater spending power when they are holidaying in noneuro one countries.
A decrease in the value of the euro imported goods are more e pensive. eople might buy more Irish goods.
Stop Colla orate
orking with a classmate, read and draft a short summary of this the article at the link belo in elation to cons e confidence in eland as o p il
edco.ie/veat
he usiness economy in reland
All businesses trading in Ireland re uire inputs or resources in order to function. They take these resources things like raw materials, labour, packaging, capital and use them to produce a product or service which they sell to make a p ofit
hen a business is set up it provides n e o s benefits to t e local and national economy. It creates obs for its employees, it buys resources and supplies from other businesses, it
pays ta es, its employees spend their wages in other local businesses. ocal restaurants, ta i services and ot e local b sinesses see an inc ease in t ei sales and p ofits
e e a e di e ent t pes o b siness, and eac b siness can be classified into a di e ent o p o sector. These sectors, or categories, classify producers and service providers based on the goods or services they produce or provide, e.g. education, manufacturing.
Ireland divides producers into the same sectors as all other uropean nion countries. This allows for accurate comparisons across all countries. Dividing the economy into categories allows for a more detailed analysis of individual parts of the economy and how each of these divisions is performing. There are ten sectors
Agriculture
Industry onstruction
i ital Trans rmati n
Distributive trades distribution, transport , hotels and restaurants
Information and communication
inancial and insurance activities
Real estate activities
rofessional, administration and support services
ublic administration, education and health
Arts, entertainment and other services.
Turnover is the value of all sales a company makes. This includes the sale of its own goods services and the sale of merchandise products it has bought from other co panies is fi e ill also incl de t e al e o an duties or ta es e cluding AT that are passed on to the consumer and any other charges such as transport or packaging.
Turnover isthe totalinvoiced by the enterpriseduringthe referenceperiod, andthiscorresponds to market sales of goodsorservicessupplied to third parties.
ample: a e s o s a e s mil and butter and uses these ingredients to ma e and sell ca es. As ell as the cost of production the ba ery ill also incur costs such as electricity, rent and insurance. he difference bet een the ba er s total costs and the revenue they receive for their ca es is their A.
Stop Colla orate
ave a discussion as a class about how digital technology has transformed how businesses operate in Ireland.
A register of all enterprises that are active in the state in each of these divisions is maintained by the ent al tatistics fice e classifies an acti e ente p ise as one that generates turnover, employs staff or makes investment in a year
I E E S S T
612CLOSURES OFFOOD- led businesses since last September’s VAT increase
€1.36MILLION cost to the economy/state per closure
€906MILLION increase in industry’s annual tax receipts during period of VAT9
€8.6BILLION of a Budget surplus
RESTAURANTS, CAFÉSANDPUBS are the heart and soul of the local communities
22JOBS lost per restaurant closure
8THHIGHEST
VAT rate on food hospitality in EU27 currently
270,000 LIVELIHOODS supported by hospitality and tourism sector ONECHANCE to secure a future for our industry
Business in Ireland, a report published by the SO, outlines the key statistics for the Irish business economy. This statistical release analyses the number of enterprises, employment and performance o b sinesses ac oss fi e secto s o t e econo t can p o ide t e detail on o s s all and medium-si ed enterprises impact on the Irish economy, how the different economic sectors are performing and the contribution of foreign-owned businesses to the Irish economy.
Stop Research
ook up the most recent usiness in Ireland publication on the SO website. orking in pairs, analyse the data and answer the following uestions.
hich sectors employed the largest number of people
hich sectors had the largest number of enterprises
hat are the most prevalent sectors in your local area
Research a company in your local area in one of the sectors. Share the results with your classmates.
edco.ie/fa6u
en anal sin t e b siness econo in eland ce tain fi es s o ld be e a ined
Employment: The data can tell us how many people are employed in each sector and the average number of people employed by each active enterprise.
Turnover: The total turnover for the business econo in eland is eas ed is fi e can then be further analysed to see which sectors contributed towards it. or e ample, the services sector would account for appro imately of business turnover in Ireland.
G : e oss al e added fi e can indicate which businesses and sectors are making valuable contributions to the Irish economy. The S sector accounts for appro imately of the total A in Ireland, playing a vital role in our economy.
id ou now
Stop Colla orate
Discuss as a class how businesses, local authorities, the government and other relevant stakeholders would use this information.
In 0 1, the average wage of a person employed in an S was appro imately 0, 00 compared to , for a person in a la e ente p ise o e s in la e const ction fi s ecei ed t e highest annual sectoral wage of 0, . ore than half . of t e a es paid in eland s non financial b siness econo e e paid to employees of the services sector.
Chapter uestions
Stop Check for nderstanding
Q1. is the key economic variables.
2. De i e the four factors of production.
3. in t e te in ation tate t o i pacts o i in ation in eland
4. ssess t e i pact t at in ation can a e on a b siness
5. in two impacts of high unemployment on business.
. at i pact do in ation ates a e on b siness
. in the term economic growth .
. De i e at is eant b t e te cons e confidence
. in the term turnover .
1 . Define the term A .
11. e whether the following statements are true or false.
a nte est ates a e defined as t e cost o bo o ed one e p essed as a pe centa e o t e amount borrowed.
b ow unemployment leads to a decrease in government spending on education.
c ross domestic product is a measure of the value of goods produced within a country.
d ow interest rates will lead to a reduction in mortgage repayments.
e n ation e e s to an inc ease in t e cost o li in o one pe iod to t e ne t
evelopin your no led e
1. De n t te o in ation and inte est ates i pact on b sinesses in eland ppo t o ans e with appropriate e amples.
2. ircle the e t ti n in each of the following statements.
a n ation is t e increase / decrease in the cost of living over a period of time.
b ank interest rates for euro one members are set by the Central Bank of Ireland / European entral Ban
c hen the euro increases in value against the ound Sterling , the price of Irish e ports in the increases / decreases.
d A decrease in A leads to more / less disposable income for an employee.
e An increase in unemployment should lead to more / less revenue for the Irish government.
3. Di u the impact of increasing employment for the Irish economy
4. ssess the impact of the following variables on Irish businesses
a n ation ate b nte est ates c ne plo ent ates
5. De i e t e i po tance o cons e confidence o b siness in eland
. in, using an e ample where appropriate, the impact that employment has on the development of the Irish economy.
. ri e TRUE or F L after each of the following statements.
1. n ation e e s to t e inc ease in t e cost o li in o one ea to t e ne t
2. An increase in the value of the euro against sterling has a positive impact on Irish e ports to the .
3. A decrease in unemployment results in an increase in A revenue for the government.
4. igh interest rates restrain business e pansion.
5. A recession represents a downturn in the economy and an increase in demand.
. in the term interest rates and outline the possible economic impacts of high interest rates for businesses.
. a in the term e change rate .
b De i e two possible risks which e change rates could present for businesses in Ireland.
Store t earn t
Consumer confidence: A statistical measure of consumers feelings about current and future economic conditions. It is used as an indicator of the overall state of the economy.
Deflation: A decrease in the general level of prices in two consecutive uarters.
Economicdevelopment: An increase in the standard of living or per person in a country, accompanied by a fundamental change in the structure of society
Economic ro th: An increase in per head without any changes in the structure of society
Business and Financial Literacy
in Ireland. It includes the value of goods and services produced by foreign multinational corporations s ..
GNP(gross nationalproduct): A measure of the total value of goods and services produced in a country, regardless of whether they are located in Ireland or abroad.
GVA (gross valueadded): A measure that calculates the value that producers have added to the goods and services they bought.
Economicindicator: A statistic piece of data that measures an aspect of an economy s performance.
Economics: A social science which studies human behaviour and how scarce resources a e dist ib ted to satis t e infinite needs and wants of consumers and businesses.
E chan e rate: The price of one currency in terms of another currency ullemployment: hen all those who are seeking work are employed at e isting wage rates.
GDP(gross domesticproduct): easures the total value of goods and services produced
ChapterChecklist
n i n
efine
Outline impact on business of c an in in ation mployment
efine ll e plo ent , labo o ce, unemployment rate
Impact of high unemployment and low unemployment nterest rates
efine
Outline impact on business of changing interest rates
conomicgrowthanddevelopment
efine econo ic o t and econo ic development distinguish between the two D vs
conomic boom vs economic recession enefits o econo ic o t
Inflation: A sustained increase in the level o sellin p ices o e a specified pe iod t reduces the buying power of each euro. easured by the I onsumer rice Inde .
Interest: The cost of borrowing money. It is e pressed as a percentage of the amount borrowed.
a our force: eople between the ages of 1 and who are working or available for work.
Turnover: The totals invoiced by an enterprise during the reference period corresponds to market sales of goods or services supplied to third parties.
Unemployment: hen a person who is available for work and of employable age is out of work. The unemployment rate measures the percentage of the labour force who are currently unemployed out of work .
change rates
n e c nfi ence
plain what is meant by consumer confidence
plain what is meant by Active enterprise
Turnover
A.
plain what is meant by value of the business economy
onsumer Sentiment Inde e plain and outline use for business alue of the usinesseconomyin reland ist the sectors of the economy
Outline the value of Ireland s business economy remember support your theory with statistics
hapter ational olicyand Business
earningoutcomes Strand
At the end of this chapter you should be able to:
4 three Irish government policies that impact on three different sectors of the economy in Ireland.
4 2 A the difference between government policy and legislation.
4 the role played by business in the development of national policy.
Case Study:
The ynch family began producing buffalo cheese in 009 when they imported 1 buffaloes from orthern Italy to their 1 0-acre dairy farm in ounty ork. The prospect of milk uotas being abolished meant that milk prices were set to fall, and this forced the family to re-evaluate. They decided to diversify into buffalo cheese production and employed an organic e pansion strategy to grow the brand. The herd now stands at over 0 on 0 acres.
acroom uffalo heese produces a range of cheeses in its state-of-the-art production facility and farm in est ork. Securing a contract to supply buffalo mo arella to A DI Ireland in 01 transformed the business. Other ma or retailers such as usgrave Super alu and entra , Tesco, Dunnes Stores and arks Spencer uickly followed. Its products are now stocked by all the ma or retailers in Ireland and it also supplies the food service industry and restaurant trade.
Its product range has won numerous food uality awards, including las na h ireann, Awards, reat Taste and Artisan heese awards, recognising the uality of their product and providing the company with a marketing advantage.
It is an Origin reen company. Origin reen is a ord ia sustainability programme o a e s, p od ce s, p ocesso s and etaile s i in een a e s a e ce tified members of the ord ia uality Assurance programme and have participated in farm sustainability assessments as part of their audit. The programme recognises farmers who are improving their practices and becoming more sustainable, and it monitors their progress on food safety, traceability, animal welfare, biodiversity and the use of energy, water, feed and fertili er Over 90 of food and drink e porters in Ireland are Origin reen members.
acroom uffalo continuously looks to the future. Its vision is to become the premium Irish dairy brand of choice. It invested heavily in its production facilities in the last uarter of 0 and moved into yoghurt production. This launched in 0 following successful consumer taste trials. Ice cream and butter are ne t for the company, with both products at trial stages.
Stop Research
atch the short video e plaining sustainable sourcing and the Origin reen programme. an o find ot e i in een e be s
edco.ie/6tzj
ational policy
ublic policy, or national policy, is the way governments, local authorities and other public bodies resolve key issues. The policy may be outlined in a statement or strategy and implemented by laws or re ulati ns funding particular state services e.g. health, education or investing in infrastructure. olicy is directed by the government in power at the time.
Some policy areas stay the same, regardless of political allegiance, such as a policy to reduce road t a fic accidents e oad a et t o it o s to i p o e oad sa et sin ca pai ns to raise awareness, and new laws and regulations imposed by government , e.g. speed limits, penalty points o fines, elp to en o ce oad sa et
Other policies will change depending on the political manifesto of the government in power. nterest groups such as B Irish usiness and mployers onfederation will lobby the government to ensure that the interests of their members will be met in any future policy affecting them.
Nationalpolicy refers to thepolicyoftheIrish government.Itincludesactionsor statementsof guidancewhichareadopted by the governmentandusedasabasis fordecision-making.
Identification
onitorin
A problem or issue is identified by, e.g.: citi ens, civil society e perts, interest groups elected representatives. A decision is made to address it.
Policy monitored for effectiveness by, e.g.: citi ens, civil society e perts, interest groups o ficials, ont line workers can lead to policy revisions.
Implementation
Actions to make the policy work, e.g.: procedures revised agencies created new services introduced.
he olicy Cycle
iscussion
Discussions to identify solutions involving, e.g.: citi ens, civil society e perts, interest groups public consultations parliamentary hearings. ecision A policy solution is adopted, e.g.: government approves new law rules or procedures are amended funding is released.
olicy vs legislation
olicy and le islati n are two terms that are often used interchangeably but in fact have distinct meanings.
Policy isallaboutguidelines,rulesandprinciples established by anorganisation,a government a enc o aninstit tionino de to in enceand determinedecisions.
They are usually developed to tackle a particular problem, to add ess specific c allen es o to ac ie e ce tain oals They assist with decision-making and play a pivotal role in achieving desired outcomes and setting standards. olicy is e ible it can c an e in line it s i ts in societ and e ternal forces. or e ample, a company s policy on employee conduct or a shop s returns policy can easily be changed should the need arise. olicies are not legally binding.
Theme
Business and Financial Literacy
Le islati n refers to theprocessofcreating, debatingandenactinglawswhicharedesigned to regulate differentareasandaspectsofsociety,social, economicorpolitical.Theselawsarecreatedthrough alegislativebodysuchasparliamentorcongress.
egislation establishes a legal framework for governance. ssentiall , t is is at sets t e les t is o e i id t an polic once a la is in place it is di fic lt to amend it. It also affects a much greater part of the population. egislation is legally binding.
et s take a look at some of the biggest differences between the two
egislation
stablishes the legal framework for governance sets out the rules nforceable by government Involves proposal, debate and enactment of laws ore rigid egally binding stablishes binding rules
In summary, legislation establishes the legal structures that govern our society policies provide guidance on how to apply those structures.
olicy
Decides how laws are interpreted and then implemented and put into practice
Includes principles, guidelines or plans by governments, organisations or individuals to achieve a certain ob ective o e e ible ot legally binding ten e ects t e al es and ob ecti es o an organisation rovides guidance and direction
Stop Research
amine a sector of the economy. It could be a sector that you have an interest in or one that is important to your local area. hat pieces of legislation are relevant to that sector hat are the policies that paved the way for that legislation
Business s rolein policy development
IrishBusiness andEmployers Confederation(IBEC)
e e a e a n be o o anisations t at in ence polic development in Ireland I is Ireland s largest lobby and business representative group. It represents the views of Irish businesses and lobbies the government and both national and international policymakers to create policies that maintain a positive climate for business. I members employ over 0 of the private sector workforce in Ireland. I employs appro imately 0 people in si o fices a o nd eland and in its o fice in ssels also as inte national connections in t e and , enablin it to oice t e opinion o is fi s based bot at o e and ab oad
I s policy groups and committees negotiate and communicate with relevant stakeholders government departments, state agencies and key politicians to ensure that the needs of Irish business are prioritised by policy-makers.
I has 9 trade associations across a wide range of sectors including aircraft leasing, childhood services, the dairy industry, biopharmaceuticals, engineering, confectionery, forestry, retail and telecommunications. These trade associations provide ta eted s ppo t and ad ice o fi s in specific ind st ies
It provides advice, support and training for its members across a range of services including human resources, health and safety, and employment law. It organises conferences and events and a range of webinars that provide insights and analysis from industry e perts on issues such as digitalisation and sustainability
Economicand SocialResearchInstitute(ESRI)
The ESRI was founded in 19 0 by Dr T. . hitaker and a group of senior civil servants who saw a need for independent, in-depth research that would support policy-making in Ireland. This continues to be the aim of the SRI today. It provides robust, ob ective evidence that policy-makers can use to produce policy solutions It publishes research on a wide range of areas, gathering e perts from a variety o disciplines o p esent t ei findin s to i eac tas o ittees Researchers from the SRI are also board members and members of advisory committees of national and international organisations s c as t e ent al tatistics fice and t e nte national abo anisation esea c findin s a e p blis ed on its website and in books, ournals and peer-reviewed reports. The SRI is a company limited by guarantee. It is funded by the Department of ublic penditure and Reform from which it receives a grant , research funding from state agencies and membership fees.
Literacy
fi e n e t t eet
Du lin
id ou now
The SRI and the Department of conomics at Trinity ollege Dublin ointly offer an Sc asters of Science in conomic olicy. It took its fi st co o t o st dents in
Stop Colla orate
orking in pairs, visit the SRI s and I s websites. Take note of three new publications or activities they have been involved in recently. hich economic sectors will these impact and how
nterest groups andlo ying
Lobbying iswhenindividuals, groupsandorganisationsput pressureondecision-makers to supportlawsorrulesthat giveanadvantage to their industryororganisation.
Stop Research
Research an interest group of your choice and prepare a short presentation for your class. Include a brief history of the group its functions recent campaigns it has been involved in and evaluation is the organisation effective . Remember evaluations need evidence to support them
An interest group is an organisation that represents the views and ob ectives of a particular group. They seek to in ence decisions and policy affecting their members through negotiation, lobbying, boycotting and even legal action. Interest groups are effective because there is strength in numbers a group has more power, more skills and e pertise at its disposal and, most important , more money and it has a better chance of being heard. amples of interest groups include the Irish armers Association and the icensed intners Association.
Interest groups methods include
o yin the overnment: or e ample, sending a petition to the government or the to pressurise them into doing something, e.g. the Irish ongress of Trade nions I T tries to in ence decision a in in elation to t e ini a e and t e opean nion Social harter
o yin theEU ommissionand commissioners: Special interest groups meet with the commissioners covered in the ne t chapter and make them aware of particular issues they are concerned about.
Settingupan officeinBrussels: Some of the bigger interest groups can set up permanent o fices in ssels to p t p ess e on t e a lia ent and t e o ission, e t e lobbied o t ei o fices in ssels to obtain eate e ibilit on il otas
ational policies
Policy : aste ctionPlan or ircular Economy
Ireland s ational aste Policy
urpose
Ireland s ational aste olicy 0 0 0 provides a roadmap for Ireland to transition to a circular economy in the decade ahead. This policy was introduced under the guidance of the Department of the nvironment , limate and ommunications.
Aims
To halve, by 0 0, the amount of food waste currently being produced.
To maintain the deposit return scheme for plastic bottles and cans that was launched in ebruary 0
To have standardised bin colours across the state green for recycling, brown for organic waste and black for residual waste.
To maintain the ban on single-use plastics which was introduced in uly 0 1. This is a ban on items such as plastic cutlery, plates, stirrers, straws, balloon rods and cotton bud sticks.
To introduce a law that will ensure all packaging will be reusable or recyclable by 0 0.
To introduce a recovery levy to encourage the continuous pattern of recycling.
To work alongside Irish designers and retailers to promote eco-design for clothing and te tiles.
e ational aste olic identifies si a eas t at will be a key focus
Stop Research
Study this RT news item on the Deposit Return Scheme at the link below. Do you think the scheme has been a success or not e able to e plain why.
edco.ie/xb9c
Recycling targets for Waste collectors
Standardised bin colours across the State: Green for Recycling, Black for Residual and Brown for Organic Waste
Waste recovery levy to encourage Recycling
Waste oversight body to manage consumer rights
Education and awareness campaign to improve waste segregation
Stop Research
Investigate the targets of the ational aste olicy at the link below and write a paragraph to summarise them. Share o findin it o class ates
edco.ie/6dmr
ositiveimpactonstakeholders
Achieving the aims of this aste olicy will re uire collaboration between several different stakeholders manufacturers, investors, producers and customers are all critical. It has already had si nificant b in and s ppo t
anufacturers: leading Irish manufacturers committed to a 0 reduction in reenhouse gases emissions and waste production through oining IR IR , the national circular manufacturing platform.
Enterprise pu lic odies: 1, companies and public bodies used the TR online resource e ficienc tool b end
onsumers: Repair yStuff online repair directory connected more than 00 repair businesses with over ,000 users.
onsumers: . million people were reached during a national Stop ood aste at It or ree e It media campaign.
Governmenta encies: 1 local authorities funded 9,000 to carry out community circular economy initiatives.
Producers: ommunity Resources etwork
Ireland supported its members to reuse over 1 ,000 tonnes of materials, saving over 11 ,000 tonnes of carbon.
onsumers: ublic drinking water fonts were installed in two public buildings in Drogheda and Dundalk, ounty outh to reduce consumption of single-use plastic bottles.
Stop Research
Think about the businesses in your local area. ow would this policy impact these businesses ake sure you consider businesses that operate in three different sectors of the economy.
am ip
e learned about the sectors of the economy in hapter
Study: ilt le
iltra ycle is a young business that turns cigarette waste into a sustainable source of plastic. The company aims to recycle 10 of urope s cigarette butts by 0 0 The more they recycle the more butts will be recycled into valuable consumer ite s ia sa t , co o nde and ie ec ti e fice O ,, says, Initially, we thought cigarette butts would be a free resource we could use for manufacturing packing peanuts and maybe make a business out of it. ut when we started digging into the problem, we found out that each cigarette butt poisons 1,000 litres of water. ost people don t know that cigarette butts contain plastic which unravels into micro plastic fib es t at a e been soa ed in nicotine and ta igarette butts are one of the most environmentally devastating forms of waste someone can produce and they re e e e e t beca e e di fic lt o s to oc s on an other idea. iltra ycle aims to produce over , 00 tonnes of high-grade recycled plastic every year This will protect the environment from to ic cigarette waste and will displace thousands of tonnes of plastic, which contains petroleum.
Stop Research
atch this video about recycling cigarette butts at the link below and answer these uestions hat is iltra ycle s aim
ow many cigarette butts end up as litter each year hat do the chemicals in cigarettes poison ho did iltra ycle partner with in 0 hat do iltra ycle recycle the cigarette butts into
edco.ie/x7cn
Policy : hite Paperon Enterprise Policy urpose
Recap
ho are iltra ycle s stakeholders ist them, and in pairs outline how the national waste policy and iltra ycle s response to it will impact each stakeholder. hich stakeholder, in your opinion, should iltra ycle prioritise arry out some stakeholder mapping
Ireland s hite aper on nterprise olicy see link below aims to ensure that the future success of the enterprise economy in Ireland is based on sustainability, innovation and increased productivity The government s vision is for Irish enterprises to have a competitive advantage and deliver rewarding obs. As the world around us continues to change and we move closer to 0 0 Ireland is facing real challenges in digitalisation, decarbonisation and global economic changes and we are at a turning point that could shape our future economy and society This new policy will ultimately protect the core elements that make our economy so attractive for enterprise to thrive, ensuring that we still maintain a competitive environment that will promote small and medium-si ed enterprises S s , their growth and their success.
Aims
To protect our S s so that they have the skills and capabilities to grow in the locally traded and international economies.
To maintain our attractiveness for foreign direct investment DI .
To maintain full employment to 0 0.
To ensure an attractive uality of life in all parts of Ireland with high-productivity, well-paid obs.
To strengthen the Irish-owned e port sector.
o e ip locall t adin b sinesses it t e no o to lfil t ei potential
In order to achieve these aims the government has outlined seven ob ectives
et s take a brief look at what each of these aims involves.
Inte ratin decar onisationandnet ero commitments: mbedding decarbonisation into Ireland s enterprise policy is essential, both environmentally and economically This new policy ill be ai ed at elpin is fi s eet t e costs o deca bonisin t ei co pan and p t t e in a position where they can e ploit the opportunities that will come with being a low-carbon economy.
2 Placin di italtransformation at theheart of enterprisepolicy: The aim is for Ireland to become a digital leader The government will supply grants, training and consultancy to Irish businesses so that they can become advocates for digital transformation. There will be increased investment in digital education along with high-level digital skills across the national workforce.
dvancin Ireland s Iandtrade valueproposition: DI will endeavour to strengthen linkages between foreign and Irisho ned fi s eland ill be s o cased as a co nt t at is climate-friendly and has a sustainable business environment.
4 Stren thenin theIrish o nede portsector: The aim is to enhance productivity, especially among medium-si ed enterprises, by increasing the start-up rate and the number of e porters. nterprise Ireland will aid ambitious Irish companies it t ei ana e ent and leade s ip s ills and capabilities ocal nte p ise fices s will assist smaller potential e porters. The aim is for companies with global potential to thrive in Ireland. or more about nterprise Ireland and Os, see hapter 10.
Ena lin localtradin sectors to thrive: Os will continue to improve their advisory services to elp locall t adin fi s it t ei p od ction le els, di italisation and ca bon e ission e e ill be an increase in the level of training, consultancy and mentoring provided to S s with over 10 and up to 0 employees.
id ou now
nterprise Ireland, the state agency of the Department of nterprise, Trade and mployment responsible for helping Irish companies to enter and e pand in international markets, saw e ports by companies it supports increase by 19 to a record .1 billion in 0 .
edco.ie/qngm
id ou now
Ireland is one of the s strong innovators and has strengthened its position to si th place on the overall uropean Innovation Scorecard in 0 .
Steppin upenterpriseinnovation: ontinuing and promoting innovation will be key in ensuring long-term productivity in Ireland. eing innovative will lead to the creation of more obs, new p od cts and ne fi s e o e n ent ai s to inc ease its esea c and development R D e penditure by up to . of I ross ational Income by 0 0. The aim is to position Ireland as a leader in innovation.
Thin in Theme
I TI
E E S
S eden inland enmar etherlands el ium ST G
I T S
Ireland u em our ustria
Germany yprus rance
EU
Estonia
Slovenia echia
Italy
E TE I T S
E E GI G
Spain Portu al alta atvia
Greece
I T S un ary roatia Slova ia Poland atvia ul aria omania nn ti n e u
uildin on stren thsandopportunities: The government will encourage the formation and strengthening of national cluster organisations to boost regional development. luster organisations will facilitate the collaboration of local companies alongside public sector bodies and higher education institutions to share ideas and potential opportunities for growth in their region. reating clusters will mean no part of the country will be e cluded from the main goal of bringing all companies to a greater level of technology usage and accelerating decarbonisation will be the key aim.
Entrepreneurial
ositiveimpactonstakeholders
The success of any policy re uires commitment and openness from all relevant stakeholders. ithout their buy-in the government will struggle to implement the policy successfully. et s take a look at some of the advantages that the hite aper on nterprise 0 0 0 offers to various stakeholders.
Theme
i ital Trans rmati n
Entrepreneurs usinesses: Innovation and digital transformation. ntrepreneurs and businesses will be given access to additional support and training for adopting new technologies. Additional funding will be made available to bring their technologies up to speed, making them more competitive in a global market Investment in education will lead to a more educated and skilled workforce, which is re uired for innovation and progression.
Employees: ob creation and ob satisfaction. mployees will have opportunities to upskill, making them more employable and adaptable to the changes ahead. ob creation will open up opportunities for employees to move into various sectors such as the growing technology sector or the green industry
Investors: stainabilit and financial s ppo t o a eas such as I T, renewable energy and clean technology Investors will see this as an opportunity to invest in an industry that has strong growth potential. The policy also focuses on sustaining and growing our economy through innovation and a more predictable and stable environment , which will reduce risks associated with an unstable economy.
ocal communities: Supporting different enterprises across all sectors and regions of the country and ensuring economic growth is more evenly distributed. This should lead to more vibrant communities. ob opportunities should increase outside the main urban areas, which will reduce the need for people to leave home to work in the main cities.
The hite aper on nterprise olicy 0 0 0 has been carefully designed to create an inclusive, thriving and sustainable economy that will not only benefit t e sta e olde s entioned abo e b t all aspects and areas of society ith clear goals of promoting and fostering innovation, building resilience and strengthening regional communities, by 0 0 Ireland will hopefully be at the top of the international scale for innovation.
Stop Research
Think about the businesses in your local area. ow would this policy impact these businesses ake sure you consider businesses that operate in three different sectors of the economy.
Policy : ational SocialEnterprise Policy
urpose
Trading for Impact, Ireland s ational Social nterprise olicy 0 0 see link below , aims to nurture and support social enterprises in Ireland, enhancing the social, environmental and economic wellbeing of different communities across the country Social enterprises are businesses with primarily social, community or en i on ental ob ecti es and ose p ofits a e reinvested to further those ob ectives rather than distributed to shareholders. This new policy recognises the value and potential of these organisations and introduces measures to strengthen and nurture them.
edco.ie/qzpf
Aims
To encourage further co-ordination of social enterprise policy across departments.
To take into consideration the important role social enterprises play when shaping and e ecuting policies.
Thereare 4,335
socialenterprisesnationally.
84,382
peopleareemployed by SocialEnterprises, whichis3.7%oftheIrishworkforce.
ofthetotalworkforce ofsocialenterprises. 69% Women represent ofsocialenterprisesemploypeople throughActive LabourMarketProgrammes.
To create a vibrant and diverse social enterprise sector that will contribute to a fair, inclusive and sustainable society
To enhance the growth and scalability of social enterprises and improve their visibility and recognition in society
In order to achieve these aims the government has outlined the following key ob ectives
uildin a areness of social enterprise: A national awareness campaign will bring awareness and attention to social enterprises through roadshows, social media campaigns, video productions and various other R activities.
2 Gro in andsustainin social enterprise: This will be achieved by generating a greater public understanding of social enterprises and their potential through training, education, providing resources, offering access to funding oppo t nities and elpin ente p ises to ana e t ei ope ations e ficientl
Supportin the reentransition: e elopin si plified policies and e lato a e o s and providing access to enterprise networks will help the transition to a greener country.
4 ationalandinternationalen a ement: The government will strive to increase co-operation and commitment between all stakeholders, ensuring that social enterprises are recognised for their cross-cutting environmental, economic and social impact.
Impactmeasurement: Access to better- uality data will help develop the policy and enable stakeholders to e amine the measures needed to achieve the ob ectives.
ositiveimpactonstakeholders
e ational ocial nte p ise olic p o ides a an e o benefits to n e o s sta e olde s o are connected or impacted by the social enterprise sector. These stakeholders include the social enterprises themselves, the communities in which they are based, government bodies, private businesses and wider society. et s take a look at some of the key advantages
Socialenterprises: ey supports include inc eased access to ant aid, financial support and resources, which will enable them to grow and sustain their enterprise. A clearer focus on building recognition and awareness of social enterprise will make it easier to attract customers, partnerships and investors, which will help to increase their market position.
Government: Social enterprise plays a huge part in helping the government achieve its social policy ob ectives, such as reducing ine uality and promoting sustainability in communities. overnments work closely with social enterprises by delivering social services in a more cost-effective manner, incorporating as much local knowledge and skills as possible. Social enterprises tend to have strong links with the communities in which they are based and so can provide the government with valuable information and insights into a community and the resources they re uire.
ommunities: Social enterprises strive to improve the uality of life in marginalised communities, often creating employment and providing opportunities that may not otherwise be available. The events and activities social enterprises run can lead to an improvement in economic, social and environmental conditions, including reduced poverty and a greater sense of social cohesion.
Stop Research
amine the ational Social nterprise olicy in further detail at the link below. ach of the ob ectives outlined above has additional sub-ob ectives, which will deepen your understanding. repare an additional two or three points for each of the ob ectives and add these to your notes.
edco.ie/ze2j
Stop Research
ou have now covered three different policies. se the template on page of your Student Activity ook to research the policy ro ect Ireland 0 0 ou will need to analyse the purpose, the aims and the core ob ectives. Describe to your classmates the advantages for stakeholders and any other information you think is relevant. See the link below.
edco.ie/z5d2
Chapter uestions
Stop Check for nderstanding
1. is fi e secto s cate o ies o t e econo
2. De n t te your understanding of the term national policy .
3. Dis in uis between policy and legislation.
4. De i e the role of two agencies that help the Irish economy.
5. Di u t e ole o in in encin national polic . in how a national policy is formulated. . in the term lobbying . . in the term interest groups .
. u ine the role of interest groups in Ireland.
evelopin your no led e
1. lu te the role of an interest group of your choice.
2. Dis in uis between the roles of I and the SRI in policy development in Ireland.
3. u ine Ireland s ational aste olicy 0 0 0 and the impact it has on three different sectors of the economy in Ireland.
4. u ine Ireland s nterprise olicy 0 0 0 and the impact it has on three different sectors of the economy in Ireland.
5. u ine Ireland s Social nterprise olicy 0 0 and the impact it has on three different sectors of the economy in Ireland.
Store t earn t
ES I: conomic and Social Research Institute.
I E : Irish usiness and mployers onfederation.
Interest roup: An organisation that represents the common viewpoint , ob ectives and goals of a particular group.
e islation: aws or rules enacted by a governing body to regulate social, economic or political activity
o yin : hen individuals, groups or o anisations t to in ence decision makers to support laws or rules that give an advantage to their industry or organisation.
ationalpolicy: overnment policy actions or statements adopted by the government and used as a basis for decision-making.
Policy: uidelines, rules and principles that have been established by an organisation, a government agency or an institution in order to in ence and dete ine decisions
e ulation: uidelines or principles set by an organisation or government.
Sector of economic activity: ategories of producers service providers based on the goods or services they produce offer. The SO publishes a list of sectors in the Irish economy.
plain what is meant by policy
Outline how policy is determined
Outline role of businesses in policy development remember I , SRI
plain three national policies their purpose and impact on business valuate the impact of one policy look at the impact on at least three different sectors
he uropean nion
earningoutcomes Strand
At the end of this chapter you should be able to:
4 4 the key decision-makers in European policy development.
4 S G S between European regulations, directives and opinions.
4 A A the effect of one EU Regulation and one EU Directive on business activity in Ireland.
Case Study:
The EuropeanUnion began life as the uropean oal and Steel ommunity, established in 19 1 by si countries ermany, rance, elgium, the etherlands, Italy and u embourg . It was felt that countries who traded with each other were far less likely to go to war with one another The Treaty of Rome, which was signed in 19 and came into force on 1 anuary 19 , established the uropean conomic ommunity , a common market that allowed for the free movement of goods, people, services and capital between member states, removing barriers such as tariffs and uotas. Over the years many other countries oined, including Ireland in 19 . In 199 , the became the uropean nion .
Over the years many other treaties have been adopted. The aastricht Treaty, signed on 1 ovember 199 , paved the way for the adoption of the euro, which became the legal currency in 1 countries in 00 . Today, 0 countries use this common currency.
The was established to create an economically prosperous, peaceful and politically stable urope, to improve the standard of living and uality of life of its citi ens and to protect common uropean values such as democracy, peace, tolerance and human rights. It operates on the principle of shared sovereignty.
In 01 , the voted to leave the by a narrow margin 1.9 to .1 . This became known as Bre it
Stop Research
ind out some information about the uropean nion and complete the worksheet on page of your Student Activity ook. heck out a brief history of the at the link below. hy not create your own timeline
edco.ie/k kuz
ey decision makers inthe
European ommission
ouncil of the EuropeanUnion
European Parliament
European ommission Role
It is the main e ecutive body of the uropean nion. It is a politically independent e ecutive arm of the It carries out a lot of the day-to-day work of the unctions
It puts forwards proposals for new laws it uses its right of initiative . These laws are then e amined and adopted by the uropean arliament and ouncil of the uropean nion. It is responsible for administration and ensures that provisions of Treaties and Decisions are properly implemented. It has a number of core functions
anages uropean policies e cept for the ommon oreign and Security olicy . anages the budget and ensures countries apply law correctly anages policies and allocates funding. It sets spending priorities together with the ouncil and arliament. Draws up the annual budget for approval by the arliament and ouncil and supervises how money is spent under the watchful eye of the ourt of Auditors . nforces law. Together with the uropean ourt of ustice, it ensures that all laws are properly implemented in all member states.
Represents the internationally It speaks on behalf of all countries in international bodies and negotiates international agreements for the Structure
It is made up of a team or college of commissioners. There are commissioners, one from each member state ach commissioner has a different Directorate eneral D , an area of responsibility such as transport , social affairs, etc. They are supposed to be completely impartial in their dealings with the
Stop Research
ind out the name of Ireland s ommissioner hat portfolio are they responsible for
Chapter
e inin tituti n t e
em ership
One nominee from each member state. urrently there are members. ower
It has investigative powers, and can take legal action against persons, companies or member states t at iolate les t can i pose fines on an b siness o co nt t at in in es la
ouncil of the EuropeanUnion Role
The ouncil of the uropean nion represents the governments of countries and it is the s most powerful decision-making body. It is often referred to as the ouncil of inisters or the ouncil for short. It meets regularly to adopt laws and co-ordinate policies, and it can also document conclusions, resolutions and statements. These are not laws but statements of the s political position. These conclusions can be used to co-ordinate member states actions or invite member states to take action on certain matters.
unctions
It negotiates, agrees and ointly with the uropean arliament adopts laws.
id ou now
Internationalagreementsareused to helpthe achieve its policy ob ectives.Theycan coverabroadrangeofareassuchastrade, fis e ies,t anspo to scienceand tec nolo
The negotiates and concludes international agreements with non- countries and with international organisations, e.g. the orld Trade Organi ation TO or the nited ations . The ouncil signs the agreement on behalf of the and adopts it into law.
Structure
The presidency of the ouncil of the is assigned to a different member state every si months. There are 0 0 council meetings each year and they are held in russels and u embourg.
em ership
The heads of state of the countries eet, as t e opean o ncil, to define the s general political direction and priorities. The ouncil is chaired by a president, who remains in post for 0 months. The ouncil meets appro imately four times a year and is based in russels.
un il e i ent le i el
ational iniste s o eac e be state o e n ent e confi ation o t e co ncil i e o a es p t e co ncil depends on t e topic to be disc ssed o e a ple, i t e topic is a finance iss e, t e finance iniste s o eac e be state ill attend t e eetin
ower
Shared and supervisory power, mainly in con unction with the parliament.
un il eetin
European Parliament
Role
The uropean arliament represents the citi ens of countries. Its members known as sembers of the uropean arliament are directly elected by uropean citi ens in elections that take place e e fi e ea s on t e sa e da ac oss all co nt ies e a e elected to act as atc do s over all aspects of the s activities.
unctions
reparing reports that can be sent to the entire assembly. The uropean arliament takes decisions on uropean laws ointly with the ouncil of the uropean nion.
egislative powers The uropean arliament , together with the ouncil of the uropean nion, is responsible for adopting legislation.
udgetary powers It must, along with the ouncil, agree on the annual budget s oversee the work of institutions, particularly the uropean ommission. It co-operates with national parliaments on uropean affairs.
Structure
i ectl elected b t e citi ens b t as a de oc atic deficit it cannot initiate o pass le islation on its own.
em ership
e e a e c entl s o e be states s a e o ped b political a finit at e t an nationality There are seven different political groupings. art of the work of s is to sit on committees. These committees meet twice a month in russels to debate, for e ample, proposed legislation.
ower
It has shared and supervisory powers. It e ercises democratic supervision over the ommission, approves the nomination of commissioners and has the right to re ect the appointment of commissioners. It also e ercises political supervision over all the institutions. Ireland has 1 s.
Stop Colla orate
it a class ate, atc t e fil abo t t e at t e lin belo Then answer the following uestions
edco.ie/axaz
ow many people does the parliament represent ame the Irish former who presents this video. here is the parliament located and what is its key function hat work takes place in the chamber hich institution is the only one empowered to initiate legislation ame the two categories of uropean laws. hat is the role of the once the ommission has proposed a law ame two key pieces of legislation that have been passed through the arliament. hat other work do s carry out on behalf of their constituents in their own member states ow many countries do s represent
id ou now
e a lia ent as an o fice in Dublin that gives information about being an citi en and about policies and decisions that affect uropean citi ens. Anyone can go and visit ask your teacher to organise a class trip
Stop Research
atch this video. Then write a short paragraph describing what you ve learned and how s work for you.
edco.ie/4qx9
EuropeanCentralBank(ECB) Role
The was established on 1 une 199 to launch the eur and safeguard its value. ore than million uropeans across 0 countries use euros every day.
unctions
aintains price stability, making sure t at in ation e ains lo belo This is important for uropean citi ens to be able to plan their spending and saving. ontributes to the safety of the banking system. Supervises euro area banks so that citi ens savings remain safe and the banks are robust.
Develops and issues euro banknotes and currency
urosystem and payments manages and maintains the electronic system that enables citi ens to pay for items electronically or transfer money digitally ower
Stop Research
efore we learn more about the , watch this short video. hat key terms did you recognise at o ld o li e to find o t o e abo t
edco.ie/4hxd
o can find o t o e abo t t e at t is lin
edco.ie/vp2h
u e n ent l n
or national legislators lawmakers must consult the when proposing new laws that might affect the s task. This power was set out in the founding treaties of the , which means that any such legislation can only be adopted once the has been consulted on it. The presents its advice in the form of an opinion, which is then adopted by the governing council.
opinions are non-binding and are part of the s advisory role. It has, for e ample, adopted opinions on e be states plans to i pose ne le ies on ban p ofits, ic co ld in ence banks capacity to provide credit to businesses and people.
Stop Research
urrently 0 of the member states use the currency as their national currency. an o find o t ic se en co nt ies do not se t e e o to find o t t e a e not pa t o t e e o one t e co nt ies t at se t e e o esent o findin s in an in o ap ic
policies: irectives Regulationsand pinions
o theEUdevelopspolicies
Proposals le islation drafted y European ommission
Proposals discussed in European Parliament and ouncil of theEU
I TE EST G UP I G
edraftin y European ommission
ecisions made y ouncil of EUand Parliament E ISI
Implemented y European ommission ourt of ustice adopts and appliesEU la
u e n ni n
Step : The EuropeanCommission, as the e ecutive body of the , is responsible for proposing le islation t ill fi st assess t e econo ic, social and en i on ental i pact and ei p t e advantages and disadvantages of the different policy options, consulting with e pert groups, industry organisations and the public.
Step : The proposal is then presented to the European Parliament and CounciloftheEU who will review it and propose amendments. The proposal can be accepted, re ected or amended at this stage.
Step : If the three institutions cannot agree on a proposal, amendments may be considered and the proposal may be redrafted by the mmissi n A second reading will take place. The arliament and Council can propose further amendments. The arliament can also block the proposal at this stage if it cannot agree with the Council.
Step : If the arliament and the Council agree on the amendments, the proposal can be adopted t e cannot a ee, a conciliation co ittee is set p to t to find a sol tion ot t e arliament and the Council can bloc t e p oposal d in t is final second eadin sta e
Step : Once legislation is accepted by the Council of the uropean nion and arliament, it is adopted into law. It is the mmissi n s responsibility to ensure the law is implemented.
Step : Decisions legislation can be ad udicated upon by the Court of Justice The ourt of ustice interprets law to make sure it is applied in the same way in all countries.
o can find a se l in o ap ic on t is p ocess at t is lin
edco.ie/r vq5
irectives Regulations pinionsand ecisions
ame planation amples
irective A legal instrument that implements and enforces law in member states. It obliges member states to change their national laws, to allow for rules, within a time limit deadline. ach country must achieve the goal of the Directive, but they can choose how to do so.
sed to bring national laws in line with each other ommon in matters affecting the single market
Regulation A legislative act that is immediately enforceable as law in all member states simultaneously
institutions can enforce a regulation throughout the They take precedence over national laws. They are self-e ecuting and do not re uire any implementing measures.
pinion on-binding acts that pass udgement on an issue, along with actions that can be taken on certain issues, without imposing a mandatory legal framework.
sually given to member states or en add essin a e specific situation.
These Opinions are different from those of the , which offers its opinion as part of the legislative process.
ecision an be given to individuals, businesses and member states.
Decisions can be made by the ouncil of the uropean nion and the uropean ommission.
Decisions are binding and are often used for rulings on proposed business mergers.
Directive on pre-packaged goods 00
orking Time Directive 00
D R Regulation 01 light ompensation Regulation 00
n , t e et e lands notified the ommission of a draft decree amending the edical Devices Directive. It sought to ban the se o pe anent de al fille s because it considered that the risks outweighed the aesthetic benefits te cons ltation, t e ommission issued an Opinion supporting the etherlands authorities intention to ban the fille s
In 00 the ommission ruled that icrosoft must supply data to rival companies to allow them to compete with icrosoft s indows operating system.
In 01 the ommission decided that Apple owed Ireland more than 1 billion in back ta es. This is an ongoing case between Apple, the Irish government and the and is due to be heard again by the uropean ourt of ustice.
Stop Research
sin t e inte net, find at least one e ample of a Directive, a Regulation, a Decision and an Opinion. ake a note of these as you will need them for the ne t collaborative activity
Stop Colla orate
orking in pairs or small groups, take the e ui at the link below. ow much have you learned while studying this chapter
edco.ie/y9n2
valuatetheeffect of one Regulation on usiness
activity
ame 00 Organisation of orking Time
Theme
Ethics and Sustainability
urpose Sets out minimum safety and health re uirements for the organisation of workers working time. These cover minimum period of daily and weekly rest , annual leave, breaks and ma imum weekly working time. Aspects of shift and night work are also covered.
ligations EU countries must ensure that all employees are entitled to:
A minimum daily rest period of 11 consecutive hours in every
A rest break in any working day longer than hours
An uninterrupted -hour rest period every days, in addition to the daily 11 hours
At least weeks paid annual leave
A ma imum average working week of hours, including overtime, over days.
ormal night work should be no more than hours on average in any -hour period.
ight workers are entitled to free health checks at regular intervals.
National authorities may:
se reference periods, ranging from 1 days to months, to calculate weekly rest periods and ma imum weekly working time
empt managing e ecutives, other senior decision-makers, family workers and eli io s o ficials o t e le islation
n reland Organisation of orking Time Act 199
ositive impact an e o benefits to e plo ees la ed a si nificant ole in est ictin o in time and guaranteeing rest breaks for employees, which protects their health and safety. rovided clarity on the right to work no more than hours in a week.
egative impact
mployers feel it doesn t take into account trading at busy periods of the year, such as ist as t as also a ed t at people it a specific s illset a be needed for more than hours a week and it would be detrimental to certain industries. It is argued that it may send a number of workers into the black economy as the rates of pay in some sectors wouldn t pay employees enough to work ust hours.
valuation It is a technical, perhaps outdated, piece of legislation that both employers and le al p actitione s can find di fic lt to na i ate t does not e ect t e c an es in t e t aditional o place since it as enacted in e e al ind st ies find it inappropriate for the world we live in today.
valuatetheeffect of one Regulation on usiness activity
ame 0 19 Digital arkets Act D A
urpose
To make the markets in the digital sector fairer and more contestable. The D A establis ed a set o clea l defined ob ectives in order to identify gatekeepers large digital platforms that provide core services to companies, e.g. online search engines, app stores, messenger services. nder law these gatekeepers must comply with the obligations and prohibitions listed in the D A.
ligations
Gatekeepers must:
Allow their business users access to any data generated from using their platform this could be in relation to customer transactions and behaviour which would allow a business to improve their offerings
rovide advertisers and publishers detailed pricing and performance information on their advertising services
rovide fair, nondiscriminatory and reasonable access to the infrastructure of the platform, e.g. search engines, app stores, social networks, for all business users
Allow users the opportunity to access third-party app stores and install apps from sources other than the gatekeeper s store. This is done to promote competition ot favour their own products or services above their competitors on their platform ive business users the option to uninstall any pre-e isting software on the gatekeeper s platform
Allow businesses to transfer their data from one platform to another e transparent in how they hold personal data, especially with digital advertising
Gatekeepers will no longer be able to:
avour their own products and services over their competitors . They will not be able to rank themselves higher on their platform
revent users from uninstalling any pre-installed software or app ombine personal data collected from different services without the knowledge and consent of their users
revent consumers matching up with businesses outside their platform
nsure that the digital assistant if they offer one on their search engine favour their products or that of a chosen third party in an unfair manner.
n reland Digital arkets Act D A
ositive impact It has enhanced competition large, dominant gatekeepers cannot give preferential treatment to their own products and services.
ives tech start-up companies and innovators opportunities to compete in the online platform space.
etter consumer choice as they can switch providers, are not tied down to certain apps and platforms and can uninstall any software they don t want.
usinesses, especially S s non-discriminatory access to a digital platform can increase customer reach and allow them to compete on a larger scale.
onsumers and businesses have the right to access how their data is being used and can make more informed choices.
egative impact
valuation
atekeepers costs will increase due to implementing the transparency measures and having to ad ust their business practices. They may pass these costs on to consumers.
onsumer e perience may change.
usiness models for certain gatekeepers might need to be changed some innovative services may no longer be viable, impacting innovation in the market
The D A primarily targets non- tech giants, so it could lead to tension with the home countries of these businesses, affecting international trade relations and even complicating the governance of the global digital market
The D A has set a precedent on the digital economy, the dominance of the large multinational tech companies and how they are regulated. The D A allows for a more competitive, consumer-friendly and innovative market. It has the potential to reshape the digital landscape in urope and beyond. The success of this Regulation will largely be dependent on how it is implemented, how it is enforced and the ability of these companies to adapt to the ever-changing digital landscape.
hile it does offer se e al benefits, e.g. promoting fair competition, there are also potential problems for international trade and international relations. These negative impacts will need to be carefully managed. If it is successful the could set a new standard for how digital technology is regulated on a global scale. Overall the D A is aiming to create a more e ual and competitive digital market that businesses, consumers and t e econo as a ole ill benefit o
Stop Colla orate
orking in small groups or with a partner, choose one Regulation and one Directive that you found from the previous Stop Research Activity omplete a table, similar to the e amples above, completing all elements. If you cannot agree on which to choose, e e a e t o ot e s ic o i t find o inte est Regulation 0 1 Roaming on obile ommunications etworks within the Directive 019 eographical Origin of Spirit Drinks or Directive 00 9 aste lectrical and lectric uipment
ook at the charts and images available on the link below, which clearly outline e actly what this Regulation means for both consumers and businesses.
edco.ie/5qce
Chapter uestions
Stop Check for nderstanding
1. in the role of the uropean ommission.
2. u ine the key functions of the uropean arliament.
3. us r e your understanding of the role of the ouncil of the uropean nion.
4. is the key aims of the uropean nion.
5. e the founding treaty of the uropean nion.
. e two countries other than Ireland that use the euro as their national currency
evelopin your no led e
1. den i the key decision-makers in the development of uropean policies.
2. Dis in uis between the ouncil of the uropean nion and the uropean ouncil.
3. n u t a research study on Ireland s uropean ommissioner rite a brief outline of their role.
4. u ti Ireland s membership of the uropean nion.
5. lu te the role of the uropean entral ank.
. De n t te an understanding of the role of the uropean ourt of ustice.
. De i e the legislative process in the uropean nion.
. Dis in uis between a Directive and a Regulation as forms of law in member states.
. in your knowledge of both Opinions and Decisions, e plain the key difference between the two.
1 . in the decision making process within the Outline the role played by each institution as part of this process.
11. ri e True or False after each of the following statements.
tatement True r False
1. s are directly elected by citi ens.
. A Regulation is a law applicable to all member states with immediate effect.
. The uropean ommission is the main decision-making body of the .
Store t earn t
re it: The s departure from the uropean nion. The word combines ritain and e it .
Decision(EU): A conclusion or resolution reached by either the ouncil of the uropean nion or the uropean ommission. Decisions are binding.
Directive(EU): A legal instrument to implement and enforce law in member states. It obliges member states to change their national laws to allow for rules within a time limit deadline. Its aims are binding but each member state decides how to implement it.
Euro: The monetary unit and currency of the , represented by the symbol . The euro replaced the national currencies of participating states and some nonstates.
Business and Financial Literacy Theme
Policy: A course of action in the form of a law, regulation or procedure adopted or proposed by an organisation, government or institution.
Price sta ility: A situation where prices remain steady and stable over time. rices do not inc ease in ation o dec ease de ation over an e tended period. If a basket of goods costs roughly the same amount in one year s time as it does now, we have price stability
Regulation(EU): A legislative act of the which becomes immediately enforceable as law in all member states simultaneously. institutions can enforce a regulation throughout the . These take precedence over national laws, are self-e ecuting and do not re uire any implementing measures.
EuropeanUnion: An international trading bloc and political alliance of uropean nations that aims to promote closer economic, political and social co-operation between its members.
Opinion(EU): A non-binding act that the uses to pass udgement on an issue, along with possible actions that can be taken, without imposing a mandatory legal framework.
ChapterChecklist
institutions
Treaty (EU): A binding agreement approved voluntarily and democratically by all member countries. It sets out ob ectives, rules for institutions, how decisions are made and the relationship between the and its member countries.
Soverei nty: The power or authority a state has to govern rule itself or another state
Analyse each institution under their role, functions, structure, membership and powers
uropean ommission
ouncil of the uropean nion
uropean arliament
uropean entral ank policies
e able to e plain each policy type and give an e ample of each plain decision-making process in the outline stages of policy development and role of institutions at each stage
Directives
Regulations
Opinions
mpact of policyon usiness
valuate the impact of one Regulation and one Directive on business activity urpose of the Regulation Directive ositive and negative impact on different stakeholders Does it foster ethical and sustainable business practice and or use of technology
nternational Business
earningoutcomes Strand
At the end of this chapter you should be able to:
A what is meant by a trading bloc and discuss why these are important for businesses in the Irish economy.
2 the trading blocs most relevant for Irish businesses.
A A Ireland’s membership of the EU from the perspective of the economy, businesses and consumers.
4 the factors to be considered when trading internationally
A why Irish businesses trade globally, with reference to Ireland’s open economy, and compare the challenges and benefits of trading in an international environment.
S G S between balance of payments and balance of trade and calculate both based on figures given.
Case Study: u
R was founded in 19 0 with the merger of two public Irish companies, ement imited which had been established in 19 and Roadstone imited established in 19 9 . They were, respectively, the sole producer of cement and principal producer of aggregates, concrete products and asphalt in Ireland. Ireland oining the now in 19 allowed R to e pand into urope. In 19 it e panded into the S by ac uiring Amcor, a concrete products company based in tah. Despite a global recession, R continued to grow during the 19 0s with sales reaching the e uivalent of 1. bn by the end of the decade. The 1990s saw rapid e pansion for the group as they entered new markets, including astern urope, and increased their market share in the SA. The company continued to pursue an inorganic e pansion strategy a fast e pansion process primarily using takeovers and ac uisitions and oined the TS 100 the ondon Stock change in 010 The company now has operations in countries and employs appro imately 0,000 people across the globe. They are the leading building materials business in the world. The company continues to evolve to meet the dynamic needs of its customers with a solution-focused strategy and a desire to make construction uicker, cleaner, cheaper and more sustainable. The company has a geographical organisation structure with two divisions, R Americas and R urope. It is a ortune 00 company and is listed on both the ondon and ew ork stock e changes. R is focused on building a more sustainable future. As part of its sustainability strategy it has set targets on how it can contribute towards the s Sustainable Development oals SD s . or e ample, R is committed to making the company a diverse and inclusive workplace SD , ender uality and it provides water infrastructure to enable access to clean water and i p o e ood de ences , lean ate and anitation Ethics and
Theme
Stop Research
atch the R story Our urpose at the link below. hat values do you think R stands for Is this evident in its operations hat is its share price toda o as it ct ated o e t e past fi e ea s ow does this affect its shareholders
edco.ie/jtnb
rading locs
Business and Financial Literacy Theme
nternati naltrade isthe e changeof goodsandservicesbetweencountries, bothimporting purchasing goodsfrom foreigncountries and e porting selling Irish indigenous goods to foreigncountries .
any countries engage in free trade, which means buying and selling goods without any restrictions or barriers such as tari s or quotas t can be a co ple and di fic lt p ocess o enco a e ee t ade, countries form trading blocs.
A tradingbloc isagroupofcountriesthatagree to remove barriers to tradebetweeneach other to formonefreetradingarea.Theyagree to tradeamongthemselveswithouttariffsor uotasbut to have commontradebarrierswithnon-members.
amples of trading blocs are the , T omprehensive and rogressive Agreement for Transacific a tne s ip , RCEP Regional omprehensive conomic artnership and Af TA African ontinental ree Trade Area .
o nt ies it in a t adin bloc a e t e benefit o ee t ade it all t e ot e co nt ies in t e bloc This means that goods are cheaper, and countries in the bloc can form strong relationships and political alliances. There are, however, some challenges to trading blocs. ountries can usually be part of only one trading bloc. To trade with a country within the bloc, a country must form a trade agreement with the bloc as a whole and importing and e porting with countries outside the bloc is generally more e pensive.
id ou now
The orld Trade Organi ation TO was established in 199 . It is an international organisation that promotes free trade. It negotiates trade rules, monitors trade agreements and helps settle trade disputes between countries.
Stop Research
o to t e s ebsite at t e lin belo and find out more about the TO, what it does and how it promotes trade between nations. repare a short report presentation to summarise your research.
edco.ie/k yap
EUtradin loc
The promotes free trade between member states through its uropean single market policy, created in 199 . This has eliminated barriers to trade between e be states, elpin is fi s as e be s to beco e o e co petiti e on foreign markets.
ree movement of capital: irms can move capital from one country to another. Individuals can invest in shares in companies throughout urope.
ree movement of people: uropean citi ens are allowed to move freely between member states, which means there is a supply of labour coming into and going out of Ireland. This can lead to competition for local obs by non-Irish nationals or a scarcity of skilled staff in Ireland when Irish people move to other countries.
ar er mar ets: This can result in greater production runs, resulting in economiesofscale and possible reduction of costs. Open borders allow fi s to e pand, c eatin o e obs
ommone ternal tariffs: The has a common system of barriers on goods imported from outside t e is eans is fi s a e p otected to so e degree.
Pu licprocurement: o e n ents a e e i ed to p t p blic cont acts p o tende o fi s t o o t t e is can es lt in t e loss o la e cont acts o is fi s
Simplified documentation: The introduction of a single administrative document has eliminated a ast n be o ad inist ati e o s and as lo e ed ad inist ation costs o fi s
Regional Comprehensive Economic Partnership(RCEP)
is a ee t ade a ee ent bet een t e ten e be states o t e Association of Southeast Asian ations AS A runei, ambodia, Indonesia, aos, alaysia, yanmar, the hilippines, Singapore, Thailand, ietnam and si other countries with which it has free trade agreements Australia, hina, apan, India, ew ealand and South orea. The agreement covers areas such as trade in goods and services, investment , economic and technical co-operation, intellectual property, competition, e-commerce and S s. It took effect in anuary 0 .
ComprehensiveandProgressiveAgreement for Trans-Pacific Partnership(CPTPP)
The T is a free trade agreement between twelve countries that allow them to buy and sell goods more easily anada, apan, Australia, e ico and, more recently, the oined in 0 are all members of the T The countries involved make up 1 of the world s economy appro 1 t illion it t is a ee ent , it a es it easie o t ese co nt ies to t ade, benefitin b sinesses and consumers whilst promoting fair rules at the same time. ey features include
educin ta esontrade countries who are part of the T will pay fewer ta es when they import and e port goods.
2 Encoura in usiness ro th companies are in a position to trade more easily, leading to strong economies and an increase in employment.
Protectin or ersandtheenvironment this agreement includes rules to ensure workers receive fair wages, appropriate working conditions and environmental protection.
Stop Colla orate
Thin on your own for a moment about t e benefits o bein an e be o do o benefit o does eland benefit Turn to a partner and discuss these uestions. hare your answer with the class. hy not create a mind map of your class answers
enefi f E
e e i
am ip
In the e am you may be asked to evaluate Ireland s membership of the . This means you must give a udgement an opinion and support that udgement with evidence.
or usinesses
Single market enables free movement of goods, services, labour and capital between member states, leading to more competitive prices, larger pool of workers, more competitively priced raw materials.
nder A the ommon
Agricultural olicy , farmers are paid appropriate prices for their produce, giving them a higher standard of living. etween 19 and 00 , Irish farmers received bn from A .
The s environmental directives and promotion of renewable energy sees businesses in Ireland as strategically positioned to benefit o ind and a e po e instead o ossil els, elpin sustainable development and climate change mitigation.
arger market over 00 million people enables economies of scale, which inc ease fi s sales and p ofits
ess bureaucracy, lower administration costs.
or consumers Infrastructure International trade re uires good transport and communication. e elopin ode n oads, co nication lin s, b oadband, etc also benefits consumers.
etter uality assurance legislation on safety standards.
obile p one oa in c a es ed ced si nificantl o cons e s t a ellin across urope. reater choice of goods and services, more competitively priced. is ide c oice o cons e s also p ts p ess e on do estic fi s to ens e their products match or e ceed the uality of imports.
or the economy
Structural funds over 1 bn from the uropean Regional Development und and the uropean ohesion und, helping improve roads and public transport and infrastructure.
The Irish economy is more attractive for foreign direct investment DI , creating employment opportunities. The value of DI in Ireland is over 0bn today.
The single currency, along with relative price stability, gave an incentive for foreign investors to locate in Ireland. The euro has made life easier for Irish businesses and travellers trading in or visiting the euro one.
nternationaltrade
actors to e considered hentradin internationally
A business that trades internationally must take a number of factors into account ariffs
Tariffs are ta es on the value price of imported goods. This makes them more e pensive and therefore less competitive on the domestic market.
trading rules mean that Ireland cannot impose tariffs on imported goods produced in other countries.
ample: Ireland can put a tariff on lamb coming from e ealand, but not on chocolate from elgium.
uotas
m argo
A uota is a physical restriction limit on the number of units of a good that may be imported e ported. They discourage imports and or encourage sales of domestically produced goods. Setting uotas reduces the level of competition and is usually done on an annual basis.
amples: he government may put a uota on the amount of bananas that can be imported from non member states. he may place a uota on the uantity of clothes that can be imported from hina into the
An embargo is a ban preventing the importation or e port of specified oods
This is done to protect domestic industries or to punish another nation. It is also done for health and safety reasons.
ample: he government may place a blan et embargo on the import of beef because of high levels of in the .
Su sidies
A subsidy is money paid by a governments to help fi s co e t ei ope atin costs and eep t ei p ices competitive.
It can be in the form of grants or low-interest loans. t is paid to indi eno s fi s to elp t e co pete a ainst imported competition.
ample: he has in the past subsidised agriculture to protect farmers from competition.
Costs
Rulesandregulations
ompanies that trade internationally need additional resources to facilitate orders from international customers, international payments and transport to foreign countries.
This means increased costs for the business to cover capital e penses e.g. new technology and current e penditure currency e change costs, I T system maintenance and increased shipping costs .
adin loball can inc ease sales o a fi nc eased sales ill re uire increased production, leading to economies of scale.
overnments can restrict international trade by setting rules and re ulati ns on importing or e porting goods.
This can be for health, safety or environmental reasons. It can lead to a reduction in the amount of goods being imported.
changerates
Competition
change rate volatility affects trade both directly and indirectly. The strength of a foreign currency at a particular time can dictate the strength and weakness of imports and e ports. change rates directly affect the cost of goods and services in international trade and can have a substantial impact on a co pan s e en e and p ofit a ins
nte national t ade eans t at is fi s need to be able to co pete with and non- countries. ompanies should look at adopting total uality management T standards and strive for International Organi ation for Standardi ation ISO standards.
ompanies need to produce top- uality products and provide an aftercare service that meets the needs of their consumers.
ompanies should strive for innovation, be market leaders in their c osen field, al a s be one step a ead o t ei i als and ai o international recognition.
anguage culture
ot understanding the local culture can lead to mis-communication and misunderstandings between stakeholders. ompanies must be willing to ad ust their strategies and a etin ca pai ns, and to be e ible in t ei app oac to all aspects of the business when dealing with a different culture or language.
usinesses should look to ac uire as much knowledge of the chosen country as possible. This can be achieved by fostering cultural intelligence, making the most of local resources, using a reputable translation service and building strong relationships with the country.
hy rish usinessestradeglo
aturalresources: e st i po t essential a ate ials and finis ed oods t at e don t have or make in this country, e.g. oil, machinery, cars.
limate: Our climate is not suitable for growing certain products, e.g. citrus fruit , coffee.
Standard of livin : Importing provides consumers with a wider choice of goods increases co petition bet een fi s
osts: e must e port to generate economies of scale reducing cost of production due to an inc ease in fi si e and to inc ease sales and p ofits eland s o e a et is too s all to achieve these by supplying only the domestic market
Profitability: irms depend on e ports for growth. Selling to a larger market can inc ease sales and p ofits o fi s
Payin forimports: e must e port goods in order to pay for our imports. Spreadin ris : Selling to more than one co nt eans fi s a e not o e reliant on their home market
Tenders: Irish businesses can tender for government pro ects in other member states. This means they have the same opportunities as other e be state co panies to inc ease p ofits
Stop Colla orate
ork with a partner to research an Irish company that trades internationally. hy not look for a company in your locality that trades internationally repare a presentation for your class outlining The company and their product s service s
The markets they trade in e benefits and c allen es o t adin internationally for that company.
Economies of scale: igher production can result in economies of scale, helping to reduce business costs, which can be passed on to the consumer as lower prices.
id ou now
In ebruary 0 Ireland s unad usted goods e ports were 1 .9bn.
enefi f in e n i n e or usinesses or consumers ortheeconomy
Access to raw materials and finis ed oods not a ailable in Ireland
Increasing sales by e porting to larger markets conomies of scale achieved by e porting to larger markets
Spreading business risk by reducing reliance on a single country and its economy
reater choice of goods available, which can lead to increased competition
Improved uality as domestic fi s t to atc t e alit of imported products
enerates obs for Irish citi ens, which in turn generates incomes and increases standard of living arns foreign currency which can be used to pay for imports
International peace countries that trade with each other are less likely to go to war with one another
Benefits for Irish business
Entrepreneurial Thin in
ccess to the vastEuropean mar et: As an member Ireland has free access to over 00 million consumers. There is an opportunity for economies of scale which wouldn t be possible ust selling to the population of Ireland. conomies of scale enable Irish business to compete in other o in a ets and to inc ease sales and p ofits
urrency: The euro makes trading easy. It is a stable currency, so there is less risk of e change rate ct ations t an it non e o c encies
Education: Irish education levels are among the highest in the world and Ireland has a highly educated and highly skilled workforce. This also makes Ireland an att acti e location o o ei n fi s
an ua e culture: nglish is an international language. Irish culture and heritage gives us a uni ue selling point in the global market
o corporation ta : elps to attract foreign companies to Ireland.
Government assistance: rants, training and advice reduces risk and cost to transnational corporations T s of locating here. Industrial Development Authority Ireland. Trade missions by nterprise Ireland help boost trade.
hallen es for Irish usiness
ow let s look at some of the challenges of international trade.
i h costs ase: Transport and labour costs are higher than in ot e co nt ies is fi s st ope ate e ficientl to keep wages and other costs down.
ompetition: lobalisation eans t at is fi s need to be able to co pete is fi s tend to be s alle t an ot e fi s b t a e co petin it la e inte national fi s, including those in non- countries. or e ample, the Open Skies agreement allows S airlines more access to cities. ocus on niche markets is essential for success.
ac of economies of scale: Due to the small market in eland it is di fic lt to c eate econo ies o scale to co pete a ainst la e fi s p od cin in la e antities ca s, so t drinks, medicines, etc. . Therefore Irish businesses need to find nic es in lobal a ets and capitalise on t e
orei nlan ua es: an a e di fic lties can be e e ident when business are conducting market research for a new product service. nowledge of a foreign language is essential to trade with other countries. ountries need to be able to sell successfully to foreign customers, so understanding their native language is key.
ocation: As Ireland is an island goods must be transported by air and sea, which is e pensive and can slow down distribution of goods to customers around the world. In turn this makes Irish businesses less competitive.
Stop Research
Research the corporation ta rates in the and present these in an infographic of your choice.
ulturaldifferences: Differences in culture can result in lost sales and customers choosing to shop elsewhere. In some cases product design and standards may differ between countries, so businesses may have to change marketing plans, product design and standards in order to adapt to local customs and cultures.
Calculatingthe value of internationaltrade
To calculate the value of international trade we measure the value of the goods and services imported into and e po ted o eland ese a e classified into t o cate o ies isible t ade and in isible trade. isible trade refers to the importing and e porting of goods. Invisible trade refers to the importing and e porting of services.
am ip
hen dealing with invisible trade services , money leaving Ireland is importing while money coming in is exporting.
isi leimports
hysical goods purchased from abroad, e.g. cars, computers, books from hina, rance, etc. hen these arrive into Ireland money leaves our economy to pay the foreign suppliers, e.g. Irish people buying wine from rance.
ample: Ireland imports a lot of grains, petrol, machinery and computer e uipment.
isi le e ports
hysical goods sold to people abroad, e.g. food sold to rance, pharmaceutical goods to the , engine components to the S, etc. These goods physically leave Ireland this in turn means money will come into our economy when overseas customers pay for the goods.
ample: Ireland e ports a lot of machinery, computer e uipment , pharmaceutical products and food.
Exports are goodsandservicessold by Irish fi s to c sto e sin ot e co nt ies. This brings foreigncurrencyintothecountry, ic benefitst enationalecono
nvisi leimports
Services purchased from abroad, e.g. banking, insurance, tourism, that are provided to Irish fi s b o ei n fi s
ample: Irish people holidaying in pain and spending money in pain is ultimately the same as us buying goods from pain and a in fo the he o of ea th is f o the Irish economy to the panish economy.
nvisi le e ports
These are services sold by Irish businesses to customers abroad. amples include selling olida s in eland to o ei n to ists, o financial services such as a client paying consultancy fees to an Irish bank.
ample: A panish person spending money in Irish hotels, restaurants, etc. is bringing money into our economy.
n t ein
Stop Colla orate
ooking at the infographic above, work with a classmate to share your thoughts on eland s i po ts and e po ts e o s p ised b an o t e fi es findin o t o t e est o t e o ld is in elation to e po ts and i po ts
id ou now
In anuary 0 , Ireland s top imports were medicinal and pharmaceutical products 9 m
organic chemicals 90 m
electrical machinery, appliances, etc. 11m
road vehicles 0 m
petroleum, petroleum products and related materials 09m .
Ireland s top exports were
medicinal and pharmaceutical products .99bn
organic chemicals . bn
p o essional, scientific and cont ollin apparatus 90m
essential oils, perfume materials, toilet preparations m
electrical machinery, appliances, etc. 0 m
an you list e amples of each of these
el
euti l u t
ientifi tu
le t i l ine
ssen i oi s
Stop Research
se the O D website at the link below to research Ireland s imports and e ports. repare a short summary using the following uestions as a guide. hat is the combined percentage of e ports to ermany and the
At what number e porter is Ireland ranked hat percentage of our e ports go to hina hat was our top e port in 0
edco.ie/wzs8
Balance of payments andtrade
hen we are measuring international trade there are certain terms that are used a lot. alance of trade, balance of invisible trade and balance of payments all measure different areas, but the most si nificant to t e econo is t e balance o pa ents
Surplus positive. Ireland is earning more than it is spending internationally eficit ne ati e e co nt is pa in o t o e t an it is earning.
Balanceoftrade: Thedifferencebetweenall visible e ports and visibleimports inacountry. Invisibletradeis e cluded. Remember,visibletrade isthesaleandpurchaseof goods.
Balanceofinvisibletrade: Thedifference betweeninvisible e portsandinvisibleimports it refers to theservicesector.
Balanceofpayments: Thedifferencebetween totalimportsand total e ports.Ittakesboth goods andservicesintoaccount.
There are two ways to work out the balance of payments. In the e am you could be asked to calculate the balance of trade, the balance of payments or both. et s take a look at both methods.
Sample alance of payments
Understandin the alance of trade
efici
ore money is leaving the country than is coming in. The government will have to increase ta es, e.g. AT, to raise income.
igher unemployment as Irish businesses need fewer employees.
Surplus
ore money is coming into the country than is leaving it. The government might be able to reduce ta es, e.g. A . igher employment and people have more disposable income standard of living improves.
t e co nt as a deficit on t ei balance o pa ents t e government needs to tackle it. This can be done by Increasin e ports: Selling more goods and services abroad in e isting markets and new markets.
2 educin imports: ncouraging consumers to buy Irish import substitution, i.e. replacing foreign imports with domestically produced goods and services, e.g. allygowan mineral water instead of vian mineral water.
Stop Check for nderstanding
1. De n t te your understanding of International Trade.
2. Dis in uis between an open and closed economy.
3. in what is meant by a trading bloc. Support your answer with suitable e amples.
4. us r e what is meant by the term invisible e ports with reference to the Irish economy.
5. Dis in uis between the terms balance of trade and balance of payments . . in at is eant b t e te s balance o pa ents s pl s and balance o t ade deficit . is three e amples of goods services that can be imported into Ireland.
. ine the information below and match the two lists by placing the correct letter in the appropriate bo . One e planation does not have a match.
Business Terms
Explanations
1. Trading bloc . A limit to the uantity of a product that can be imported into a country.
2. mbargo B. The world is viewed as a single marketplace.
3. uota . A ta on goods and services imported into Ireland.
4. Tariff . hen trade barriers between countries are removed and they trade freely with each other.
5. . A total ban on a product being imported into a country.
. in the term free trade .
1 . Dis in uis between a subsidy and a uota as barriers to trade.
11. lete t e issin fi es ep esented b , and in t e table belo
Visible Exports (€bn) Visible Imports (€bn) Balance of Trade (€bn)
12. l ul te t e balance o t ade o and state et e it is a s pl s o a deficit sin t e fi es belo
reland s trade in ds 2 25
Exports
nited ingdom 0bn
nited States bn
Rest of orld 11 bn
13. Dis in uis between the terms uota and tariff .
14. in what is meant by an open economy.
Imports
nited ingdom bn
nited States 1 bn
Rest of orld bn
15. in the term trading bloc in relation to International trade.
1 . us r e the barriers to free trade between countries.
1. 2. 3. 4. 5.
evelopin your no led e
1. De n t te your understanding of the term trading bloc .
2. Di u the importance of trading blocs for Irish businesses.
3. lu te Ireland s membership of the under three headings usinesses conomy onsumers.
4. Di u the factors a business should consider when trading internationally
5. u ine the reasons why Irish businesses engage in international trade.
. e t e benefits and c allen es o t adin inte nationall o is b sinesses
. De n t te your understanding of the terms balance of trade and balance of payments by completing the uestion below.
sing the following data, calculate the following i alance of trade ii alance of ayments
tate in eac case et e it is a s pl s o deficit
isible e ports 0bn
Invisible imports 0bn
Total e ports 1 0bn
Total imports 100bn
alance of Trade
alance of ayments
ns er Surplus or Deficit
. n se t e si nificance o nte national t ade to eland, e e in to an is b siness in your answer.
. De n t te your understanding of international trade by completing the following uestions.
Invisible e ports 1 , 0 million
Total e ports 10, 00 million
Invisible imports 1 ,100 million
Total imports 190, million
a alc late t e alance o ade sin t e fi es abo e o o o in s b efine t e te ta i isc ss t e possible e ect on t e is econo i t e o e n ent were to impose a tariff on Irish goods in the future.
Store t earn t
alance of invisi letrade: The difference between invisible e ports and invisible imports refers to the service sector. alance of payments: The difference between total imports and total e ports, both goods and services.
alance of trade: The difference between all visible e ports and visible imports in a country Invisibles are e cluded.
Economies of scale: A cost advantage that companies can gain from increasing their output the more they produce the cheaper the unit cost becomes.
Em ar o: A ban on importing or e porting specified oods is is done to p otect domestic industries, to punish another nation or for health and safety reasons.
E ports: oods and services sold by Irish fi s to c sto e s in ot e co nt ies
Internationaltrade: The e change of goods and services between countries. It is the process of importing buying goods from foreign countries and e porting selling goods to foreign countries .
Invisi lee ports: Services sold to customers abroad, e.g. foreign tourists holidaying in eland, financial se ices s c as a client paying consultancy fees to an Irish bank.
Invisi leimports: e ices bo t o fi s abroad, e.g. banking, insurance, tourism.
peneconomy: An economy that engages in international trade and imports and e ports goods and services.
uota: A physical restriction limit on the number of units of a good that may be imported e ported. uotas discourage imports and or encourage sales of domestically produced goods.
EP: Regional omprehensive conomic artnership a free trade agreement TA between the ten member states of the Association of Southeast Asian ations AS A and si other partner countries.
e ulations: overnment can restrict international trade by setting rules and regulations on importing or e porting goods. They can be for health, safety or environmental reasons.
Su sidies: oney paid by governments to elp fi s co e t ei ope atin costs and keep their prices competitive.
Tariffs: Ta es put on the value price of imported goods. This makes them more e pensive and thus less competitive on the domestic market.
ChapterChecklist
rading locs
plain what is meant by a trading bloc ame e amples of trading blocs
al ate t e benefits to eland o membership Review your knowledge o apte fi st nal se t ese benefits o t e perspective of business, consumers and the economy nternationaltrade
tline is fi s en a e in international trade
Tradin loc: A group of countries that agree to remove barriers to trade between themselves to form one free trading area.
PTPP: omprehensive and rogressive ee ent o ans acific a tne s ip A free trade agreement between twelve member countries that allow them to buy and sell goods more easily isi lee ports: hysical goods sold to people abroad, e.g. food sold to rance, pharmaceutical goods to the , engine components to the SA, etc. isi leimports: hysical goods purchased from abroad, e.g. cars, computers, books from hina, rance, etc. hen these arrive in Ireland money leaves our economy to pay foreign suppliers.
Outline factors to consider when trading internationally tariffs, uotas, embargoes, subsidies, rules and regulations, e change rates, competition, language culture
o pa e t e benefits and c allen es o trading internationally easuringinternationaltrade
Distinguish between visible and invisible imports and e ports include e amples
alculate balance of trade alculate balance of payments
Distinguish between balance of trade and balance of payments
hapter 9 nternationalisation andGlo alisation
earningoutcomes Strand
At the end of this chapter you should be able to:
A A the impact of Irish organisations trading internationally, with a focus on both positive and negative impacts and the social and environmental impact of globalisation.
A how globalisation can increase interdependence and evaluate the consequences of this for both businesses and consumers.
9 A A the role of technology in globalisation.
A what is meant by Foreign Direct Investment and investigate how the Irish government promotes Foreign Direct Investment. the contribution of Foreign Direct Investment to the Irish economy.
Case Study: fi e
n fi e beca e one o t e fi st p a ace tical companies to locate in Ireland. It employs over ,000 people ac oss fi e locations in o , ilda e and blin and its total capital investment in Ireland to date is over 9bn. Its operations in Ireland focus on research and development R D , treasury, commercial operations, manufacturing and shared services. Its Irish manufacturing base, which is its leading manufacturing facility, e ports to global markets.
The range astle facility manufactures therapeutics and vaccines, including the ovid-19 vaccine, which is e ported across the world. art of its worldwide research and development section is also based here, along with supply chain logistics, engineering and human resources, employing , 00 people at this location alone.
fi e e b id e is o e to t e lobal ec nical b, ic e plo s o e , people and which is focused on professional growth and development with initiatives such as the ewbridge ront ine eadership Development and eaders ens programmes.
e in as idd site pla s a st ate ic ole in fi e nte national, actin as t e global site for all new small-molecule active pharmaceutical ingredients. The site uses cutting-edge technologies and works collaboratively with R D to provide highalit inno ati e t e apies fi e is co itted to t e s stainable e elop ent oals SD s , and the site s SD programme strives to make a difference to the wider community.
i ital Trans rmati n
Theme
fi e in send is o e to its lobal siness e ices, e e o e e plo ees o nationalities o in a an e o b siness and financial ope ations e blin i ital ea s ppo t a an e o fi e s lobal initiati es
hat areinternationalisationandglo alisation
Globalisation: The growinginterdependence andinterconnectedness ofthe world seconomies, culturesandpopulations arisingfromcross-border tradein goods,services, digital technologyand movementofinvestment, people,dataand information.
The Silk Road, an ancient network of trade routes across hina, entral Asia and the editerranean that developed between 0 and 0 , is possibly the earliest e ample of an e change of products and customs between nations. ven then, technological advancements played an important role the creation of coins and roads increased trade.
Stop Colla orate
ith a classmate, read this article o t e ent al tatistics fice and s a ise it in fi e e bullet points.
edco.ie/xf7g
Glo alisationandinterdependence
lobalisation means the increasing interconnectedness of production and consumption around the world. any of the goods and services produced here in Ireland use components produced in other countries. These raw materials or components are imported here, produced into a good or service and then sold on, in many cases to countries outside Ireland. Think of a smartphone. The tin used in your phone was mined in southeast Asia, the screen was produced in South orea, touch ID software created in Taiwan and the whole product assembled in hina.
ample: Ireland is dependent on the rgani ation of the etroleum porting ountries and oil producing countries for a s of oi hen con ict a ose et een ssia and the raine the uropean nion placed sanctions on ussia, hich meant that Ireland, along ith other countries, as forced to find an a te nati e s ie
Ireland is also heavily reliant on the nited ingdom market in relation to the e port of food and agricultural produce. Over of the mushrooms grown in Ireland are e ported to the annually The industry itself is worth over 119 million to the economy and employs over , 00 people.
Ireland has strong economic ties with the , due to our geographical pro imity, and it is one of our largest trading partners. This reliance has decreased over time beca se eland as di e sified its t ade elations ips, and also because of re it.
A globalcompany viewsthe worldasonelarge marketplace. ultinationalcorporations s , e.g. cDonald s, oca- ola,areglobalcompanies. They trade their products all over the world.
lobalisation occurs when economies become interdependent and interconnected. oods, services, people, one and c lt e o ac oss bo de s, sti latin econo ic o t an co nt ies specialise in the production of certain goods and services, which means that they must trade to meet the demands of their consumers or e ample, Ireland has a strong information and communications technology I T sector, with global companies such as oogle, eta and TikTok all located here.
Some of the factors that encourage globalisation are n mar et saturation: fi s do estic a et beco es sat ated and it is nable to inc ease sales o p ofits t ill sea c o ne a ets to e pand sales, ac ie e econo ies o scale and inc ease p ofits Increased consumerdemand: onsumers want the best- uality, most on-trend goods and services. a our mo ility: The availability of cheaper labour or skilled labo in an co nt ies eans fi s can locate ope ations in one country and e port their product or service to a division in another There has been an increase in migration with workers moving from one country to another seeking alternative employment.
Transport: Improved transport services and lower transport costs e.g. a reduction in shipping costs has increased global trade between countries and encouraged globalisation.
Improvementsintechnology(ICT): Improvements in tec nolo eans t at fi s can locate t ei ope ations in an countries and communication between their operations is faster and c eape t as also beco e si nificantl easie to co nicate it customers, suppliers and subsidiaries all around the world.
reetradea reements: International agreements and organisations set up to promote free trade, such as the orld Trade Organi ation TO have advocated for free trade on a global scale. Transnationalcorporations(TNCs) were initially viewed as a potential threat by many countries, but now countries often welcome the arrival of a T as it creates employment. The movement for greater free trade and the increase in trading blocs has meant a removal of trade barriers.
Stop Colla orate
atch this video on Starbucks and the ietnam coffee market omplete the worksheet on page of your Student Activity ook and discuss your answers as a class.
edco.ie/c95z
mpacts of glo alisation
Impacts on usiness
Economies of scale: irms are selling to a larger market roducing and selling on a larger scale leads to ed ction in nit costs and econo ies o scale fi a also e pe ience a disecono o scale, ic is an inc ease in t e nit cost o p od ction as t e fi inc eases in si e n ot e words, one disadvantage of becoming too large is an increase in unit cost.
Increased salesandprofits: irms increase sales when they sell on a global scale, which means i e p ofits a e olde s ill ecei e i e di idends a our: irms have a wider pool of potential employees as globalisation leads to increased migration and labour mobility.
Glo al rand: Selling on an international scale re uires global marketing campaigns and global brand recognition. lobal marketing campaigns are e pensive and re uire heavy investment without guarantee of success.
ompetition: Irish businesses face more co petition o inte national fi s because of reduced trade barriers and deregulation. lobalisation has seen an inc ease in t e si e o fi s d e to mergers and takeovers. Smaller Irish fi s a st le to co pete it large global companies.
Innovation: lobalisation and inc easin co petition eans t at is fi s st contin o sl inno ate and in est in is can be e pensi e and can p o e c allen in o s alle fi s p o e ents in , o e e , can lead to eate e ficiencies
Standardisedproduct: The same product is sold in broadly the same way throughout the world, with only small variations to accommodate differences such as language.
ustoms: Any business trading internationally must be aware of local customs and make sure its product is not offending the local culture
a s: ach country s national laws must be followed when trading internationally. Some countries might have uotas on the amount of certain products allowed into the country or even a complete ban on a certain product. A business must carry out e tensive research before launching into a new market
Impacts on consumers
o erprices: ons e s ill benefit o lo e p ices as fi s ed ce t ei p ice to co pete it lobal b ands and to e ect a ed ction in p od ction costs
Increasedchoice: onsumers have a wider range of goods and services to choose from as markets become more competitive. rand proliferation many brands being owned by one parent company may also e ist due to an increase in mergers and takeovers.
Standardisedproducts: lobal brands may sell standardised products and use a standardised marketing mi to reduce costs. These standardised p od cts a not acc atel e ect t e needs o consumers in individual markets.
nilever was formed on 1 anuary 19 0 with the merger of argarine nion and ever rothers imited. oth companies were operating in similar industries both sourced oils and fats to produce soaps and food products such as Stork margarine and all s sausages. Since they were competing for similar raw materials they realised synergies could be created if they merged. nilever e panded and grew its product portfolio over the years, ac uiring atchelors and irds ye in the 19 0s. In the 19 0s it focused on science and technology, establishing a research division which is now called nilever ood and ealth Research Institute. ore brands were introduced, including Dove soap, ipton s tea 19 1 and yn known as A e in the nited States nilever increased its presence in uropean and S markets. It restructured the business in 199 to focus on four e a eas o e ca e pe sonal ca e oods and specialit c e icals t e fi as operating worldwide. During the course of the ne t decade nilever focused on using technology to improve its products and processes and on improving sustainability e.g. sustainable sourcing for ipton s tea and Tips . It launched campaigns to celebrate and encourage diversity Dove Real eauty and Self- steem pro ects and introduced its Sustainable iving lan in 010. Today nilever operates in over 190 countries, employs over 1 ,000 people and in 0 had a turnover of 9. bn. It has ,000 suppliers in around 1 0 countries with over 0 factories operated by nilever. It is a truly global company.
id ou now
nilever is the parent company of many well-known brands, including ellman s, Dove, en erry s, Domestos and omfort.
Ethics and Sustainability Theme
Stop Research
ee t e lin belo to find o t o nile e is becoming more sustainable. rite down four of its targets achievements. ind out more about the brands in its portfolio and its corporate growth strategy edco.ie/34qn
Case Study: nile e
Socialandenvironmentalimpacts
Increased a areness of climatechan e: onsumers are more aware of the importance of environmental and income sustainability They can make more informed decisions and choose greener and more sustainable products.
ree movement of la our: Increased migration has meant that ideas, skills and cultural traditions are shared across borders. ultures are at risk of losing their national identity and heritage.
Economic ro th: lobalisation has led to economic growth, which means a higher standard of living for Irish consumers.
Scarceresources: Increased consumerism has put pressure on the world s scarce resources and resulted in increased pollution and damage to the environment. A move towards a circular economy and a greater awareness of sustainability is important to ensure sustainable economic growth.
Environmental dama e: Increased production to meet consumers demand for goods and services is having a negative impact on the environment. Air and sea pollution, destruction of natural landscapes e.g. the Ama on rainforest are seriously damaging our world, which will impact on future generations.
istri ution of ealth: International trade and the benefits o lobalisation a e not al a s dist ib ted evenly. The gap between rich and poor has widened and there are greater ine ualities in the world.
Theme
Ethics and Sustainability
Stop Colla orate
atch this video discussing the future of globalisation. rite down your observations as you watch it and then discuss with a partner.
edco.ie/3dny
Politicalrelationships: Trade deals and trading blocs have fostered strong political links and alliances between countries. This interdependence makes nations more vulnerable to economic shocks.
Role of technology inglo alisation
Stop Colla orate
omplete a placemat activity sheet on what you know about globalisation so far and the role that technology plays in globalisation. Share your group s feedback with your class and discuss the role of technology in globalisation.
Theme
i ital
Trans rmati n
ec nolo as c an ed apidl in ecent ea s t as a si nificant i pact on o e o and interact and on how businesses operate.
or practices: ideo-conferencing software and cloud computing enable workers to work from home, which means that companies e i e less o fice space ei e plo ees can work from anywhere in the world and connect e otel to ead o fice
Trade: The greater availability of broadband and i eless inte net enables fi s to sell t ei products worldwide via websites and apps. This is a ma or factor in increasing the number and si e of global companies. It also makes it easie o fi s to so ce a ate ials
usinessoperations: omputer-aided manufacturing A and robotics have streamlined production processes, allowing fi s to ed ce t ei cost o p od ction i s can locate production in the country that best s its t ei needs, ile basin t ei finance and marketing departments in other locations.
Socialmedia: The growth of the internet has meant that companies need to adopt more standardised and adapted marketing strategies. The number of global brands has increased, and consumers are more aware of these brands and want to be able to access them anywhere in the world.
E commerce: -commerce has allowed companies to e pand their operations globally, enabling people from all over the world to both access and purchase products through online portals and websites.
am ip
oreigndirectinvestment
Remember to evaluate means to look at the evidence and make a udgement. ou will need to be able to assess whether or not technology is an important factor in globalisation. se e amples to support your point of view.
In economic terms investment is said to be the production of capital goods, for e ample buying new machinery for a factory, building new premises or e panding e isting premises. hen this type of investment is carried out by foreign-owned companies in Ireland it is called F . It is a key contributor to Ireland s economic growth and development.
In the last uarter of 0 direct investment into Ireland increased by . bn, while Irish investment abroad increased by 1 . bn. The value of assets owned by foreign investors in Ireland stood at 1, bn in December 0 . oreign-owned multinationals operating in Ireland employ over 0,000 people
o Irelandpromotes I
Ireland is a popular location for DI for the following reasons uman capital: Ireland has an nglish-speaking workforce with good skills, particularly in the knowledge-intensive and technology sectors. Ireland has the highest level of ST graduates per capita in among 0 9-year-olds, and over of Irish people aged have completed third-level education. The Irish education system offers learning opportunities for all levels. It supports training and development programmes through national training agencies e.g. SO AS and a wide range of third-level institutions. The Industrial Development Authority partners with industry bodies to ensure that training programmes meet industry needs.
Humancapital isthecompetenciesembodiedinpeoplethatareinvestedinanddeveloped to helpthem to bemoreproductiveand realisetheirpotential.
Pro enterprisepolicy: Ireland s low corporation ta rate 1 . has been a key factor in attracting , beca se it eans t at b sinesses can etain o e o t ei p ofits eland adopts a p o enterprise policy that supports enterprise development. State agencies such as reland provide information and advice to potential investors.
ccess to mar ets: Ireland is the only nglish-speaking member of the The uropean single market allows for the free movement of goods, services, people and capital between member states. irms that establish in Ireland have access to a uropean market of over 00 million people.
esearch: The IDA has links with many third-level institutions and industry bodies to support research, development and innovation, which account for the largest proportion of the IDA s grant ndin p o a e t s ppo ts fi s b o e in ta incenti es a ta c edit on acti ities, o e a ple and collabo ati e ndin t can also p o ide assistance to fi s nde ta in t ei initial research before engaging in long-term R D pro ects.
Infrastructure: e e as been si nificant in est ent in eland s in ast ct e inte national air, road and sea links connect Ireland with the , the and the rest of the world. Ireland s ational Development lan sets out continued investment in transport , housing, sustainability and education, with 1 bn committed to ma or capital e penditure pro ects.
I Ireland
IDA Industrial Development Agency Ireland is responsible for attracting and developing DI in Ireland. ompanies such as oogle, Intel, icrosoft and eta have all interacted with the IDA. It attracts foreign businesses into Ireland in a number of ways
Informationand statistics: It gathers information on key businesses and their sectors and where they are located in Ireland.
Stop atch
atc t is ideo to find out more about the work of the IDA.
2 in s: It creates links between international businesses, thirdlevel institutions and research centres. This ensures that support is in place when new businesses come to Ireland and that Ireland has the necessary skills, research and development capabilities.
edco.ie/m5cn
ssistance: It provides support and guidance to businesses that want to set up in Ireland by elpin t e find t e ideal location o t ei b siness siness a s assist in settin p a business in Ireland and offers advice on property for international investors. It also introduces potential investors to local industry, government , service providers and research institutions.
4 Grants: It can provide a certain number of grants to new businesses.
Stop Colla orate
atch this short video. hat are the key reasons the IDA offers for businesses to invest in Ireland
edco.ie/3tka
Stop Research
any foreign-owned companies, such as Analog Devices, A S and Dell Technologies, now call Ireland home. See the link below and research some of these companies. repare a short co pan case file t at o can s a e it o class ates hy not choose a company that is close to your local area
edco.ie/5jye
pportunitiesandchallen es of I for Ireland
irectemployment: Appro imately 00,000 people are directly employed by foreign multinationals in Ireland. It is estimated that DI companies give rise to indirect employment of twice that amount. They employ highly skilled graduates, right up to hD level, which prevents brain drain . any of these graduates are engaged in R D, an important area in multinational businesses.
Ta revenue: s pa co po ation ta on t ei p ofits is lo rate of corporation ta is a key government strategy in attracting DI.
Positivespin off effects: T s source their inputs from domestic companies where possible, t e eb inc easin e plo ent in t ose fi s e ento is fi s to b in t is abo t ocal ta is, cate in fi s, cleane s, sec it fi s, p bs and esta ants all benefit o t e p esence o a transnational in their locality
Enhancin Ireland sreputation: This acts as a catalyst for further DI. As companies such as Intel and oogle have a ma or presence here, it can be inferred that Ireland is a good place to do business international goodwill .
usinesse pertise: nte national fi s b in no led e and e pe tise in ana e ent s ste s and organisational culture. The latest technology is introduced based on research carried out in other countries, thereby re uiring less Irish e penditure on R D. Irish managers gain e perience and learn from these foreign business e ecutives.
ccess to mar ets: cellent high-tech companies have easy access to international markets. ootloose: Some DI companies are considered footloose having no loyalty to Ireland . They may leave immediately if operating costs are lower elsewhere. The Dell imerick move to oland resulted in thousands of ob losses in the imerick area. ruit of the oom moved its operations from Donegal to Indonesia due to high labour costs.
Shared no led e: Irish employees of foreign multinationals learn the best business practices and technologies. This makes it easier for would-be entrepreneurs to set up their own businesses, thereby promoting an entrepreneurial spirit.
Positiveimpactonthe alance of trade: T s bring their own business plans and ready-made e port markets. p to 0 of Irish e ports are from foreign multinationals about 0 from ust fi e co panies eca se o t ese s bstantial e po ts, eland asn t ad a balance o pa ents problem for many years.
Q4. lete the following sentence using these words one word does not apply . Standardised Strategic Single lobal businesses view the world as one market and use a global or adapted marketing mi to sell a product.
5. oogle is a multinational company. in the term multinational company . Outline two possible reasons why oogle decided to locate in Ireland.
evelopin your no led e
1. lu te the impact of globalisation on i businesses ii consumers.
2. lu te the social and environmental impact of globalisation.
3. De n t te your understanding of DI.
4. n e ti te how the Irish overnment promotes oreign Direct Investment.
5. Di u the opportunities and challenges of DI for the Irish economy
. in the term global marketing .
. lu te the role the IDA plays in international trade for Ireland.
. ine the role that technology plays in International trade.
. u ine two reasons why multinational businesses locate in Ireland.
Store t earn t
Foreigndirectinvestment(FDI): The purchase of an asset in another country, resulting in an ownership stake in the foreign country, which was made by an investor, a government or a company from another country.
Glo alisation: The growing interdependence and interconnectedness of the world s economies, cultures and populations arising from cross-border trade in goods, services, digital technology and movement of investment , people, data and information. A lo al company views the world as one big marketplace.
uman capital: eople s skills and abilities, which are invested in and developed to help them to be more productive and realise their potential.
ChapterChecklist
Glo alisation
plain what globalisation is plain the link between globalisation and interdependence
Outline impact of globalisation on businesses, consumers, society, the environment
echnologyinglo alisation
Analyse and evaluate the role of technology in globalisation
Business and Financial Literacy Theme
IDA (IndustrialDevelopmentAgency)
Ireland: Responsible for attracting and developing DI in Ireland.
Interdependence: hen one group relies on another for goods and services.
Internationalisation: Designing or tailoring a product, service or operation for entry growth in international markets.
Transnational corporations(TNCs): irms that produce and market goods in more than one country, e.g. icrosoft , Shell, cDonald s, Toyota.
oreigndirectinvestment
plain what is meant by DI
Outline the role of government in promoting DI ethods of promoting DI
IDA Ireland
Outline contribution to Irish economy
St ra nd 2
nderstanding nterprise
nthis strand y u ill ind the followingchapters: nterprise 1
Operationsand 1 inance rowth,Development and pansion anagingRisk
Applying y earning
Usetheactivities(Stop& Research!and Stop&Collaborate!)outlinedthroughoutthe chapter to help youapply yourlearning.
Strand 2
earningoutcomes Strand 2
At the end of this chapter you should be able to: examples of innovation, intrapreneurship and entrepreneurship in your local community, nationally and internationally, and explain the importance of innovation for business, the economy and society
2 the competencies of innovators and outline why these are significant when starting a business.
S GA the role of government in fostering enterprise and supporting business development and growth.
Case Study: urren o e ouse Coun C re
The urren Smokehouse is one of Ireland s best-known artisan producers of organic smoked salmon. A family-run business, it was established in 19 9 by an enthusiastic young Swedish woman who stumbled on the lare town of isdoonvarna. lown away by its rich culture and heritage, and the rugged coastline, irgitta edin decided to take a risk and build a smokehouse. ringing with her the skills and e perience she had ac uired in Sweden, irgitta and her husband s o ed t ei fi st sal on at t e oadside Tavern pub using a patented process they designed themselves. Over thirty years later irgitta and eter have seen the company grow in both si e and scale. They are resilient and future-focused and have a strong sense of self-belief which they know will get them through any potential challenges.
Theme
Ethics and Sustainability
ir e edin Cur in ounder o e urren o e ouse
irgitta describes the company philosophy as innovative. e started in food tourism thirty years ago, it didn t really e ist then. e re very much community-based as well. Sustainability and the environment are very important to us and I think that sets us apart as an organisation. ith a turnover of over . m in 0 0, the company is continuing to grow and has seen e pansion in the form of a visitor centre and the urren rewery aving won numerous awards and accolades nationally and internationally for its ecofriendly and sustainable approach, the urren Smokehouse is a company thriving on success. Trading internationally through a contract with S sees the company e pand their global footprint year on year
ource Interview with ORA, ovember 019 https fora.ie birgitta-hedin-curtin-burrensmokehouse-interview- 9 - ov 019
ntrepreneurship
Enterprise is an attempt to do or start something new by an individual or group of people. It is the ability of a person or group to generate and build ideas creatively, to identify opportunities for inn ati n and turn them into practical and targeted actions. To be enterprising is to have the abilit to ene ate ne ideas, to identi an oppo t nit and to a e t e confidence, oti ation and dete ination to ta e t e financial and pe sonal risk to turn the idea into reality.
An entrepreneur isapersonwhotakestheinitiativeandrisk,bothpersonal a riskthatdirectly a ectst e o t ei a il andfinancial a is e e one canbelost to set pab siness int e opeo a in ap ofit nt ep ene sactasa entso c an e e o aniset e ot e factorsofproduction intoaproductiveunit.
nterprises fall into three main categories inancialenterprise: sinesses t at ai to a e a p ofit ulturalenterprise: These provide consumers with access to is al a ts, fil , sic, adio, etc , e Dublin ringe estival, lectric icnic, the uinness a estival in ork.
Socialenterprise: This type of enterprise puts people and co nit fi st a ead o pe sonal and p i ate ain e tackle social, economic or environmental issues.
Stop Colla orate
Take two minutes to think about e amples of each of these types of enterprise. Think of local, national and international e amples. Then turn to a partner and in pairs come up with a more comprehensive list. Share the results with your classmates. hy not create a poster or collage for your classroom wall
any enterprises begin when an entrepreneur comes up with an innovation that will solve a problem, provide a solution or improve on an e isting process or product.
To beinnovativeor to innovate meansintroducing somethingneworanew wayofdoingthings.An inn ati n isanewidea,deviceormethod.
uinness es i in Cor Ci
Con er eds i du s er dou in s n o der cre ed oc e ores s soci en er rise usiness
ample: hat as launched in ovember 2022 by technology company penAI. his inno ation too a tificia inte i ence techno o and t it in the hands of o dina se s
The ames Dyson oundation sponsors an annual international design competition called the ames Dyson Award. It is open to current and recently graduated university students of engineering, product design and industrial design in 0 countries. Twenty of the best inventions are shortlisted, with one overall international winner, two runners-up and one sustainability winner. Take a look at previous winners at the link below.
edco.ie/qzxw
ork-based company Ocean nergy develops wave energy technology t as spent ten ea s esea c in and de elopin tec nolo t at oats on the ocean s surface and generates electrical energy It has been backed by the Sustainable nergy Authority Ireland S AI , has received funding of 11. m from the nited States Department of nergy and also has the support of EnterpriseIreland.
Stop Research
rite three e amples in a list one local, one national and one international and write a p ofile o eac o t e denti e amples of innovation. Add it to your Investigative older
i ital Trans rmati n
nterprises can be started for a variety of reasons
CR➜ Redundancy: eing made redundant can motivate some people to start their own business if they receive a redundancy package it will also give them the finance to set p t e b siness
ample: illian eidy set up her branding, design and communications agency enhouse Design in 1 6 hen she as made redundant.
➜ Independence: eople like the idea of entrepreneurship because they can be their own boss. They can make all the decisions themselves.
ample: he fo nde of i d end ea o isi ith sta ted he o n siness hen she ea ised that o in fo othe s asn t fo he
➜ Income: e potential to ea n a p ofit can be a bi oti e e ea nin s t at can be potentially earned from owning your own business is a strong motive for a lot of entrepreneurs.
ample: isters Dr Lisa and Dr anessa reaven set up potlight ral are in he co an e o ted a t no e of in and so ced f ndin of in the sa e ea to d i e its inte nationa e ansion
➜ Challenge: aslow s theory of motivation places self-actualisation as the highest motivator This is the need individuals have to push themselves to achieve and reach their potential. This is true of many entrepreneurs who start new enterprises to challenge themselves and achieve more.
ample: nt e ene i icha d anson has sta ted n e o s sinesses since the a e of o e ha e een ite s ccessf thin i in t antic othe s ess so e i in o a e ta es is ho ies too s ch as hot ai ballooning he is a natural ris ta er and loves a challenge.
C➜ Creativity: or some people, starting a business provides an outlet for creativity and self-e pression. eople who are e tremely creative may seek an oppo t nit to s o o t at c eati e ai
ample: argaret oyne launched her dress ma ing business, argaret o ne o t e in o a o nt a an in he as a ad ate of the afton cade and had ea s e e ience in the fashion ind st t anted an o t et fo he o n c eati it
n ce n ner e ener con er er C
mportance of innovation
Government
reatesemployment: nterprise is a driver of ob creation. Any business will need employees. eeting the needs of customers will result in new ob opportunities. ot only will the business create employment , it will encourage other entrepreneurs to be innovative and will create competition, generating more obs.
Governmentrevenue: All registered businesses pay ta , which is a key source of revenue for the economy, for e ample co po ation ta ta on p ofits t e ea n and pa elated social insurance contributions for their employees. Innovation also contributes to increasing our gross national product , which leads to ob creation and higher ta revenue for the government. ccess to oodsandservices: very new business reduces dependence on imported goods and services. It offers consumers a broader range of goods and services to choose from. The more entrepreneurs in the economy, the more competitive they beco e, ic benefits cons e s it o e a o dable p ices and a wider range of products and services to choose from. very new company that enters the market reduces the scarcity of essential commodities.
Society
usiness
Innovation: ew ideas for products and services come from entrepreneurs who have taken the initiative and risk to start a business. It can lead to the development of new industries and markets. ew ideas can range from developments in technology to better business techni ues. This leads to a continuous cycle of innovation and progress.
ommunity
e learned about in
Infrastructuredevelopment: A new business can often lead to the development of communication and transportation links in its locality, thus enhancing the area and allowing other businesses the opportunity to take advantage of new infrastructural developments Standard of livin : ew businesses have the potential to improve people s uality of life by developing innovative products and services that are affordable and will make a difference to their lives.
ompetition: nt ep ene s ip can a e a si nificant i pact on competition. any entrepreneurs may launch a new company in established markets, usually dominated by larger and well-known companies. The introduction of a new company leads to healthy competition between enterprises, which in turn leads to better products and greater choice for consumers.
Enterpriseculture: ntrepreneurs are always looking for opportunities to promote their business and make it grow. Seeing a business open in a community can encourage other like-minded entrepreneurs to take the initiative and start their own business.
ommunity cohesion: any entrepreneurs make a positive impact on the communities in which they are based by supporting local initiatives and sponsoring local teams or clubs. They strive to bring communities together, whether through employment or developing products that are environmentally friendly.
oostin nationalincome: ne o t e ost si nificant i pacts o ente p ise on societ is the opportunity to increase our national income. hen more people are employed to work in a company this leads to a boost in the national economy through their contribution to ta es.
Intrapreneurs are inventive, creative and innovative. They are constantly looking for ways of growing o e pandin t e b siness and i p o in b siness p ocesses o p od cts it o t ta in t e financial risk themselves. They will try to come up with new ideas on how to save money, problem-solving techni ues or ways of increasing the company s revenue. Intrapreneurship is encouraged in most o places as it p o ides n e o s benefits to t e fi
amples: ost its ere created by t o scientists employed at hen the c eated a i ht adhesi e that co d stic t o dn t ond ith s faces o e nstein ca e ith the idea of the a ea fo c ona d s in to a e the chain o e a ea in to chi d en and fa i ies oo e offe s i e its e o ees can s end of thei o in ti e on thei o n o ects and c eations that i enefit oo e ai as c eated d in de e o e a cheit s i e
Stop Research
There are lots of other e amples of intrapreneurship ind some local and Irish e amples and share the results with your classmates. hoose one of the companies pro ects and analyse what resources or structures the company has in place to encourage intrapreneurship. Remember to save your report in your Investigative older.
o p o ote int ap ene s ip it in a fi , co panies s o ld reate a or placeculture in which it s okay to make mistakes and think independently.
ake resources a ailable to elp e plo ees p s e t ei ideas e finance, ti e and t ainin ntel eland as a t adition o enco a in int ap ene s ip, p o idin t e eso ces, bot financial and ee ti e, to allo its e plo ees to c eate t ei o n p o ects, and it also finances p o ects e ards o e o t and c eati it , ic co ld in ol e a i t e o pa , financial incenti es e bon ses and non oneta benefits s c as p o otion, leade s ip oppo t nities and e ible working arrangements.
Team or encourages creativity among employees as it facilitates brainstorming sessions as part of the product development process, etc.
Benefits of intrapreneurship ncreased salesandnewproducts markets
Intrapreneurship results in potential new products services being developed. Intrapreneurs are champions of change they are always looking for ways to grow and e pand the business, striving to improve the business s processes or products. ithout new products and developments in market research a company could be at risk of failing.
ample: ost it od cts de e o ed t o e o ees of ence i e and t no ene ate n ann a
e ce c efficiencie i e c i i y
e an e o ideas and c eati it in a fi t at encourages intrapreneurship ultimately leads to greater productivity Successful ideas can save t e fi bot ti e and one , es ltin in eate p ofitabilit e ideas and finance sa in eas es es lt in inc eased p ofits
ample: n e o ee at ad s ca e ith a pac aging improvement that reduced costs.
Staff moraleand motivation
The more en oyable a workplace is, the more motivated staff are. This lends itself to an atmosphere where in-house talent is nurtured and innovation and intrapreneurship are encouraged. Offering staff the opportunity to be intrapreneurial increases productivity There is improved industrial relations within a business when intrapreneurship is encouraged.
ample: o th est i ines is fa o s fo its h o o s safet anno nce ents he e e fi st int od ced i ht attendant a tha o s ho eca e ti ed of he s a anno nce ents and t ied so ethin diffe ent he eca e fa o s on o e and o th est i ines e an enco a in its staff to e ace h o ncidenta its safet anno nce ents a e no o th o e in inc eased customer loyalty
mployeeretention
mployees who have a voice, who have a say on new opportunities, who have been given time and resources to create and work on new ideas, will most likely become more engaged and happier in their workplace. mployees are less likely to leave if they are encouraged to show their intrapreneurial side.
ample: a in ot heetos e e c eated ito a anito icha d ontane hen the of the co an anno nced an initiati e fo a e o ees to act i e an o ne ontane ent on to eco e ice esident of tic t a a es and o nit o otions fo a ent co an epsi o.
Stop Research
st o n, atc t e fil a in ot about Richard ontane s life story
Case Study: r uc s
Starbucks has become synonymous with intrapreneurship. ounded in Seattle in 19 1, the company was determined to become the place people would go between work and home, essentially the third location in their day. Starbucks mission was to create a comfortable environment , not ust a regular coffee shop. In 011 a barista in the company decided to add to the rela ed environment by writing customers names on cups. This initiative as ic l ed bac to ead o fice, o lo ed t e pe sonal app oac t is brought. In the months that followed, this approach became standard in all their stores. To cement the promotional strategy, Starbucks produced a television campaign highlighting their new and uni ue approach towards their customers.
Another e ample of intrapreneurship was the launch of the frappuccino, a cold coffeea o ed d in sold in all o t ei establis ents s all o p o e plo ees de eloped t e drink in an A store and the manager at the time took the initiative to launch the drink, which is now a signature product on the Starbucks menu.
Stop Research
Research an entrepreneur of your choice. ake sure each person in your class is researching a different entrepreneur and try to include Irish entrepreneurs, local entrepreneurs from your area and international ones too. repare a presentation to share with your class. Include some in o ation abo t t e , t ei li e sto , and e ect on at you feel makes them a successful entrepreneur.
Competencies of innovators
en o e ect and include your opinion on something this is an e aluati n ou should remember to support your opinion with a fact or theory.
The competencies ofanentrepreneurarethetraitsandcharacteristicsthatdeterminetheir ability to manageandcontrolabusiness.
Confident: A belief in their ability to make their ideas a ealit t e can sta t and finis something. They have a strong conviction about their own business idea. They see failure as an opportunity to learn.
reative innovative: The ability to think of new ways to make a product successful developing new ideas or adding new aspects to e isting ideas constantly looking for ways to improve an idea. They are prepared not only to be different but tend to have a vision of the future.
ecisive: The ability to make decisions uickly so as not to miss opportunities. nowing when the time is right to make a clear decision. They take full personal responsibility for their actions and decisions.
Ener etic: They work hard and are enthusiastic at all times. They keep going and make changes for the better in the business. They are able to inspire and lead.
le i le: Able to respond to changes and to adapt plans if necessary ntrepreneurs who fail to modify their approach when needed are unlikely to meet the needs of the market , their investors or their customers.
uture focused: Always looking to the future, sei ing opportunities when they arise. They look at future demand and make plans to stay ahead of the competition. They anticipate customer needs and steal a lead on rivals.
otivated: They want to achieve something, so they work towards that ob ective. ntrepreneurs thrive on the challenge to succeed.
esilient: hen times are tough they are able to overcome disappointment and continue on to achieve their goal. This is closely linked to e ibilit
ealistic: They are realistic about what they can achieve not over-optimistic. Taking a considered and well-planned approach is the most likely route to success.
is ta ers: They are willing to take risks in order to succeed in business, and to take a c ance bot financial and pe sonal en an opportunity arises. They embrace failure as a learning e perience. A risk-taker is not afraid of failing.
It will be important that you can read a case st d o ent ep ene p ofile and identify their competencies. Then you can apply your learning to real life situations. Remember to outline why these particular competencies were so important when the innovator was starting their business.
Stop Colla orate
Stop Colla orate
In groups, share the entrepreneur p ofiles o co pleted in o ea lie Stop Research activity. Analyse the competencies these entrepreneurs and innovators displayed. Did they have traits in co on e e t ese so si nificant and important when starting a business
atch this clip of a ons en agic hiteboard and answer these uestions hat makes this product so uni ue hat entrepreneurial characteristics did eil and aura show ow long had the company been trading and what did they e pect their turnover to be hat e clusive rights did they secure ow large was the order to orway ame three uses eil and aura mention that the whiteboard could be used for. hat was the outcome of their pitch
he role of government
The state has an important role to play in fostering an entrepreneurial spirit and encouraging and supporting business development and growth. The government has established state-owned businesses for a number of reasons
Stop atch
atch this short video on all the supports the government provides to Small and edium nterprises in Ireland
edco.ie/b4tr
To provideessentialservices: i ate ente p ises a e a p ofit oti e so a not be illin o able to s ppl np ofitable essential se ices, e al t anspo t sc e es o e n ent inte ention ia state o ned fi s is essential to ens e all e ions and a eas a e ital se ices The government also provides advice to commercial businesses e.g. ilte Ireland .
2 To developnaturalresources: ord na na, ord is and oillte are all state agencies set up to develop long-term potential and protect Ireland s key natural resources energy, forestry . To protect strate icresources: overnments may prefer to control the production and supply of important resources such as water and public transport.
4 To provideinfrastructure: irms and households rely on systems of transport, energy and communications. The state needs to ensure that these are provided with minimum disruption. hen a pro ect re uires large amounts of capital e penditure and is ust too e pensive for a private company to set up, the government will build the infrastructure, e.g. power plants.
The government also supports business development and enterprise through a number of state agencies.
epartment of Enterprise, TradeandEmployment
This government department advises and implements government policies that stimulate the productive capacity of the economy, creating employment and ensuring sustainable development and growth. The department is also responsible for promoting fair competition in the marketplace, protecting consumers and safeguarding workers.
hat doesthe epartment of nterprise radeand mployment do
nterprise innovation
Supports innovation that creates and maintains high-value obs in Ireland. Innovation support is essential in helping attract investment and develop business. The funding and promotion of programmes and supports designed to encourage innovation are delivered through nterprise Ireland and ndustrial DevelopmentAgencyIreland(IDAIreland).
radeand investment orks in con unction with nterprise Ireland to promote and develop Irish e ports and help Irish companies achieve global success. IDA Ireland attracts oreign Direct investment , a key driver of enterprise development and growth.
Support for S s ppo ts t e de elop ent o s b p o idin access to finance, management development , mentoring supports, market supports and trade promotion. The needs of S s are taken into account when developing national policy key discussions will take place with relevant stakeholders.
Business environment
The views and voices of all stakeholders are taken into account when addressing issues across a wide range of sectors. ocused on developing and implementing policy that enhances the enterprise environment , ensuring sustainable development and growth for all businesses.
Corporate law Advises the government on legislative and policy needs.
Consumers and competition iaises with the ompetition and onsumer rotection ommission and works on national and uropean nion policies to ensure fair markets for consumers.
EnterpriseIreland
nterprise Ireland is the Irish government s enterprise development agency. It was established in 199 to support indigenous Irish industry to achieve global success. It has a net o o o fices a o nd t e o ld elpin is fi s network, make connections and enter new markets with innovative and sustainable business solutions. nterprise Ireland focuses on helping Irish-owned business with ten or more employees that are seeking to deliver new e port sales.
Case Study: reenes
reenes Shoes, established in 19 9 in Donegal, is 100 Irish-owned and operated and now has seven stores across Ireland, including in imerick, alway and etterkenny. Orla c adden is the general manager and director of reenes Shoes. She recognised a changing retail environment and began developing the company website about ten years ago. It started small and she applied to nterprise Ireland s Online Retail Scheme for support to improve it. She had ust been accepted onto the scheme when ovid-19 arrived in Ireland and lockdowns hit. The funding allowed her to continue to develop her website, which proved critical in allowing t e fi to contin e to sell despite its traditional retail space being closed. reenes Shoes now sells online to all counties in Ireland as well as customers in and urope.
evelopment advice
anagement development programmes
undingand grants
hat does nterprise reland do
A team of development advisers provide advice and supports for companies and researchers in higher education institutes to develop new technologies and processes that will lead to ob creation and increased e ports. They support companies in developing innovative, scalable solutions for international customers.
elping business owners and managers develop their skills in raising capital, innovation, digitalisation and sustainability.
elps companies become more competitive and innovative. uity investment direct investment in innovative start-ups that have strong international market potential.
ew markets nte national o fices elp o e po ts b p o idin a etin se ices o is co panies, acilitatin oppo t nities o is fi s to net o and a in connections and introductions to potential overseas customers. Trade missions, trade fairs and knowledge events give clients the opportunity to connect with e isting and new customers, increase sales in international markets, e change ideas, etc.
arketing market research
nte national o fices elp is b sinesses it a etin and p o ide p to date information on market si e, competitors, key statistics on the country and the target market
obby ealy was already a successful entrepreneur, having established two successful companies, when in 01 he started anna Drone Delivery with the aim of revolutionising food delivery e saw a gap in the market for a food delivery service to suburban Ireland, an area where many food platforms don t operate due to i costs and lo p ofitabilit obb eal began hiring technology e perts to help him turn his idea of drone delivery into a reality.
e connected with the igh otential Start- p S team at nterprise Ireland, who have been working with him to commercially scale his business. Their logistical support , training and market access are invaluable as anna Drone Delivery e pands into the global marketplace. The S team in San rancisco have helped anna as t e aise finance to s ppo t t ei business. anna s mission is to improve the world by making lightning-fast suburban deliveries affordable, green and safe .
Stop Research
oo at t e lin belo and find ot e co panies nterprise Ireland has supported. repare a short report on one of these companies. Remember to share it with your class and build up your bank of case studies
edco.ie/x8hw
i ital
Trans rmati n
Theme
nn Drone ein se u o e de i er
Case Study: nn DroneDe i er
Local Enterprise Offices
LocalEnterpriseOffices Os are a government initiative. Their role is to deliver an integrated support service for micro enterprises businesses with fewer than ten employees and small businesses in Ireland. Os provide advice, information and support to people starting or growing their business.
e e a e dedicated tea s ac oss t e local a t o it net o , ic act as fi st stop s ops e have a county-based focus and try to do what s best for their geographic area.
e a e a n be o specific nctions
inance
s p o ide di ect financial s ppo ts to ic o b sinesses ants a e a ailable o a ide an e o p poses incl din easibilit st dies, b siness e pansion, , ic o finance loans, ene e ficienc and a t adin online o c e sc e e
They offer grants for local feasibility studies up to 0,000 , market research and preparing accurate business plans for purchasing capital e uipment and for utility costs of up to 1 0,000 Some grants are available to provide training for local people. Some of these grants may have conditions attac ed to t e in ot e o ds, to et t e finance t e b siness st do ce tain t in s
Advice
Os provide business information, advisory services and enterprise support to start-up fi s e p o ide ad ice on local a t o it e lations, plannin , accessibilit , en i on ent , procurement and other issues affecting business.
They are an e cellent starting point for new entrepreneurs in areas such as business formation, company registration, market research, company law, and advise on national and local support schemes available, alternative funding options and local authority regulations.
entoringservice
The entor rogramme matches entrepreneurs in need of practical and strategic advice and guidance with e perienced business practitioners who can share their knowledge, skills and insights to aid decision-making. The programme is open to both new and e isting businesses.
A service is available to match e perienced business people with new entrepreneurs. This can be in play when enterprising skills are low in the beginning. A mentor is an independent adviser who agrees to help the new business with offering advice and help with problem-solving.
Stop Colla orate
ook at ood Academy rogramme at the link below and take a closer look at some of the pro ects that have gone through the programme.
edco.ie/963d
raining
ocal Os deliver high- uality training in areas such as starting your own business, managing your b siness, a etin , sales, financial ana e ent , st ate and b siness plannin irststopshop
Os can provide connections for businesses with appropriate state resources, including relevant a encies s c as t e epa t ent o ocial otection ente p ise s ppo ts ic ofinance eland business loans Revenue seed capital scheme ducation and Training oards business courses and t e edit e ie fice en o ban as e sed c edit
igitalforBusiness
Digital for usiness is an O initiative that provides supports for small businesses to obtain digital strategy, technical and or advisory services. It p o ides di ital cons ltants o can elp fi s de elop t ei o n di ital strategy and digital plan.
Sustaina ility
o s ppo t b sinesses in ta in t ei fi st steps to a ds beco in o e sustainable, Os run a free programme called reen for usiness. A green consultant will work with the enterprise to highlight areas they can improve and changes they can make to become greener and more sustainable.
Stop Research
atch some of the short video case studies here, outlining how the Digital for usiness initiative and reen for usiness programme have s ppo ted fi s
edco.ie/yt7e
i ital Trans rmati n Theme Ethics and Sustainability Theme
I Ireland
e learned about the IDA in hapter 9.
thersupports
Recap
an you remember the functions of IDA Ireland ind a classmate who can help you remember more
Other supports for business development and growth in Ireland include rganisation
A OR S
uilt to Innovate initiative
Disruptive Technologies Innovation und
nterprise Ireland
igh otential Startp unding
Supports early-stage female entrepreneurs living in rural Ireland. rovides peer support and mentoring
Supports Irish companies in the residential construction sector that wish to improve the operational performance of their business in competitiveness, digital technology and research and innovation.
00m has been set aside as part of the ational Development lan to develop technologies that will tackle national and global challenges.
rovided for businesses with the potential to develop an innovative product or service for sale on international markets. It must have the potential to create ten obs and 1m in sales within three years of start-up.
Supports are provided at start-up stage feasibility study stage , investorready stage companies with a developed business plan and postin est ent t also s ppo ts establis ed fi s it a etin , st ate ic planning, R D and innovation.
ood Academy rogramme
A collaboration between Os, ord ia and Super alu for food business start-ups.
oing for rowth A free si -month programme supported by and nterprise Ireland that assists female entrepreneurs to grow their businesses. irms should be established and trading for two years. entoring is a key aspect of support.
Innovation ubs ent es t at p o ide s ppo ts to sta t p fi s in pa tic la secto s ational Digital Research entre DR has a network of innovation hubs that support start-up companies and act as incubators to protect start-ups. uritas, Soundwave, o ever and Silvercloud ealth are all digital start-ups that have been supported by DR . inness nte p ise ent e p o ides o fice space, ad ice and s ppo t to business start-ups and businesses looking to scale up and grow in Dublin ity entre.
e bicon ent e, o is an inno ation b ointl financed b o Institute of Technology IT and nterprise Ireland. niversity incubationcentres include Ignite Incubator rogramme niversity ollege ork , Tangent and aunchbo Trinity ollege Dublin , ova D, Origin ational ollege of Art and Design AD , The atch ab, orey and Invent entre D .
Start our Own usiness
This scheme provides income ta relief for long-term unemployed people who want to start their own business.
Sustainable nergy Authority of Ireland S AI o ides capital ants to fi s in t e a ea o ene e ficienc and renewable energy.
Stop Research
Take a look at some of the business start-ups supported by Innovation at the link below. Research one of these companies and prepare a case study report. ake sure each person in t e class esea c es a di e ent co pan and s a e o findin s at si ila ities did you notice ow were these companies supported on their ourney Remember to add your research report to your Investigative older
edco.ie/adgt
Chapter uestions
Stop Check for nderstanding
5. o plete t e ollo in definition Intrapreneurship involves in a business coming up with new to help improve the business.
. u ine two reasons why a person might consider becoming an entrepreneur
. n esti ate an entrepreneur in your local area. Outline three competencies they display. . us r e two e amples of intrapreneurship for a business.
. Discuss the importance of enterprise for the government.
1 . in the reasons why someone would become an entrepreneur
11. u ine the characteristics that you would associate with an entrepreneur of your choice.
12. ndic e whether each of the following are e amples of either intrapreneurship or entrepreneurship. rite the answers in your copybook.
An employee at Sony coming up with the idea for the Sony layStation
Two Stanford niversity graduates setting up a photo-sharing app business known as Snapchat
cDonalds employee, ob ernstein, coming up with the idea of the appy eal.
An employee at oogle coming up with the idea for an email service, which became known as mail
Dr isa and anessa raven setting up their business Spotlight Oral are.
13. Descri e the importance of enterprise to both society and the community 14. u ine two methods of promoting intrapreneurship within a business.
evelopin your no led e
Q1. in t e te int ap ene s ip and o tline t e benefits o int ap ene s ip o a b siness o your choice.
2. us r e what it means to be an intrapreneur
3. u ine the e ternal supports available for business development in Ireland.
4. u e t e ole o nte p ise eland and ocal nte p ise fices in s ppo tin b siness sta t ups and business development in Ireland.
5. Discuss the role of the IDA and nterprise Ireland in the development of the Irish economy.
. u ine two ways in which the Irish government supports businesses.
. in the service provided by IDA Ireland to foreign multinational corporations s .
. ssess the role of nterprise Ireland in supporting Irish businesses.
. u ine t o nctions o ocal nte p ise fices
Store t earn t
ompetencies: The integration of knowledge, skills, values and dispositions that support and foster innovation.
ulturalenterprise: An activity that uses artistic and cultural content to achieve social harmony and content in a community
epartment of Enterprise, Tradeand Employment: Advises on and implements government policies that stimulate the productive capacity of the economy, creating employment and ensuring sustainable development and growth.
Enterprise: An attempt to do or start something new by an individual or group of people.
Enterprisin : The ability to generate new ideas, to identify an opportunity and to have t e confidence, oti ation and dete ination to ta e t e financial and pe sonal is to t n the idea into reality
Entrepreneur: A person who takes the initiati e and is , bot pe sonal and financial, to set up a business in the hope of making a p ofit nt ep ene s act as a ents o c an e
EnterpriseIreland: The Irish government s enterprise development agency stablished in 199 with the purpose of supporting the development of indigenous Irish industry to achieve global success.
Innovation: A process of bringing about new ideas, methods, products, services or sol tions t at a e a si nificant positi e impact and value to society
Intrapreneurship: hen employees act in an enterprising manner in the workplace. Intrapreneurs are inventive, creative and innovative.
(Industrial evelopment ency)Ireland: Aims to attract DI into Ireland by providing financial ad ice and s ppo t
Local Enterprise Offices(LEOs): Their role is to deliver an integrated support service for micro and small businesses in Ireland. They provide advice, information and support to people starting or growing a business.
actors of production: The resources used in producing a product service land, labour, capital and enterprise.
inancialenterprise: A company or o anisation en a ed in finance
Incu ationcentre: A centre that provides support to business start-ups in the form of resources that small businesses may struggle to access, such as networks, investors or ento s, finance o co o in o fice space
Outline why someone would choose to be an entrepreneur ntrapreneurship plain intrapreneur
tline t e benefits o int ap ene s ip for a business
Outline how a business can encourage intrapreneurship
e able to list several e amples of intrapreneurship
Socialenterprise: A business that aims to achieve social and environmental goals while at t e sa e ti e ene atin p ofits to enable the business to survive.
mportance of enterprise for: overnment Society ommunity usiness
Role of governmentin fostering enterpriseandsupporting usiness developmentandgrowth
hy the government intervenes in business
ow the government intervenes in business look at
Department of nterprise, Trade and mployment
nterprise Ireland
ocal nte p ise fices
IDA Ireland
ternal supports available for business development in Ireland
dea evelopment
earningoutcomes Strand 2
At the end of this chapter you should be able to:
2 R the factors that impact on the development of business ideas.
2 2 design thinking as an innovative approach to idea development and appreciate how the process is iterative and both solutionand person-centred.
2 A R C A the importance of conducting a feasibility study to evaluate a business idea.
hat isideadevelopment
It is a step-by-step process t at efines a pool o b siness ideas by analysing each idea and identifying which will bring about the most success and the greatest impact. It can be broken do n into o sta es, it a fi t and final step o e al ation
Inspiration
The initial stage of development when several ideas are brought to the table and it is time to decide which are most likely to be successful. A group of individuals look at the viability of the ideas and the business implements strategies to facilitate the process. These include brainstorming, mind mapping and collaboration.
Recap
e learned about brainstorming and mindmapping in hapter 1. Take a moment now to refresh your memory on these two concepts.
Incu ation
Collaboration: Differentgroupsorindividuals come together to shareideas,knowledge,skills and resourcesinorder to achieve acommon goal. ollaboration tends to build strong relationshipsbetweenthosewhoengageinit.
Screening
deageneration
This is a structured approach to analysing the ideas generated in stage one, providing time for analysing the creativity, market viability and feasibility of an idea. It affords the opportunity to address and e amine potential problems and challenge them. Ideas will begin to take shape. It s a period of nurturing and allowing concepts to develop. There are several steps in the incubation period dea enerati n
Screening
Conceptandprototypedevelopment ar et testin .
e st on est ideas ene ated in t e fi st sta e a e no disc ssed in o e detail b siness st ene ate an b siness ideas to find a e ood ones t is is an e ficient , et odical a o findin ideas for new products and services.
In the process of screening all ideas are vetted and then a team selects the most promising ideas for development , scrapping the ones that don t work. A S OT Strengths eaknesses Opportunities Threats analysis should be applied to each idea to help businesses avoid costly mistakes and errors and ensure that good opportunities are not missed. ook to page 1 for more on S OT analysis..
Conceptandprototypedevelopment
is in ol es efinin t e concept, cond ctin a et esea c and c eatin prototypes or proofs of the chosen idea, turning them into potential products and making sure that the product appeals to customers. reating a prototype helps the entrepreneur to identify suitable production processes and to calc late p od ction costs and p ofits t can also be sed to see i it con o s to ce tain standa ds and to determine what ad ustments or improvements need to be made before deciding to go into full production.
arkettesting
This is carried out to see how customers react to a product s price, packaging, promotion, etc. before it goes into full production. All aspects of the product must be tested. Some of these can be measured p ecisel , o e a ple a ca s el cons ption at a set speed ot e s a e o e di fic lt to eas e, o e ample taste, because they depend on consumers opinions.
Theme
S analysis
A management technique/strategic planning method used to assess/evaluate a business in terms of strengths, weaknesses, opportunities and threats. Strengths and weaknesses are internal factors; opportunities and threats are external factors. The aim is to maximise the potential of strengths and opportunities and minimise the impact of weaknesses and threats.
Illumination
Often referred to as the most e citing stage of idea development , this is where the initial idea really begins to take shape. It is sometimes called the aha moment as this is when the idea begins to turn into something concrete. It is also a time where weaknesses can be identified and decisions ade on o best to navigate through them.
It provides an opportunity to ask uestions like, hy would we not develop this product service and hy would the proposed target market choose not to buy it
This particular stage is incredibly important as it is an e cellent opportunity to provide answers to the unasked uestions at the beginning of the process.
Implementation
Business and Financial Literacy
e p od ct se ice is no at a c itical sta e e de elope is ead to c eate t e finis ed p od ct or service and launch it onto the market It is a time to test the product properly and make sure that the third phase of illumination was successful were all weaknesses eliminated and was the feedback implemented If not, it may be necessary to go back to the incubation phase.
Evaluation
e p incipal ai at t is sta e is to e al ate t e final product results to see if it needs to be improved or tweaked. It is a key time to look back and analyse et e t e final p od ct se ice ali ns it t e initial vision. eedback from consumers will be available at this point , which will be a telling factor in looking at the longevity of the idea.
id ou now
Thirty-four per cent of business start-ups fail because of lack of a et fit p od cts o se ices Twenty-two per cent fail because of marketing problems.
actorsimpactingonthedevelopment of usinessideas
usiness structureand mana ement
If a new business idea is to be successful it is vital that the correct structures are in place. aving t e i t ana e ent st ct e and t e i t pe sonnel ill allo b sinesses to i ple ent e ficient decision-making processes. This will enable management to focus on ideas that are relevant to a particular task or pro ect.
pennesstone ideas
ith any new launch come concerns and worry from some employees change can be daunting, and employees need time to ad ust and get used to a new idea. To make this change as smooth as possible it is vital to maintain clear channels of communication between employees and employers.
Alleviating any fears or concerns employees have will make the transition easier when the time comes to launch a new product idea.
learvisionandcommitment
One of the biggest challenges facing entrepreneurs is the ability to stay committed to the idea and have the determination to see the pro ect through. An entrepreneur needs to be willing to put in the time, effort and resources to bring their idea to life. It is easy to come up with an idea but it is a lot tougher to push past any negativity and setbacks and keep a positive mindset.
aving a clear vision of where you see the product ending up is vital. An entrepreneur must be willing to a e sac ifices, ta e is s, s o pe se e ance and be adaptable
nlinepresence
A thriving business will always feed off the engagement of the public and if a business can t connect with its customers it will struggle. ore and more people research online before making a purchase, so building a strong online presence is critical for many businesses. Advertising online, allowing people to engage with your company online, giving customers the opportunity to research your product online are all key components in building a business. ithout an online platform a business may struggle to compete with larger, more well-known brands.
inancial status and ac in
o panies can o ten o o t o b siness d e to lac o financial s ppo
de elop ent o b siness ideas it o t financial s ppo t to s stain
not even be possible to begin it.
Technolo icaladvancements
The constant development of technology and the advances being made in the technological world can impact whether a business can launch an idea or not. Technological developments may prompt a business to develop new aims and ob ectives and be as innovative as possible. or e ample, a business might decide to increase its revenue through a new online portal, or develop new production processes through the use of technology
id ou now
Some of the largest car manufacturers have changed their aims and ob ectives with the help of technology. any are now focusing on green technologies such as electric cars as opposed to petrol or diesel cars.
Case Study: ir in rou
Stop Research
an you think of other factors that would impact on the development of business ideas hat about trends, for e ample, personal connections or an entrepreneur s interests and skills ave a class discussion to share your thoughts.
at fi st t e idea is not abs d t en t e e is no ope o it ic a d anson, t e billionaire entrepreneur behind the company irgin has lived by this philosophy. e co-founded irgin in 19 1 and it has now grown to be a holding company for over 00 companies. hen it comes to innovation and idea generation the irgin roup is one of the leading businesses in the world. irgin has a clear vision, and every idea it chooses must have the following criteria it must champion the consumer, offer value for money, be something fun yet competitive, drive innovation and offer an e cellent product or service.
hat started out as a mail order company has e ol ed into one o t e ost di e sified co panies in e istence, today employing more than 1,000 people across the globe. This growth did not happen overnight there were many businesses and brainwaves that ailed b t anson, a c a pion o inno ation, fi l believes that innovating is only possible when everyone is involved in the working process and motivated to become part of the success. e believes in allowing employees the opportunity to work on pro ects they are passionate about , encouraging intrapreneurship.
Idea development and innovation come naturally to ranson. Stand-up bars aboard an aircraft were introduced when ranson himself wanted to talk to one of the passengers but could not leave his seat because of technical issues. hen an idea is presented to the team at irgin it is analysed across several categories. If something doesn t uite fit into one o t ei e istin co panies, it is e ie ed b t e b siness and co po ate development team and then either considered as a new venture or scrapped. Since irgin is always looking for the ne t big idea, it is no surprise that irgin-branded businesses span multiple sectors travel and leisure health and wellness music and ente tain ent teleco s and edia financial se ices and space
Stop Colla orate
atch this short documentary on Richard ranson and answer the uestions on page 1 of your Student Activity ook.
edco.ie/w8dw
esignthinking
esi nthin in isaninnovative,non-linear approach to thedevelopmentofproductsand serviceswhich focusesonsolutions fortheenduser.
Design thinking is a person-centred approach to problemsolving and innovation. It is different from other innovation and ideation processes as it is solution-focused and user-centric rather than problem-based. It focuses on the solution to a problem instead of the problem itself
ample: if a co an is e e iencin co nication o e s et een de a t ents it o d foc s on a s to i d tea o and e ationshi s
In this way of thinking there is a focus on the person who is e periencing the problem or using the product, for e ample ho will be using this product , ow will they use this product , ow will it i pact t e o enable t is app oac a sense o e pat is an essential fi st step esi n t in e s must understand the person affected by the problem before they can create a meaningful solution. The design thinking process fosters innovation. It encourages multidisciplinary teams to work together to create solutions that will address users needs. The process aims to create a solution that is desi able anted b se s , easible possible to a e and iable financiall possible to p od ce
The design thinking process is iterati e and n n linear
An iterativeprocess meansthat theprocessis repeated overand overagaininorder to improve it.
Anideaorsolutionwillbecreated, tested, efinedand testeda ain is processwillcontinueuntilthemost desirableoutcomeisachieved.
henaprocessis n n linear it won tbese uential or straightforward. reatingprototypesand testing mayuncovernewinformationthatwillsparknew ideaso elp to edefinet ep oble esi n t in e s a findt e sel es et nin to t e ideationordevelopment stageoftheprocessand startingagain.
ESIG T I I G
Stop Research
atch an episode of the RT programme i ife i to see the design thinking process in action. In the programme a team of designers, engineers and other technology e perts invent solutions that transform people s lives.
There are four phases of design thinking.
CClarify: e oc s o t e desi n t in in p ocess is defined and t e p oble is clea l identified e e a be obse ation and an anal sis o p e io s sol tions Observations and research should be without bias. After observations have taken place, the problem is often written as a statement or uestion. ➜
Ideate: ew innovative ideas to solve the problem statement are imagined at this stage. rainstorming will take place and design thinkers should think outside the bo to come up with new and innovative solutions. It is important to avoid assumptions and keep the user at the centre of the thinking process.
➜
Develop: During the third phase concepts are developed. A range of possible sol tions ill a e been identified in t e ideate sta e ese ill no be c iti ed and analysed. rototypes will be developed and tested. periments may take place. These are done to assess the viability of the possible solutions.
➜
Implement: is is t e final p ase estin ta es place, es lts a e anal sed and t e e may be further testing. At this point , design thinkers may go back to the ideate stage and efine a ain is is at e ean b desi n t in in bein a non linea , ite ati e process. Results of the process should be shared with stakeholders.
any obs in today s dynamic world re uire design thinking skills, such as marketing managers, graphic designers, software developers and engineers. Skills such as communication, innovation, research and leadership are all essential in the design thinking process. Design thinkers should have empathy, be optimistic, embrace change, be good team players and be curious.
Stop Colla orate
atch the short ouTube video e plaining the design thinking process. orking with a partner, take it in turns to e plain the four stages to each other ou could use mini whiteboards to draw diagrams to help e plain the process.
edco.ie/rm4a
ESIG T I I G: I E P ESS
Learn about users through testing
Empathise to help define the problem
Tests create new ideas for the project
Define
Ideate
Empathise Test
Learn from prototypes to spark new ideas
Tests reveal insights that redefine the problem
Source Interaction Design oundation https www.interaction-design.org literature article stage- -in-the-design-thinking-process-test
Case Study: D son d
a es son la nc ed t e fi st e sion o is no a o s son vacuum cleaner, D 01, in 199 . The idea was borne from frustration when he found that his state-of-the-art vacuum cleaner fre uently beca e clo ed it d st and di t t t is asn t is fi st o a into invention he had created the allbarrow in 19
Dyson td has since e perienced huge growth. ompany head uarters are in Singapore, but the company is present in co nt ies a o nd t e o ld, ost si nificantl t e , t e hilippines and alaysia. Dyson employs over 1 ,000 people worldwide and had a turnover of .1bn in 0 . It describes itself as solving the problems that others have ignored solving t e fi st sin o tec nolo and in en it t specialises in o se old appliances s c as ac cleane s, ai p ifie s, fans and lighting, but constantly looks to broaden its range of products and services. ot all of its ideas have been successful the Dyson R01 washing machine was a revolutionary product, faster and better than its competitors, but it was too e pensive to manufacture, so production ended in 00 .
Theme
Ethics and Sustainability
ames Dyson started the ames Dyson oundation in 00 to inspire the ne t generation of engineers. ake Dyson, ames s son, designed a lighting technology in 01 that was brought under the Dyson umbrella. The lights have uni ue D technology that use a heat pipe to lower the temperature of the D, resulting in precise and powerful lighting that could last decades Dyson launched the Dyson Supersonic hairdryer in 01 . The development process took four years and 00 prototypes before engineers developed a small, light hairdryer that was powerful and minimised hair damage. In 0 it launched the Dyson one air-purifying headphones.
Stop Research
earn more about Dyson and sustainability at the link below. rite a short report outlining the initiatives that Dyson td has funded e.g. the ames Dyson Award, son a in a e o findin s it your classmates.
Stop Colla orate
ork with a partner hoose any one of the Dyson products and inventions and analyse how the design thinking process may have been applied. erhaps you could apply the design thinking process to a problem of your choice. ow would you solve this problem
valuating usiness ideas
A feasibility study isaninvestigationthatiscarriedout to assessthecommercialviabilityofabusinessidea.Itwill assesswhetherornottheproposedsolutionispossible to make,howmuchitwillcost to produceandwhetherornot thereisademand fortheproductorservice.
Productionfeasi ility: Is it possible to produce the product hat materials will be used ill it meet consumer and safety legislative standards ill the proposed solution work A prototype will be produced at this point to demonstrate how the product will meet the user s needs remember, the solution must be desirable, feasible and viable .
A prototype isafi st oc uporsampleoftheproduct.
ou now
Sir ames Dyson made ,1 failed prototypes of his Dyson vacuum cleaner.
inancialfeasi ility: A detailed cost analysis will be carried out. i ed and variable costs associated with producing the product will be calculated. otential revenue will also be dete ined to calc late potential p ofit
Importance of carryin out a feasi ility study
uturesuccess: ffective feasibility studies can help a business determine the future success of a product or service. They will enable the business to predict future costs and estimate possible sales and market si e.
Specific: easibility studies are focused and specific e as et e an idea, p od ct or service is viable. They force the entrepreneur to focus solely on that uestion to e plore all possible outcomes. It is an investigative tool and can be used before creating a business plan.
i picture: easibilit st dies o ce a co pan to loo at t e b oade pict e fi st and t en narrow down to details. The initial uestion of whether or not a product is viable may lead to many o e detailed estions, eac oc sin on a specific pa t o t e p od ction p ocess o e a ple, the company will need to consider customer need, competition and possible risks, as well as definin t e ta et a et and anal sin costs and potential p ofit
lternative solutions: easibility studies can provide an opportunity for the company to get a product right before committing time, money and other resources to an idea that may not be financiall iable t a also e eal ne oppo t nities and sol tions t at a ne e a e been considered.
Chapter uestions
Stop Check for nderstanding
1. Define design thinking.
2. u ine the four stages in design thinking.
3. in, with the aid of a diagram, how the design thinking process is used to support idea development.
4. is the four phases of idea development.
5. in what is meant by an iterative process.
. Discuss two factors that impact on the development of new business ideas.
. u ine what is meant by person-centred .
. Define the following terms a rainstorming b ind mapping.
. in what is meant by a feasibility study
1 . Define prototype. Support your answer with a suitable e ample.
11. in o a fi a e al ate b siness ideas
12. in two different types of feasibility study and how they may be used in idea development.
evelopin your no led e
1. in what is meant by design thinking.
2. us r e the design thinking process.
3. Design thinking is an iterative and non-linear process. Discuss this statement. Support your answer with relevant e amples.
4. De ons r e your understanding of the term feasibility study .
5. u ine the factors that impact on the development of new business ideas.
. u ine the four stages of the idea development process.
. us r e your understanding of the term prototype .
. Discuss the importance of evaluating business ideas.
. The inspiration phase of idea development has three sub-sections. is and e in each of these.
1 . e d ames Dyson s story here edco.ie/aa27 Answer the uestions below
a an you identify the competencies he displays b here did he receive support on his entrepreneurial ourney c ow does he support budding entrepreneurs d ith regard to the idea development process, outline an e ample of one of the products discussed in the article and clearly state where there is evidence of each phase.
Store t earn t
rainstormin : The deliberation of ideas by a group in an attempt to settle on an idea that i t be a sol tion to a specific p oble olla oration: roups or individuals coming together to share ideas and resources in order to achieve a common goal.
esi nthin in : An innovative, non-linear approach to the development of products and services which focuses on solutions for the end user
easi ility study: An investigation that is carried out to assess the commercial viability of a business idea.
Ideadevelopment: A step-by-step process of analysing a pool of business ideas and identifying which idea will bring about the most success and the greatest impact.
ChapterChecklist
deadevelopment
plain
Outline the factors that impact on it esignthinkingprocess
plain
Identify the four stages
Illustrate how it can be used in idea development
Theme
Business and Financial Literacy
Idea eneration: A process that is used to form new ideas. It involves creating, developing and communicating new ideas.
Iterativeprocess: A process that is repeated over and over again in order to improve it.
ind mappin : reating a simple yet powerful diagram or visual representation that outlines ideas and information in one place. on linear: ot se uential.
Prototype: A mock-up or sample of a product. Screenin : Ideas are vetted and then a team selects the most promising product ideas for development , scrapping the ones that don t work.
S T analysis: A management techni ue strategic planning method used to assess evaluate a business in terms of strengths, weaknesses internal factors , opportunities and threats e ternal factors .
plain iterative process
plain how design thinking is solutionand person-centred easi ility study
plain
Discuss the importance of feasibility studies
hapter 2 Business lanning
earningoutcomes Strand 2
At the end of this chapter you should be able to: A R C A the importance of having a business plan and outline the key functions of a business plan.
2 the importance of ethics and sustainability when planning in business. A what is meant by a business model and appreciate its role within the business plan.
4 the key elements of the business model canvas and outline the role of business models in successful enterprises. and compare the most common business models. how digital technology is a driver of change in business. and compare a number of technology-driven business models and outline the key characteristics of each model.
Case Study: i rien s C oco es
ily O rien s hocolates, an authentic Irish brand of uality chocolates, was started by a nn ien in t ecei ed its fi st bi b ea in en it on a cont act with Aer ingus to supply them with two million two-chocolate bo es and three million ints is a e a nn t e confidence to e pand and app oac eat o ai po t
urrent O ichelle ance oined the company in 00 and became O ust before the ovid-19 pandemic. ily O rien s felt the effects of the pandemic immediately Its food service division, representing of the business, was worst hit. It used this time to engage with its stakeholders, focusing on its retail and online markets. ast forward a few years and the company s revenues have recovered to pre-pandemic levels, but the customers in the food service market continue to remain price-sensitive.
ily O rien s is a largely seasonal business, with aster and hristmas being the busiest seasons. roduction is carefully planned to ensure it can meet the high demand at these times of the year
Theme
The company prioritises sustainability and innovation. It aims to reduce the amount of plastic in its packaging and has recently launched a pouch range with a 9 reduction in plastic. The company s long-term plan is to make ily O rien s a global brand and to e pand into urope and the S while maintaining and growing its domestic and markets. Driving the rate of sales and increasing customer engagement is key to achieving this. Teamwork and working in partnership with stakeholders is essential. It wants to build long-term sustainable growth with trusted partners. panding into uropean markets will be challenging, but support from nterprise Ireland and ord ia will help it achieve its goals. The ord ia ellowship rogramme a pa tne s ip bet een o d ia and fit siness c ool t at lin s b siness development and marketing fellows with companies is one programme the company is conside in ontin in to de elop and o its online p esence ill be a fi st step in helping ily O rien s achieve global success
Stop Research
atch this short video clip in which ary Ann O rien tells her story
edco.ie/5jn7
lanning
lannin istheprocessofdecidingthe ob ectivesofabusinessandhowthey are going to beeffectivelyachieved.
A plan isapredeterminedcourseof action.
The process of planning involves selecting organisational goals or ob ectives and seeking o t a s to ac ie e t e e fi decides what it wants to achieve and how it will achieve its goals. lans reduce risk and uncertainty and give an organisation purpose and direction.
Identifiesresourcescurrently available to thefirm: The most important factors for the enterprise are identified b ca in o t a t en t s ea nesses, Opportunities and Threats analysis. The best people can then be put in charge of particular tasks or areas to improve the chances of success.
Improves motivation: A good plan will be clear and agreed by all, and every stakeholder will have been consulted. They will know the value of their role and the contribution they make to the overall success of the organisation. mployees will feel valued and appreciated, which will improve their motivation and productivity.
Recap
e learned about S OT analysis in hapter 11.
inance: otential investors will re uire a plan be o e t e co it to financial in est ent in a fi inancial instit tions, t e o e n ent and a encies ill all ant to see a financial plan t at clea l s o s a fi s abilit to epa and t e potential p ofit o an p o ect nticipatespro lems: lanning helps organisations look ahead to the future and identify future problems. They will be able to cope with changes in the use of technology, new products, societal changes, competitors, etc. hange is normal and the emphasis is placed on seeking out new opportunities and solutions. See design thinking from hapter 11.
Theme
Business and Financial Literacy
enchmar in : lans ensure that management are in control of the organisation. The plan has been agreed by all stakeholders, so it is likely to be realistic and achievable. Targets and goals will have been outlined and review points will have been set. These can be monitored to ensure the business is staying on target or altered to accommodate changing needs.
Greaterefficiency: A plan sets out a clear course of action for a business The role of each depa t ent and tea is clea l set o t , leadin to eate e ficienc o t e fi
ypes of plan
A missi n statement setsoutthevisionofthecompany, its ethos, values,whatit stands forandhopes to achieve.Themain purposeofamission statementis to keep staff focusedonthe company smainaims.
ample: i ien s ethos t i ien s e a e assionate a o t c eatin a a in and inno ati e choco ate eci es e st i e to inco o ate oth food ins i ed a o s and ndenia e c assics into each and every collection. ur esearch and Development team are constant shin a o o nda ies ta in ins i ation f o t ends and a o co inations f o a a o nd the o d
Strategicplanning
Stop Research
ind the mission statement of a business of your choice. hat does it say about that company Is this e ected in its dail operations Share o findin s it o classmates.
To be strategic is to carefully plan something to achieve a particular purpose or gain an advantage. It involves identifying long-term aims and e amining how to achieve them.
In business, a strategic decision is an important decision that will help achieve a long-term aim of the business. A strategic view is a future-focused, proactive view to help the business achieve its longterm goals.
A strategicplan is a long term plan developed by the senior management team to cover abo t fi e ea s o t e b siness t cla ifies t e ob ecti es set o t in t e ission state ent and oc ses on lon te ob ecti es s c as a et s a e, p ofit , capital e pendit e, e pansion and di e sification
ese a e s all co p e ensi e, nified plans that cover all parts of the business. They act as a guide to management and ensure that resources a e allocated e ficientl it in t e fi anagement has a base against which progress can be measured benchmarking and the plan can set out a mechanism for informed change when needed. Strategic plans help businesses to identify ac uisition opportunities.
ample: i ien s is co itted to reducing the impact its business activities have on the environment and to becoming a more sustainable business.
actical functional planning
Tacticalplanning is short term planning aimed to elp t e fi ac ie e its s o t te oals t b ea s t e strategic plan into shorter, more manageable goals and short-term ob ectives. These are usually developed by the middle management team and cover one to two years of the business.
Tactical plans outline a set of action items or tactics to help a business achieve a number of key ob ectives or goals, for e ample adding a group of new customers in the ne t year, improving customer service levels, reducing employee turnover or lowering operational costs.
To help you remember the difference between strategic and tactical planning, think of a soccer team. Their end goal or strategy may be to win the league long-term but their tactics in each game free kicks, corners, etc. help them to achieve that.
ample: i ien s is a e e of the o d ia i in een o a e hich o ides it ith a f a e o to ana e its siness s staina i it t a so has an en i on enta ana e ent s ste as a t of its o e a s staina i it an
perationalplanning
Contingencyplan
Operationalplanning isplanning forthedays, weeksandmonthsahead.Itinvolvesproducing weekly staff rotas,productiontimetables and uantities.Itiscarriedout by f ont ine management. oodoperationalplanningis essential to turningproductsaround.
ample: he od ction ana e of i ien s choco ate facto in i da e has a od ction sched e fo each da ee and onth his sets o t hich t es of choco ate a e od ced on hich day and hen the machines ill be do n hen the a e c eaned to chan e f o i to hite choco ate fo e a e he e a e set antities of each t e of choco ate to e produced each ee .
A contingencyplan isaback-upplanused to dealwithunforeseencircumstancesoremergency sit ations tisessentialt atafi ascontin enc plans to elpit ini isedis ption to its b siness,andpotentiallostp ofits,int e e ento e e enc sit ations
ample: i ien s i ha e contin enc ans in the e ent that a s ie cannot s essential ra materials. any companies began stoc piling essential ra materials or components in ad ance of e it as the e e nce tain ho this o d i act thei s
e will e amine strategic planning and contingency planning in more detail in hapters and en e disc ss t e ationale o plannin and o fi s ana e c an e in an o anisation
C oco e roduc ion
thics andsustaina ility in usiness planning
Incorporating ethics and sustainability into strategic and tactical planning ensures sustainable enterprise development and growth. egislation, such as data protection, consumer protection and en i on ental le islation, co pels fi s to a e b siness decisions that support and protect the environment , protect consumers from misuse of their data and harmful products services or misleading advertisements. egislative re uirements must be taken into account by senior and middle management teams when planning.
Genderpay ap
Recap
e e amine business regulation and corporate governance in hapter . ork with a partner and write down five key pieces of information each from that chapter.
The gender pay gap is the average difference in gross hourly earnings of men and women, e pressed as a percentage of men s average gross o l ea nin s positi e fi e indicates t at, on a e a e, o en a e in a less favourable position than men. The ender ay ap Information Act 0 1 set out a legislative base for gender pay gap reporting. The Act re uires organisations to report on the hourly gender pay gap ac oss as a an e o et ics n all fi s it o e e plo ees e e andated to p blis a ende pa ap epo t n , all fi s with over 0 employees were re uired to publish one.
The gender pay gap in Ireland in 0 was 9. , which means that the average man earned 9. more than the average woman.
Stop Research
ook at the SO s most recent Structure of arnings Survey hich sector had the highest gender pay gap hich had the lowest In what sectors do women earn the highest hat factors contributed to a higher gender pay gap
orporate overnance
y 0 , all companies will be re uired to publish an environmental, social and corporate governance ESG report on their activities. irms must set targets in relation to each of the three areas and provide data to measure their progress. Employees are an important stakeholder in any organisation. irms recruit , train and motivate their staff and spend time and money retaining them and ensuring employees are motivated and engaged. irms incorporate corporate social responsibility (CSR) programmes and employee wellness programmes to increase employee morale and reduce labour turnover.
Stop Colla orate
ork in groups to research a local, a national and an international business. ind their mission statements. hat are the companies overall goals ind out how they incorporate ethics and sustainability into their planning. Remember to keep your information in your Investigative older
ood corporate governance, transparency and accountability a e essential and le islati e e i e ents o all fi s Investors will pay close attention to all these to ensure that their in est ent is bein sa e a ded and t e ep tation o t e fi p eld onsumers a e beco in o e in o ed abo t t e et ical be a io o fi s and t e i pact fi s have on the environment. A 0 survey by w found that of Irish consumers are willing to pay a higher than average price for a product that is produced or sourced locally are willing to pay more for products made from recycled or sustainable materials and would buy from fi s it a ep tation o et ical p actices io itisin et ical and s stainable p actices and inco po atin t ese into t e plannin p ocess as financial i plications o fi s
Business models
A businessmodel isanelementinthebusiness planthatoutlineshowacompanywilloperate, create,deliverandcapture valueineconomic, socialandculturalconte ts.
A business model looks at the product or service created by the business, the market for this product or service and how this product will generate revenue.
A key elementofany businessmodelisthe alue proposition Thismeanslooking at theproduct or service,theproblemitsolves for customersandhow cons e s illbenefit o t isp od ct tin ol es understandingwhat makesthisproduct different fromall otherproductsorservicesonthemarket.
Stop Research
atch this short video e plaining business models. Then list some e amples of different business models you may have encountered in your daily life.
hen creating business models, companies must closely e amine the target market and pro ected costs as well as analysing potential competitors and revenues. fi s o ld nde stand its p od ct o can t e fi generate revenue from it an the model be sustained and scaled up irms should establish a clear pricing strategy and study their target market closely to ensure they are ma imising the potential of t ei p od ct nde standin t e ta et a et ill elp a fi to make decisions on how to deliver the product to their customers. osts should be analysed and calculated. easibility studies are covered in hapter 11 .
id ou now
A business plan outlines the overall strategy and goals of a business. The business model is a part of the plan it e plains how the business will generate revenue. Think of the business plan as a roadmap for starting or growing a business, and the business model as the engine that makes it run.
A business model
Illustrates how a company will offer value to customers and generate revenue. or e ample, it identifies et e t e b siness ill se a s bsc iption odel li e et i , a a etplace model like DoneDeal or another model. It includes important details like pricing, how products will be sold online or in stores , and who the target customers are.
Assists entrepreneurs and business owners to att act in esto s and sec e finance an s o investors will need assurance that the business will generate enough revenue to succeed in a competitive market
hen putting together a business plan, the business model is one of the most important sections. It shows how the business idea will work in real life and what will a e it p ofitable o e ti e
In hapter 11 we referred to iterative processes processes that are repeated over and over in order to improve them. A business model should also be iterative. Testing may i li t a need o t e cla ification on an aspect of the business model. ood business models will need to be constantly re-evaluated to make sure they are always meeting customers changing needs and keeping up with changing trends. Business and
unctions of usiness models
Identifythe tar et mar et: A company with a good business model will understand and know its target market who they are, what their needs are and how to connect with them.
Definetheproblem: It will help understand the consumers problem that the business wants to solve.
Understandthe solution: a in clea l defined the problem, a good business model will clarify how the product or service solves that problem. hat makes the product service uni ue hy should customers use their product service instead of a competitor s hat is the company s value proposition
Generaterevenue: Strong business models have a clear strategy for generating revenue. osts should be closely analysed so that a successful pricing strategy can be chosen. nderstanding how the product or service can generate revenue will be key to the success of the business model. is mana ement: usiness plans should cover all aspects of the business model These plans should be tested. arket research should be conducted, prototypes developed and trial launches undertaken to gauge customer reactions. This will minimise potential losses and mitigate the threats the business is e posed to e learn about risk management in hapter 1 .
usiness odel anvas
The Business del an as isa toolused to mapoutabusinessmodel.Itincludesthe key partners,activitiesand resources,the valueproposition whythecustomer wouldchoosethe product service ,customers,customer relationsandchannels,costsand revenues.
e usiness ode C n s
In 010, Ale ander Osterwalder and his co-author ves igneur published a book called siness odel eneration, which outlined a business model framework that businesses could use to map out the various elements that are essential to success. e called it the usiness odel anvas. It is a visual tool t at c eates a plan o oad ap o a fi co e in all t e ele ents in ol ed in t ei b siness
The usiness odel anvas has nine components.
eypartners: elations ips it ot e fi s and s pplie s ese pa tne s co ld elp a fi reduce risk, locate resources, generate economies of scale or increase sales. irms should ask themselves ho are their key partners ho are their key suppliers hat key resources and activities does each partner provide perform
2 ey activities: The activities a company needs to do to make the model work and to deliver the value proposition what makes the company uni ue in terms of revenue streams, channels of distribution or customer relationships. They may be managerial or operational activities.
eyresources: The resources the business needs to be able to deliver its value proposition, to create value for its customers. They include the company s assets and an, financial and tan ible and intangible intellectual property resources.
4 alueproposition: e fi s p od ct se ice and o it provides value for the customer It should focus on why a customer would purchase this product over a competitors , and what makes this product service uni ue. It should clearly identi t e c sto e p oble o need t at is bein satisfied
ustomerrelationships: fi s o ld identi the type of relationship it wants to create with its various customer segments. ow does a business interact with each segment ow will the business get new customers ow will it create brand loyalty and retain e isting customers ow will it grow revenue from its current customers ill this re uire fre uent communication and customer support or e ample, personal assistance, self-service, automated service and communities are all types of customer relationships.
hannels: A business must consider how it delivers its value proposition to its target market. ecti e dist ib tion c annels a e ast , e ficient and cost-effective. onsideration must be given to the channels that will be used to create awareness marketing , evaluation getting potential customers to try the product , purchase how and when customers will buy the product , delivery and after sales.
ustomerse ments: A vital component of the business model canvas. It describes the target customer and their needs and e i e ents e fi needs to conside demographics age, gender, etc. , preferences and oti ations s t e fi ta etin a ass market or niche market Is the market se ented o di e sified
ost structure: All businesses will incur costs relating to their key activities, key partners and e eso ces ese costs can be bot fi ed costs that do not change as output changes, e.g. rent and variable costs that increase in proportion with output , e.g. raw materials, labour or direct or indirect.
9 evenue streams: here will the business s revenue come from Direct sales, advertising, freemium when a basic service is offered for free but customers pay for a premium service, e poti o s bsc iption e fi st think about what customers are willing to pay and how they pay. usinesses may have more than one revenue stream and should consider how much each revenue stream contributes to their overall revenue.
Stop Colla orate
atch this short video, which e plains the usiness odel anvas. Then work in pairs to complete a usiness odel anvas for a business of your choice.
edco.ie/y65q
ho are your key partners suppliers
hat are the motivations for the partnerships
hat key activities does your value proposition re uire
hat activities are most important in distribution channels, customer relationships, revenue stream, etc
hat core value do you deliver to the customer hich customer needs are you satisfying
hat relationship does the target customer e pect you to establish ow can you integrate that into your business in terms of cost and format
hich classes are you creating value for ho is your most important customer
hat key resources does your value proposition re uire
hat resources are the most important in distribution channels, customer relationships, revenue stream, etc
hat are the biggest costs in your business hich key resources activities are most e pensive
Through which channels do your customers want to be reached hich channels work best ow much do they cost ow can they be integrated into your and your customers routines
or what value are your customers willing to pay hat and how do they pay ow would they prefer to pay ow much does each revenue stream contribute to overall revenue
ommon usiness models
Retailer
Business models
A well-thought-out business model is essential for the success of any business, whether it is new or established. The type of business model a business chooses will help it to attract new customers and distinguish it from competitors.
Retailer
The most common style of business model.
2 anufacturing
The manufacturingmodel is a fi a o ite among businesses.
Amanufacturermakesproductsfromraw materialsandsellsthem to distributors, customersor to otherbusinesses whomight thensellthem to consumers .
Theconsumerbuysdirectlyfromthe retailer, eitherinaphysicalshoporfromitsonline store.The retailerbuys goodsfromawholesaler andsellsthemon to consumers at amarkedupprice a pricethatwillbothcover e penses andea nap ofit o t eco pan
It is the most straightforward model but the one involving the most competition, since other retailers will be selling similar items. Retailers compete on uality, price, marketing campaigns, etc.
It is critical that the business is able to generate revenue and survive at the same time. A manufacturing model business might choose to assemble to order, make to order or make to stock. The business aims to create, deliver and earn revenue for the business, e.g. Apple, Samsung.
Su scription
This is a newer business model than some of the more traditional models but it has been used by maga ine publishers for uite some time.
The subscription companyprovidesa productorservice to theconsumers fora setprice.Thesubscriptioncouldbecharged weekly,monthlyorannually.
Stop Research
Read this article about Spotify s business model. repare a short summary on the success of its subscription model, including Spotify s growth and some key statistics.
edco.ie/aqp9
The customer will make a recurring payment to the provider for either access to the service or for an ite t e ecei e in t e post, e et i , poti
4 ranchise
Some of the most popular and familiar brands are franchises
Afranchisecreatesablueprint foracompanythat ishighlysuccessful.Itthenoffersthatblueprint to franchisees,whousetheestablishedbrand,business odelandintellect alp ope t to ene ate ap ofitable business forthemselves.
Advantages of this model include a proven business concept, a recognised brand name and a ready-made clientele.
Stop Colla orate
Read this article on cDonald s and how their story of anc isin be an n pai s, list fi e e points o t e a ticle
edco.ie/s6m3
reemium
Acompanyoffersasimple,basic versionofitsproductorservice for freeandthencharges forany features o se icesitclassifiesasp e i Thisbusinessmodelisoftenused for apps,gamesandonlineplatforms.
The goal is to attract a larger customer base to the basic version of the product or service by eliminating the initial cost. The premium level offers the user additional features, such as no advertisements during streaming in adsupported models , additional storage limits or improved customer service. amples include anva software , Spotify mobile apps and oom online platform .
Recap
ook at hapter for information about franchises, how they work and their key benefits
An affiliate businessmodeliswhen a business orindividualearns a commissionwhen a memberofthepublicortheiraudience purchasessomethingthrough a direct linkfrom anadvertisementthey have mentioned.
id ou now
filiate b siness odels a e becoming more popular due to the popularity of social media.
ssentially, a business is relying on a third party to advertise, market and sell its product or service The a filiate is esponsible o d i in and inc easin sales o t e co pan t e a e a filiated it o e o ten t an not t e a filiate ill onl ea n a co ission i t e pe son isitin t e p o oted site p c ases a p od ct se ice e e a e se e al e benefits o an a filiate as a b siness odel, o e a ple
Income: e e is i inco e potential as an a filiate i o a e lin ed to a t i in o well-known business.
le i le or in hours: e ast a o it o a filiate a ete s do it as a part-time ob, but some people do it full time if it has t e potential to i e a i inco e filiates can be e ible in their working hours and can pre-record work and launch it at appropriate times to catch the audience at optimum times. emote or in : One of the biggest pe s o bein an a filiate is t e abilit to work from anywhere in the world. All that is needed is access to the internet and a platform to launch the products being promoted.
a ples o a filiates incl de social edia in ence s and a on associates t is is a ell no n a filiate p o a e e e individuals or website owners promote Ama on products on their own site or platform and earn a commission on sales ene ated t o t ei a filiate lin s
Stop Colla orate
e often see af, ad and sp on social edia sites an o t in o so e in ence s o have used af a filiate lin o in it a class ate, a e a list o in ence s o se t is and the product service they are enticing you to purchase.
igitaltechnology
Digital technology is a driver of business transformation. ompanies are embracing digital technology at different levels and speeds and for different reasons. loud computing and AI are increasingly becoming more popular as a method of improving customer e perience. Other companies adopt digital technology in order to remain competitive and to provide a pathway for innovation. o e o t e e benefits o di ital technology are
Efficiency: It helps businesses to i p o e t ei e ficienc , it less scope for human error Technologies such as AI almost outperform humans in accuracy and speed.
ustomer value: The more willing businesses are to adapt to change, the greater the e perience will be for their customers.
or in to ether: It provides an opportunity for businesses to bring different areas of the company together virtually .
Employees: Staff can upskill using new software, which in turn will improve employee performance and productivity.
Digital technology is providing businesses with a platform to reinvent their current business models with fresh, new and relevant ideas. It is e panding the market si e for business and opening up new areas of growth.
Case Study:
Recap
Digital technology speeds up business operations, improves customer e periences and helps companies stay competitive. ompanies that embrace these changes can innovate, grow faster and stay ahead of their competition in today s fast-changing market.
id ou now
The ig our Ama on, Apple, oogle and eta are collectively worth trillion.
ns or ionins o in
I A has shown how a traditional company can pave the way in digital transformation. It has been pushing a robust plan to offer an omnichannel shopping e perience, strengthening its position with e-commerce. Apart from changing to smaller-format shops, the Swedish company allows its consumers to use augmented reality to choose furniture before making a purchase. In 01 the company bought TaskRabbit , a platform for hiring people, helping c sto e s to find so eone to assemble furniture. It was recently announced that I A has ac uired eomagical abs, a company known for its advanced D and visual AI technology. The new feature of the app will allow customers to upload pictures that will be automatically rendered in D. As a result , prospective buyers will have a chance to swap old items out and new ones in. ource www.future-processing.com blog 10-companies-with-successful-digital-transformation
Technolo y driven models
igital usiness model
arketplace
ey feature: Connects buyers ith sellers
Examples: ma n tsy eBay, Uber
planationSimilaritieswith non digital models
An online centralised platform where multiple buyers and sellers interact and carry out transactions.
The online marketplace doesn t own any products or services it acts as a mediator connecting buyers and sellers. There are no set prices, and each seller sells their own products under their own company brand name. It provides value to both buyers and sellers.
of online shoppers go straight to a large online marketplace for their purchases.
Su scription
ey feature: recurring payments
Examples: Netflix, Spotify
The consumer receives monthly or yearly use of a service. The subscription company receives a recurring subscription from consumers.
Position: As a platform to sell products and services, it is similar to a standard market or a shopping centre.
Interaction: rovides an opportunity for buyers and sellers to interreact.
Marketing: oth online businesses and physical shops need to market themselves in order to generate custom.
Market research: nowing who your customers are is e ually important for both online businesses and physical shops. oth conduct market research to generate as big a customer base as possible.
Newspapers: onsumers can subscribe to an online newspaper but they can also buy a physical newspaper in a bricks and mortar store.
Revenue: oth business models generate sales and p ofit o consumers when they pay for products and services.
Relationships: oth business models strive to develop customer relationships either through repeat subscriptions or repeat visits to a physical shop.
Range of products: oth business models provide a range of products and services that meet their customers needs.
ifferences from non digital models
Prices: A standard bricks and mortar shop has set prices.
Ownership: A shop owns the products and services it sells.
Costs: Selling products through an online store costs less than through a bricks and mortar store that incurs costs such as rent and maintenance, which are not needed with an online store.
Access: An online store is available hours a day a physical store has restricted opening hours.
Sales: Subscription services make a steady return in revenue through recurring payments from consumers and repeat purchasers. ricks and mortar shops generally rely on one-off sales. Repeat custom is always welcome but never guaranteed.
Customer interaction: Subscriptions often offer continuous customer interaction and are able to build relationships with their customers. A physical store may have less fre uent interactions with customers.
Crowdfunding
ey feature Connects in est rs ith entrepreneurs
Examples: Bre d raised 12 milli n thr u h GoFundMe)
Involves raising small amounts of money from a large number of individuals. sually done to finance a ne business venture.
ntrepreneurs connect with investors with the hope of securing enough finance to sta t t ei business.
Capital: oth models e i e finance to launch their business. rowdfunding may ac uire this through venturecapitalists or the general public online a bricks and mortar store generally re uires a loan, owner capital or money from an investor.
Customer engagement: oth business models engage with consumers, but the methods may differ for each model.
Personal interaction: A typical retailer model has a physical presence with physical customers who visit a premises and purchase a product or service. rowdfunding campaigns are conducted online and can reach a wider audience.
Initial investment:
The initial start-up costs and investment re uired for a bricks and mortar model are e tensive. rowdfunding can alleviate some of those initial costs by generating funds before launching the business.
Advertising supported model ey feature Free r users supported by ad ertisers
Examples: le Facebook, YouTube
A business establishes an online presence with relevant content and then sells advertising space to companies.
This model has been around for years and continues to generate revenue, e.g. acebook.
Revenue: oth sell advertising space to companies, e.g. print media companies sell advertising space in newspapers, maga ines and on billboards.
Marketing: Advertising is a form of marketing that all businesses, online or not, need to conduct.
Revenue: Advertisingsupported models generate revenue primarily through online ads acebook, Instagram, etc The aim is to attract an audience to whom you can sell advertising space. A standard bricks and mortar shop generates revenue by selling physical items in a shop.
Online: The method of advertising is 100 online in many ways this is easier as the audience is much larger than for businesses with a different business model.
reemium model
ey feature: Free (basic) and paid-for (premium) eatures
Examples: Spotify (free vs premium), m
A company offers a basic version of a product or service for free and then charges for any features or se ices classified as premium.
Access: ith both the freemium and a non-digital platform customers receive a free or low-cost basic version of the product with the option to pay or upgrade to premium features. or e ample, a maga ine offers a free trial issue before asking for a subscription similar to apps.
Audience: oth models strive to gain a large user base by offering something for free or at a low cost. In the nondigital world companies offer a free sample to attract customers. In the freemium model users are given free access to the basic service.
Cost: ith a digital freemium model the cost of offering the basic free service is minimal. A non-digital model will have higher costs as a physical product needs to be produced e.g. a free newspaper still needs to be printed and delivered and the distribution costs will be higher.
Customers: sing a freemium model in the digital world makes it easier to track customer behaviour as companies have the ability to gather data on how customers are using the service.
ith a non-digital model feedback will be slower and a lot less data-driven. It will be harder to gather direct customer feedback.
Chapter uestions
Stop Check for nderstanding
. C oose the appropriate terms to complete the sentence below. Two terms do not apply.
A plan is a plan for a business to be achieved over a 1- to -year period, while a plan is used in the event of an emergency unforeseen situation. . e two types of plan used in a business. hat types of plan might a sports store like ifestyle Sports use
. ndic e by placing a tick in the correct bo the type of plan to which each statement for agen-Da s ice-cream relates.
tatement
agen-Da s aim to create the most e traordinary ice-cream the world has ever tasted, a spoonful of lu ury to escape the every day .
agen-Da s aim is to continue e panding its product range and its locations over the ne t 10 years.
agen-Da s will establish their own creamery to ensure continuous supply of milk and avoid shortages.
agen-Da s will e pand its vegan range of ice cream in the ne t months.
Strategic lan Tactical lan issi n tatement Contingency lan
1 . u ine your understanding of the term marketplace as a business model.
evelopin your no led e
1. u ine the importance of a business plan.
2. De ons r e your understanding of a usiness odel anvas.
3. us r e your understanding of the steps involved in the S ART process.
4. den i nd co re the most common business models.
5. u e any three components of the usiness odel anvas.
. Dis in uis between strategic planning and tactical planning in a business.
. in the term contingency plan .
. u ine the importance of planning for a company of your choice.
. u e the difference between a marketplace business model and crowdfunding.
1 . Discuss how digital technology is a driver of transformation in business.
Store t earn t
dvertisin supported model: enerating revenue by selling advertising to a business
Affiliate business model: A business or individual earns a commission when a member of the public or their audience purchase something via a direct link from an advert they have mentioned.
usiness model: An element in the business plan that outlines how a company will operate, create, deliver and capture value in economic, social and cultural conte ts.
usiness odel anvas: A tool used to map out a business model. Includes the key partners, activities and resources, the value proposition why the customer would choose the product service , customers, customer relations and channels, costs and revenues.
11. Co re Chapter 2: re and contrast crowdfunding and marketplace as digital business models
Theme
Business and Financial Literacy
ontin ency plan: A back-up plan to deal with unforeseen circumstances or emergency situations.
orporate socialresponsi ility ( S ): A model that helps a business become more socially accountable to itself and its stakeholders.
ro dfundin : The process of raising small amounts of money from a large number of indi id als, s all done to finance a ne business venture.
orecastin : The anticipation of a probable event , involving the use of foresight and udgement. It is a look into the future.
ranchise model: A company creates a blueprint that it offers to franchisees, who use the established brand, business model and intellect al p ope t to ene ate a p ofitable business for themselves.
reemium model: A company offers a simple, basic version of a product or service for free and then charges for any features or services noted as premium.
anufacturin model: hen a business earns money by manufacturing products from raw materials and sells them to distributors, customers or other businesses who might then sell them to consumers . ar etplace: An online platform where multiple buyers and sellers interact and carry out transactions.
ission statement: A statement setting out a company s vision, ethos, values and what they hope to achieve
perationalplannin : lanning for the days, weeks and months ahead. It involves producing weekly staff rotas, production timetables and uantities.
Plan: A predetermined course of action. Plannin : The process of deciding the ob ectives of the business and how to achieve them.
etailer model: The consumer purchases from a retailer, either in a physical shop or via their online store.
S T o ectives: Ob ectives that are specific, eas able, a eed, ealistic and timed.
ChapterChecklist
Businessplanning
efine b siness plan
Outline different types of plan and their functions
plain the planning process
Discuss the importance of planning for businesses
thics and sustainability in planning
ow they are incorporated into planning
Their importance in planning
Business models
plain
The role of a business model in business plans
Identify business models retail manufacturing subscription franchise a filiate
Strate icplannin : A long-term plan developed by the senior management team to co e abo t fi e ea s t cla ifies t e lon te ob ecti es o t e fi set o t in t e mission statement.
Su scription model: The subscription company provides a product or service to the consumer for a set price. The subscription could be charged weekly, monthly or annually The customer makes a recurring payment to the provider for access, or they receive the ite in t e post, e et i , poti
Tactical(functional)plannin : Short-term plannin to elp t e fi ac ie e its s o t term goals. It breaks the strategic plan into shorter, more manageable goals and shortterm ob ectives. sually developed by the middle management team to cover 1 years of the business.
alueproposition: fi s p od ct se ice and how it provides value for the customer It focuses on why a customer would purchase this product over a competitors , and what makes this product service uni ue.
enture capitalists: rivate e uity investors
o p o ide sta t p finance to b sinesses with large potential growth in return for shares in the company.
Business odel Canvas
Identify key elements
Discuss its importance igitaleconomy
ow digital technology is driving transformation in business
Identify range of technology-driven business models
arketplace
Subscription rowdfunding
Advertising-supported ompare and contrast models
Outline key characteristics of models
arketResearch and arketAnalysis
earningoutcomes Strand 2
At the end of this chapter you should be able to:
4 A R C A the importance of market research in identifying the target market and discuss how businesses conduct market research.
4 S RA an understanding of the disruptive impact and influence of digital technology on market research and marketing.
4 A A the influence of ethics and sustainability on marketing.
4 S a power interest grid to analyse customer interest and adjust the marketing mix as necessary.
4 C C a STEEPLE analysis to develop greater understanding of the external environment and identify issues of concern for a business.
Case Study: Dunnes ores
Dunnes Stores, one of Ireland s leading food retailers, launched a loyalty campaign for their customers where for every 0 spent customers would receive a 10 off voucher for their ne t shopping trip. The voucher scheme has been central to the success of Dunnes Stores in recent years. The ost ecent fi es o etail anal sts anta s est it as been t e ost pop la oce etaile in t e co nt o a si nificant pe iod cco din to t e ost ecent data, Dunnes held a . market share, with growth of 10. , compared with Tesco on and pe al on nnes as spent a si nificant a o nt o one on advertising campaigns to attract even more customers to its stores. In one of its recent campaigns, the character of ill shrinks while discovering Double Savers in a Dunnes store. The advert was published across several different media outlets T , national radio, social and digital media and in store, heightening awareness of the campaign. Dunnes has always stayed focused on its uni ue selling point S of Always etter alue , but with the cost of living on the rise, there was a need to demonstrate more overtly how to save at Dunnes Stores. This campaign showed customers that there are two ways to sa e fi st in t e aisle and t en at t e till Dunnes was aware of the e ternal challenges facing them, and launching a very successful promotional campaign has enabled them to retain their e isting customers while attracting new ones at the same time.
Entrepreneurial Thin in
Theme
Stop Colla orate
atch the Dunnes Stores Shrink your ill advertisement at the link below. aving read the case study above, do you feel this is a successful campaign ow do you think it could be improved
edco.ie/gxsq
hat is marketresearch
Market research isthe systematicgathering, recordingandanalysingofallinformationabout someelementofthemarketingmi inorder to identifyandsatisfycustomerneedsinaninformed andeffectivemanner.
arket research reduces both the risks associated with introducing new products and the development costs of the product. e have already learned about the importance of research in the idea development stages. Research can be carried out before a product is brought to market , but it will also be carried out after a product has been launched to gauge customer reaction and anticipate possible changes that may need to be made in the future.
Aims of marketresearch
S➜
Strength (or weakness): elps to identi t e st en t s ea nesses o specific products. ➜
Identify market: elps identify whether a market e ists for a particular product or service and the various characteristics of the market , i.e. si e, geographical location, age, status, etc. It can provide information about whether or not the market is growing.
➜
C ➜
C➜
Needs and wants: hat consumers need and want from a product or service their eaction to sa plin , e pac a in o p ice t ed ces t e is o a fi and a es it more likely that the product created will meet consumers needs.
Consumers: sinesses can se a et esea c to find o t t e easons cons e s b a pa tic la p od ct and at in ences t ei b in be a io is ill elp a fi to clearly identify the most suitable marketing mi for their product.
Competitors: arket research can reveal information about competitors in the market It can establish the strengths of the competitors and how much of the market share they a e t ill also elp identi co petito s ea nesses and enable fi s to capitalise on these.
➜ Promotion: inding the most suitable advertising method available.
➜ Product name: Testing a certain product name.
➜
Future trends: any things, such as economic outlook, changes to legislation, ta ation and income levels, all need to be considered and analysed. ithout the most up-to-date in o ation on t ese it is nli el t at a fi ill be able to acc atel assess t e i pact of the product.
arget market
A tar etmar et ist especific o po cons e s it commonneedsand wantsthatabusinessaimsitsproduct orservice at.
A nichemarket isaspecialistmarket.Itusuallyhasonlya certainsmallnumberofsuppliersbecauseofitsspecialist nat eand e i e ents nic e a et isidentifiedt o market segmentation,whichcanbe by socio-economicclass, geographicalarea, etc.
Specialist markets are more common in times of economic prosperity
ample: ne niche a et is the a et fo ida shoes nothe niche a et is the een cons e a cons e ho ta es conce n fo the en i on ent e se io s and i on products that minimise damage to the environment.
arketsegmentation
ar et se mentati n in ol esdi idin t e a et intoclea l identifiablesections it co on c a acte istics tallo safi to identi ot ei ta et a et is
ons e s in a b oade ta et a et a a e di e ent p ofiles, so t e e ill be di e ent o ps o segments within that market ach of these groups of consumers will have different needs, incomes, etc. ach segment should be targeted differently
The most common ways to segment a market are ( ho ) emo raphic: ased on common characteristics such as age, income, gender, occupation. or e ample, adbury Dairy ilk uttons are targeted at children, while the adbury aramel bar is targeted at adults.
( here ) Geo raphic: ased on different geographical areas or regions. The lare hampion and the avan oice are local newspapers that provide news to people living in those localities.
( hy ) Psycho raphic: ased on beliefs, attitudes, lifestyles and tastes. or e ample, people who would buy only organic products green consumers who purchase from en i on entall esponsible fi s arket segmentation is important because it enables a fi to increase its sales by providing a product that specificall eets t e needs o t ei enti e target market , which will increase customer loyalty and boost sales
2 increase its market share by establishing a wide range of brands, making it more c allen in o ne fi s to ente t e a et decrease costs the business does not waste time or money marketing and selling a product to consumers who do not want to buy it.
Stop Colla orate
Divide into groups within your class. ach group should focus on a different market , for e ample footwear, clothing, chocolate, soft drinks, toiletries, household cleaning products. ow many different market segments can you identify within your chosen market ompare your results with your classmates . ere some markets easier to segment than others ould you identify companies that service these markets
ow does marketresearchhelp to identifya target market
Research inds out the si e of the market and whether there is an actual market to enter
emand Tests the product service and see if people are interested. The business can then decide whether to scrap the idea sees or take feedback and make changes.
Competitors inds o t o t e fi s co petito s a e and et e it is iable to o a ead it their idea looks at product range, price, etc.
Customer needs ains an insight into customers needs, wants and preferences. This will help companies tailor their product service range to meet customers demands
Reducesrisk elps reduce the risks associated with launching a new product or attempting to enter a new market. ives the company important data which will guide their marketing route and any decisions they make about future directions.
ricing strategy ow much it will cost to produce, distribute and promote the product and how much potential customers would be willing to pay for it. id ou
now
The market research industry generated revenue of . bn in 0 .
ow usinesses conduct marketresearch
es research
Desk research orsecondary research isbasedonsecondarysourcesofinformation,i.e. research thathasalreadybeenconducted by others.
It is gathered from a range of sources, such as Theinternet: Often free information about businesses in Ireland and around the world. Search engines, social media platforms, etc.
Internalreports: rom sales reps, marketing reports, etc.
usinessreports: Reports from other businesses can help a company increase its knowledge of competitors or the market they are breaking into.
e spaperand ma a inearticles: ompiled by government agencies such as the entral tatistics fice , nte p ise eland, o d ia, etc
Trade associations, e.g. ookselling Ireland. ut information is often only available to members. E perts in pa tic la fields
Advantagesanddisadvantages of deskresearch Advantages
uantity arge uantities of information available from a range of sources.
nsights Information from e isting data and statistics can produce the same results as primary research in less time.
Cost A lot of information is free. sually less e pensive than primary research as it re uires less time and fewer resources.
Accuracy overnment publications are accurate and reliable. They also provide an opportunity to access diverse sources to get a broader overview of a topic.
isadvantages
ack of accuracy Information can be misleading sales stats, etc. . It can be impossible to verify the validity of data gathered it is incredibly important to choose sources carefully ack of detail sers are at the hands of the data and do not have the ability to tailor it to their o n needs e e is no oppo t nit to as ollo p estions o disc ss specific research uestions.
ime It can be time-consuming to search for all the information re uired.
ieldresearch
Field research orprimary research isbasedonprimarysourcesofinformation.Itseeks to discovernew, detailedinformationaboutamarket ,whichinvolves goingintothemarketplace the field to ca o tc sto e s e sand st dies
It is gathered from a range of sources, such as ompetitors: eople in similar businesses. ocus roups also called consumer panels : roups of potential customers usually in the target demographic meet and disc ss t e fi s p od cts is elps t e b siness find o t abo t cons e habits, opinions, likes and dislikes, etc. ysteryshoppers: eople who anonymously evaluate customer service and monitor how a shop conducts its operations.
servation: atching how people behave can reveal the most popular products and indicate market share. The observer watches people s reactions and uses the information to enhance the p od ct se ice t e fi o e s
ustomersurveys: Asking customers about their attitudes to new products through personal interviews and phone surveys. These surveys provide the business with uantitative data statistics, etc. and ualitative data opinions .
n e n i n e f fie e e c
Advantages
Accuracy There is normally a good response rate to face-to-face surveys. Researchers at e fi st and no led e and in o ation e data is specific to t e needs o t e fi
etail Detailed information can be gathered, along with in-depth insights into people s attitudes. It can uncover social facts that may not have been initially obvious.
iming The information gathered is recent.
Behaviour ith observation, people don t know they are being observed, so more honest and accurate information can be gathered.
nfi en i i y e in o ation is o ned b t e fi and it does not a e to s a e it it ot e s This gives it an advantage over its competitors.
isadvantages
ime consuming It can take time to plan, conduct and analyse primary research. It may involve se e al e be s o sta o a fi a need to i e an o tside fi to do the research.
Cost o e e pensi e t an des esea c e fi as to plan, desi n and cond ct the research and analyse the information. This is a longer process, involving more e plo ees, ic ill cost t e fi o e one
Business resources fi a a e to allocate se e al e plo ees to doin t e esea c as ell as other resources, e.g. Information and ommunication Technology I T .. This eans t at a e eso ce o t e fi is nable to co plete ot e i po tant tas s, e aisin finance
Bias hen people are asked uestions in interviews or uestionnaires their responses can often be inaccurate or biased, which means the business is now relying on inaccurate data. uestions must be designed carefully and all research should be conducted honestly and in as unbiased a manner as possible.
Stop Research
atch the short video clip about adbury s market research process when developing a chocolate bar with 0 less sugar Outline the types of research you think adbury s would have undertaken. ere they successful
edco.ie/8qaq
Stop Colla orate
Divide your class into groups. ach group should take a different product or service and carry out market research on that product. repare a p esentation it o findin s o o class te eac o p s presentation put them in the hot seat . hy did they choose the methods they opted for as their research effective
isruptiveimpactanddigitaltechnology
Thephrase disruptiveimpact isoften used to describehowdigital technology canchangethe waybusinessesoperate includingwithinthe workplace andhow consumersinteractwithbusinesses.
An organisation s long-term success hinges on its capacity to create value for its customers. i ital tec nolo as si nificantl i pacted marketing and market research in the following ways
nte rati n
Interaction
ndi idualisati n
arketing campaigns can be integrated across several different channels, e.g. email, social media, websites.
It is possible to interact with target audiences, both directly and indirectly
arketing campaigns can be more targeted and personalised.
Independent locations usinesses can reach global audiences within seconds of launching any form of marketing.
ndustry analysis
The depth of market research now possible with the assistance of technology provides companies with opportunities to target different demographics and research their target markets in more depth than was previously possible.
These advances have led to more customer engagement , better customer satisfaction and much higher conversion rates for companies. owever, as with any development in technology there are both advantages and disadvantages of the impact it has on marketing and market research.
mpacts of technology on marketingand marketresearch ositive egative
fi ien nd roduc i i
Technology can be used to streamline marketing processes. It is useful for repetitive tasks.
r e ed d er isin sing technology to conduct market research allows precise audience segmentation, which enables a business to target the correct audience. ersonalised messages aimed at a certain demographic based on location, preferences, etc. appeal to consumers.
o udience re c
arketers and businesses can reach a global audience in seconds. Social media platforms, email marketing and search engines all have geographical features enabling the correct adverts to reach the correct demographic.
o dis ce en
ecuri nd ri c concerns
Automation and AI can replace certain marketing roles, which will inevitably lead to ob losses.
The amount of consumer information collected raises security and privacy concerns. a ete s need to find a balance between sending too many and too few emails to consumers. Striking the balance between personalisation and privacy is key.
n or ion o er o d
onsumers are bombarded with emails, targeted ads and notifications e e da It can be very challenging for a ete s to find a a o guaranteeing they reach the consumer.
Technology is a double-edged sword when it comes to marketing. arketers would struggle to survive in the business world without technology, but it also presents several challenges that re uire careful and well-thought-out management.
Stop Colla orate
ork in groups to analyse the marketing strategy for a national or international product of your choice. ow has the strategy changed over time hat role did technology play in that c an e esent o findin s to o class an o see co on c a acte istics
thics andsustaina ility in marketing
SOLAR POWER
onsumers today are more informed and discerning than ever before. They have a wider variety of goods and services to choose from and demand transparency, sustainability and ethical practices from businesses. In hapter 1 we see that a 0 survey by w found that over 0 of Irish consumers are willing to pay more for locally sourced products, products with recycled or sustainable materials and p od cts o fi s it et ical p actices
Ethical marketing leads to higher brand loyalty and increased market share, and reduces the risk of negative public relations associated with scandals or boycotts.
The concept of ethical marketing has honesty and transparency as core values. It means acting in a sociall esponsible anne at e t an oc sin on p e p ofit plo ee ellbein , di e sit and incl sion a e all i po tant to an et ical fi
Sustainablemarketing canalsobe referred to asgreenmarketingoreco-marketing.Itinvolves developingandpromotingproductsthathave minimalnegativeimpactontheenvironment. Sustainabilityisthe focus at every stageoftheproductdevelopmentprocess,including sustainablesourcingofrawmaterialsand reducingcarbonemissions.
et s e amine how ethics and sustainability can impact a company s marketing strategy.
Product: irms should source products locally where possible. Raw materials should be sustainably sourced to ensure fair prices for famers and growers. or e ample, utlers hocolates uses only sustainably sourced cocoa and airtrade coffee, ensuring farmers are paid fairly for their work and have access to training and funding to improve their livelihoods and farming practices. ompanies that use airtrade products can put the logo on their product packaging and promotional material, which gives them a marketing advantage.
Price: roducts that have been produced ethically and sustainably may command a higher price.
Analytical tools
Place: usinesses should seek to minimise the negative impact the delivery of their product or service may have on the environment. They should use renewable energy sources and transport their product using electric vehicles to reduce their environmental impact.
Promotion: ompanies that are sustainable and ethical can advertise the fact on their company website and promotional material. onsumers prefer to buy from companies that are participating in legitimate and recognised ethical and sustainability programmes.
People: thical and sustainable businesses act responsibly to t ei sta e olde s an fi s a e a co po ate social responsibility SR policy and employee wellness programmes, and support initiatives in their local community They collaborate with organisations and initiatives to seek innovative solutions.
Process: irms should seek to minimise any negative and harmful impact the provision of their product or service has on the environment by using recyclable materials, minimising waste, using green energy and conserving water.
Pac a in physicalevidence: usinesses should reduce the amount of packaging they use and use recyclable materials where possible.
These tools can be used to analyse customer interest and the e ternal environment.
Po er interest rid
A power/interestgrid is a form of stakeholder mapping that looks at the motivations of stakeholders and t ei abilit to e e t in ence either positive or negative .
Recap
hapter looks at stakeholder mapping. orking with a partner, use mini-whiteboards to draw a power interest grid, recall each of the four uadrants and how the grid can be used to manage stakeholders, specificall c sto e s
ene eener sources
ir r dein roduc ion
e are now going to look at a power interest grid for estle ortar, an Irish skincare brand that has grown e ponentially since launching in 01 . e need to categorise the different types of customers and then e amine the level of power and interest of each. The grid will help marketing managers determine how to engage with and communicate with their entire customer base.
i i h Po er o Interest:
Decision-makers/ Influential buyers an affect the business but are not interested in the day-to-day details. eep them happy without overwhelming them. se simple but impactful marketing showing how the product can solve their problems.
o Po er o Interest:
ust mers h are n t in l ed with the brand
They may purchase occasionally or not at all. inimum effort is needed but they should be monitored to identify any potential for growth.
i h Po er i hInterest:
Key customers
These are loyal customers and big clients.
They should be managed closely and given special attention through tailored offers, loyalty programmes and premium services.
o Po er i hInterest:
Very interested customers
They don t have much power to in ence b t a e e inte ested in your product.
These may be younger customers or followers on social media. They should be kept informed and engaged with regular social media updates or behind-the-scenes videos.
estle ortar s marketingmi
roduct ontinue to introduce new products or variations of e isting ones that directly address key customer needs, while making sure not to overwhelm them with too many choices. eep customers engaged and continue to emphasise the value of the products through their uality and simplicity
rice aintain competitive pricing to attract customers who may not be brand loyal yet. Offer promotions or discounts to entice new customers to try products. ontinue to highlight the value of the product natural ingredients, cruelty-free ethos, sustainability. This will appeal to ethically conscious consumers.
lace rowth into retail outlets is increasing. roducts are widely available online, retail partners, an outlet in ildare illage and continually entering new channels. otentially look at a subscription service.
romotion
romotional campaigns to encourage trial or repeat custom, perhaps through a loyalty programme or referral discounts. nco a in satisfied c sto e s to ene ate inte est through word of mouth may be more powerful to lowinterest customers. Introduce a weekly vlog or tutorials on how to use the products.
eople ustomer service is paramount it will be vital to build on this service. ontinue to actively seek and respond to feedback as this could increase interest and loyalty. erhaps introduce personalised recommendations to heighten the shopping e perience for customers and make it more engaging
ackaging ac a in at p esent is ni e in its si plicit , e ectin t e b and s et os nsuring that it is attractive and informative will make it more likely to catch the eye of the low-interest customers and draw them to look at it more.
rocess
The purchasing process is currently very streamlined but the company could look at anything that causes friction for consumers and try to eliminate these areas. Introducing mechanisms to gather customer feedback and acting on it will show responsiveness to consumers thoughts and a willingness to adapt.
Introducing small but effective changes in aligning the marketing mi to customers who have high power but low interest could potentially increase customer engagement. It could also help to foster new relationships, which could drive sales and increase customer loyalty.
Stop Colla orate
sing the template above, prepare a power interest grid for a company of your choice. ow would this information be helpful to the company If you were the marketing manager for this company, what changes would you make to its marketing mi based on your grid
STEEP E analysis
A STEEPLEanalysis assessestheimpactof e ternal factorsonabusiness by looking at social, technological, economic, environmental, political, legaland ethical factors.Itisa valuable strategicplanning toolthat e pands a STanalysis political,economic,socialand technological factors .
Stop Research
If you are a little confused about a ST analysis, watch this short clip and you should get a clearer understanding. edco.ie/psjs
ppo t nities and t eats can be identified a eness o t e e te nal acto s t at in ence a b siness ill enable a fi to a e o e in o ed decisions, de elop st on e , o e esilient st ate ic plans and become more competitive.
SSOCIAL
TECHNOLOGICAL
The social conte t and cultural norms of the company s environment. Involves analysing customer attitudes, eti uette, customs, the average age of the population, education rates, consumer opinions abo t specific iss es is de o ap ic data can in o b siness strategies, marketing campaigns and customer service approaches, ensuring that companies are prepared to meet each target market s needs and preferences. It will also help to enhance brand image and perhaps generate a competitive edge in the marketplace. or instance, a marketing strategy that resonates with consumers in one country may not translate well in another, e.g. tipping is e pected in the S but not in rance or apan.
Technology changes uickly new processes, systems and production methods offer new opportunities. These changes can help improve business operations and increase revenue.
A technological analysis reduces the risk of entering a market that isn t viable, and ensures that the business can both take advantage of emerging technology and be proactive in adapting to technology that can enhance their business
ECONOMIC
ENVIRONMENTAL
POLITICAL
LEGAL
ETHICAL
cono ic a iables s c as in ation, inte est ates, e plo ent levels, growth levels and international trade. orporation ta levels and ot e financial incenti es in eac ele ant co nt
The effect the company has on the environment , both positive and ne ati e aste disposal, ate and ai poll tion, ene e ficient tec nolo ies and o ene e ficient an o anisation is The more positive impact a company makes the more rewards it will receive, e.g. grants for reaching environmental targets.
The political framework in a country and policies that can aid business development and growth. actors include ta rates, employment legislation, environmental regulations and government stability and involvement.
eeping up to date with relevant laws, checking new regulations, researching new laws to make sure the company is operating legally If a company trades internationally it will need to know and follow each country s laws. onsider competition law, health and safety, policies on hiring staff
A company s ethical values impact its day-to-day operations. actors include integrity, duties, morality and behaviour of employees and employers.
Social
opulation growth rate
Age distribution areer attitudes
Safety emphasis
ealth consciousness ifestyle attitudes
ultural barriers
Technology incentives
evel of innovation
Automation R D activity
Tech change
Tech awareness
Interest rates n ation
Trade restrictions
Chapter uestions
Stop Check for nderstanding
1. in the term market research .
2. u ine two reasons why a company might conduct market research.
3. Circ e the correct option in each of the following sentences
Discrimination Anti-trust mployment onsumer protection opyright and patents
hen a business conducts its own market research this is called primary/secondary research. Observation is an internal/external form of market research.
A product s USC/USP is what will make the product stand out against its competitors.
4. in the term market research and list two of its aims.
5. Define the term market segmentation and e plain one method of market segmentation.
. hat is meant by the term desk research in clearly one method a business could use to carry out desk research.
. Descri e t e benefits o a fi ca in o t a et esea c . is t o ad anta es and t o disad anta es o field esea c . in the term disruptive impact .
1 . us r e your understanding of a power interest grid.
11. in the term sustainable marketing .
12. u ine o nde standin o a anal sis and b ie e plain t o sections o it
evelopin your no led e
1. in the term market research .
2. u ine t o i plications o a b siness o sin field esea c as o o a et esea c
3. us r e t e benefits associated it des esea c o a b siness en at e in in o ation about the market in which it operates.
4. in the term niche market .
5. Discuss the methods by which a business can carry out market segmentation.
. u ine t e ad anta es and disad anta es o sin p i a field esea c to collect in o ation about your market.
. us r e t o ad anta e and t o disad anta es o bot field and des esea c as o s o a et research.
. in the term disruptive impact and e plain the effect it has had on businesses.
. us r e your understanding of a power interest grid.
1 . in how a business may use a power interest grid to analyse customer interest and subse uently ad ust its marketing mi .
11. De ons r e your understanding of a ST analysis.
12. u ine three steps involved in a ST analysis.
Store t earn t
es research: Research based on secondary sources of information, i.e. research that has already been conducted by others, e.g. from newspapers, maga ines, company reports, government statistics, databases. Also called secondary research.
isruptiveimpact: ow digital technology can change the way businesses operate and how consumers interact with businesses.
ieldresearch: Research based on primary sources of information. It seeks to discover new information about the target market. It involves going into the marketplace to carry out customer surveys and studies. Also known as secondary research.
ar etresearch: The systematic gathering, recording and analysing of all information about some element of the marketing mi in order to identify and satisfy customer needs.
ar etse mentation: Dividing up the market into clea l identifiable sections it co on characteristics.
ChapterChecklist
arketresearch plain
Outline its aims
Discuss its importance
Distinguish between desk and field esea c
Discuss methods of both desk and field esea c
arget market
efine ta et a et and nic e a et plain market segmentation isruptiveimpact plain
Theme
Business and Financial Literacy
iche mar et: A specialist market that is especially suitable for marketing a particular type of product or service. It usually has only a small number of suppliers. A niche market is identified t o a et se entation
Po er interest rid: A form of stakeholder mapping that considers the motivations of stakeholders and their ability to e ert in ence eit e positi e o ne ati e and maps them according to their relative power and interest.
STEEP E analysis: sed to assess the impact of e ternal factors on a business. It looks at social, technological, economic, environmental, political, legal and ethical factors.
Sustaina le mar etin : Developing and promoting products that have a minimal effect on the environment.
Tar et mar et: specific o p o cons e s with common needs and wants at whom a business aims its product or service.
Discuss impact of technology on market research and marketing thicsandsustaina ility valuate impact on marketing evaluate impact on each of s
Analytical tools
ower interest grid e plain what it is be able to use a power interest grid to analyse customer interest Remember you must be able to ad ust the marketing mi as necessary
ST analysis e plain what it is conduct a ST analysis
4 he arketing i
earningoutcomes Strand 2
At the end of this chapter you should be able to:
4 2 the elements of the marketing mix and explain their significance for a business and how they are influenced by the target market
4 a marketing mix for a product and a service of choice and provide a USP analysis for each.
4 4 A A and suggest ways of improving an existing marketing mix.
Case Study: Donne s Cris s
The O Donnell family have been potato farmers on Seskin arm in the area known as the olden ale in ounty Tipperary since the 1 00s. In 010, when d O Donnell, a seventh-generation farmer, was studying agriculture in ngland, he began working with a vegetable company and noticed that farmers were diversifying into other areas to generate more income. After e tensive market research he decided to return home to Tipperary with the dream of diversifying his own family business. There were already a large number of hand-cooked ritish crisps on the shelves of Irish supermarkets, so he saw a gap in the market and an opportunity to create his own authentic product hand-cooked Irish crisps. It was important for d to create a product that was ni e and sed is a o s, so e so ced local ood p od ce s to i e t e c isps t ei c a acte istic a o s
d Donne o Donne Cris s
O Donnell s was lucky to receive a lucrative deal with usgrave Retail artners Ireland, which saw its product range sold e clusively in 19 Supervalu stores and entra Stores nationwide. The c isps e e an i ediate s ccess and contin e to be a fi a il a o ite e a e now available in all Irish supermarkets, garage forecourts and other retail outlets. ith over 11 items on its product list the company is always looking for ways to increase its market share in Ireland. A clear pricing strategy was put in place to keep it in line with competitors. romotional campaigns have seen it sponsor e s nato on RT , as well as he estaurant, enabling it to reach its target audience on a larger scale. The O Donnell family have a commitment to using a packaging system that reduces its impact on the planet n t e past e ea s t e co pan as s ccess ll e o ed o fil o its individual packets of crisps. The company has grown to become Ireland s top handcooked artisan crisp brand, with over 1 market share.
lements of the marketingmi
The marketingmix is a set o cont ollable ele ents t at a b siness can se to in ence and eet t e needs of its target market They are multiple areas of focus in the company s overall marketing plan. The original s of marketing roduct, rice, lace and romotion have become the s with the addition of eople, rocess and ackaging hysical evidence. et s look at each element in more detail.
Packaging/ physical evidence
roduct
The product isthe goodorserviceprovided by a business to satisfytheircustomer sneedsand wants.
A company s product portfolio is the range of products it sells.
achproductwillhave a uniquesellingpoint(USP),a featureorcharacteristicofaproductor servicethatdistinguishesitfrom othersimilarproducts.Itiswhatmakesthatproduct service betterthanitscompetitors.
It is also important to create a positive image for the product in the minds of consumers. This image may emphasise a product s key feature or S This is called product positioning e ll look at three distinct aspects of a product product design, branding and product life cycle.
Productdesi n
The design of a product must consider a number of elements
unction: The product must do what it is supposed to do. It should meet consumers e pectations and comply with all safety standards and legislation e.g. onsumer Rights Act 0 .
aterialsand manufacturin : The materials used to make the product should be ethically sourced and the product should be produced with minimal damage to the environment.
orm: The product should be attractive to look at in terms of shape, colour and image. It should also be practical and easy to use.
ost: The cost of producing and distributing the product must be financiall iable e p ice s o ld co e t e nit cost and a e a p ofit o t e fi
Stop Colla orate
ook at idea development in hapter 11. rite down fi e e te s o t at c apte n to a pa tne and co pa e lists an o add anot e fi e e te s to your combined list
Business and Financial Literacy Theme
id ou now
One day in 1 9 alter unt wanted to pay a fi teen dolla debt to a iend e decided to in ent something new. rom a piece of brass wire about eight inches long, coiled at the centre and shielded at one end, he made the fi st sa et pin e too o t a patent on his invention and sold the rights to it for 00.
Designs can be protected through Patent: egal protection of an invention or a design of a product
Trademar : A logo legally registered by a business to distinguish them and their products from competitors, e.g. the ike Tick or cDonald s olden Arches.
Stop Research
o to t e t dent one o t e ntellect al ope t fice o eland at t e lin belo a e a list o fi e is scientists and inventors. ook at the list of women inventors and make a similar list. ere there inventions on that list that surprised you Turn to a partner, share your lists and discuss your observations.
A brand leader is the brand with the highest percentage share of a particular market
enefi f n in
id ou now
Own-brand goods are brands developed by large retailers that buy in bulk from manufacturers and use their own brand name on products. Dunnes Stores Simply etter, A DI s Specially Selected and Tesco s inest are all e amples of successful own-brand goods.
ar etin : A brand name makes a product instantly recognisable and easier to distinguish from competitors products. It can be used as a marketing tool for advertising purposes. Sales may increase.
e productsareeasier to introduce if the brand name is already well known. rand names can be re istered to p otect t e o ne so t at no ot e fi can se t at na e
Pricin : A well-known brand name can command a premium price.
ustomerloyalty: Over time consumers become loyal to a particular brand and will not change. or e ample, consumers tend to eat the same brand of cereal every day. randing helps a company bond with its customers to create loyalty Once they create a position in t e a etplace it is c o e di fic lt o ot e b ands to co pete satisfied c sto e may leave, but a loyal one is much less likely to Products may ecomethe rand: Some brands become so popular over time that the product becomes the brand, e.g. oogle, oover, biro, Tipp-e .
wn la el rands
or ern ris c or ie Dorn n s nnounced s eDie Co e ss dorin
Own-label brands are often cheaper than well-known brands and can build up a good reputation for the retailer
Advantages include
etailers benefit o c eape p od cts, ic in turn attract more customers to the store. They also gain a considerable advertising advantage. ood p ofits can be ade o sellin o n brand products.
Producers benefit o e t a sales, ic a e achieved from lower manufacturing costs.
onsumers have a wider variety of cheaper products to choose from. any own-brand products are ust as good as those of leading manufacturers e.g. Super alu, Spar, entra . Some retailers release different ranges depending on the target market they are addressing, e.g. Tesco s alue, Standard and inest ranges appeal to different demographics.
Stop Colla orate
Take the logo ui on page of your Student Activity ook. ork in small groups to see how many of the famous logos you can recognise.
Case Study: u er c s
Supermac s was founded in 19 when teacher at cDonagh spotted a gap in the market for an Irish uick-service restaurant b siness e opened is fi st esta ant in allinasloe, o nt alway. Since then Supermac s has gone from strength to strength, with over 100 restaurants in Ireland, over , 00 employees and a turnover in e cess of million. Supermac s puts its success down to a uni ue menu, designed to suit local tastes, that uses food and ingredients sourced locally as much as possible, and a high- uality service delivered by friendly, well-trained staff
In 0 , Supermac s won a landmark case against cDonald s over their use of the ig ac trademark. The uropean ourt of ustice ruled that cDonald s cannot use the trademark ig ac when branding its restaurants, drive-throughs and food preparation areas. at cDonagh claimed that cDonald s was preventing the Irish company e panding in the and urope by not allowing them to name their outlets Supermac s .
The case began in 01 when Supermac s applied to the ntellect al ope t fice to a e t e i ac trademark revoked as cDonald s had not made genuine use o it in t e p e io s fi e ea s e led in pe ac s favour but cDonald s were still allowed to use the trademark on poultry products, as well as in connection with cDonald s outlets and drive-throughs. Supermac s challenged this ruling with the uropean ourt of ustice and in 0 the ruled in Supermac s favour. Read more about the ruling and watch some short video clips and interviews at this link.
edco.ie/czsd
Productlife cycle
Entrepreneurial
The productlifecycle mapsthelevelofsalesofaproductfrominception introduction to the a et to adeclineinsales endo a et iabilit tt ac ssales o e aspecificti epe iod, ic isdi idedintofi esections int od ction, o t , at it ,sat ationanddecline
ales lume
e roduc i e c c e e fi st int od ce ne p od cts to eplace p od cts o ic de and as allen and to ain a la e s a e o t e a et e e p od cts last o e e , alt o so e e a s ba s, co n a es have a very long life cycle. roducts are like people they are born and eventually they die.
et s take a further look at each stage.
ntroduction
This is a period of slow sales and high e penditure on advertising as the product is launched on the a et ea d ain on cas o rice is high as there is little competition. arketing mi and strategy are planned. ocus is on advertising, distribution and sales promotion.
ample: Apple introduced the i hone in hich t ansfo ed the s a t hone industry. Apple invested heavily in mar eting.
Growth
Sales increase as the product is demanded by many customers advertising and sales promotion campaigns . ustomer awareness of the product increases.
rice may be reduced to attract a wider market Additional finance a a e to be in ested
ample: he i hone as in the gro th stage bet een and e e anded its an e of od cts int od cin diffe ent ode s he to e as a nched in od ction and dist i tion e e sca ed od ct diffe entiation as e hasised
aturity
Saturation
Sales slow down level off rand loyalty becomes critical.
od ct is co onplace in t e a et ales and p ofits reach their peak and start to level off sales are slower than before.
A lot of repeat order sales. rice may have to be further reduced to maintain market share.
Other markets are sought as there are other uses for the product.
ample: he i hone had reached the maturity stage in at hich oint it as facin co etition f o nd oid ased s a t hones he e e e ots of o tions a ai a e fo cons e s to choose f o e e hasised improving its products to retain its mar et position.
tensive advertising and sales promotion. ofits s o ld be stead arket will have been fully e ploited.
ample: e contin ed to face co etition ith the i hone f o on ards. he mar et as saturated and there ere many competitors. Apple ad sted its icin st ate ies and e anded into ne mar ets.
ales and p ofits d op as cons e tastes c an e anagement will have to decide whether to continue with advertising or let the product die product harvesting . any competitors in the market. ew products cause a decline.
ample: e di e sified its e en e st ea s into othe services such as Apple usic, Apple and Apple Arcade to inc ease c sto e en a e ent t contin es to ef esh and improve the i hone to minimise mar et decline.
Remember the usiness odel anvas e ll learn more about revenue streams in hapter 1 .
Stop Colla orate
Theme
Business and Financial Literacy
sing mini-whiteboards, work in pairs to draw and e plain the product life cycle. One person should e plain and the other partner should draw. Take it in turns to draw and e plain
E tendin a product s life cycle
fi can e tend a p od ct s li e c cle b adaptin o changing one of the elements of its marketing mi .
Product: Improve the product or introduce a line e tension or newer updated version. This may attract new customers and encourage e isting customers to return, increasing sales. or e ample, Apple regularly introduces new, updated versions of the i hone with enhanced camera features or new functionality
Price: Alter pricing strategy increase or decrease price in order to increase sales.
Promotion: se a new, innovative and more effective promotion techni ue to attract new customers and create brand awareness. hange the brand name to alter the product position .
Place: se a new channel of distribution, e.g. move to purely online selling.
2 rice
Stop Research
ind e amples of products at each stage of the p od ct li e c cle a e o findin s it o class ates an o find e a ples o p od cts that have successfully e tended their product life cycle
Setting a price involves determining how much a consumer will pay for the product or service. There are a n be o acto s t at a fi st conside be o e decidin t e final p ice to be c a ed to c sto e s
osts: e p ice s o ld co e t e fi s costs production, marketing, distribution, etc. and include a p ofit a in cost pl s p icin ompetitors prices: e fi loo s at t e p ice t ei competitors are charging. ill they charge the same, less or more
Type of product: e st ate c osen s o ld e ect the type of product and the product image, e.g. premium pricing.
Sta e of productlife cycle: roducts will be priced differently at different stages of their life cycle, e.g. charging a higher price for new products to help recover costs price skimming. onsumers: The type of buyers the target market will affect the price that can be charged. Economic conditions: If the economy is booming people have more disposable income, so prices may be increased.
Pricin strate ies
ow pricestrategies
Penetrationpricin : ndercutting a competitor s price to gain a a et s a e an so eti es ean sellin at a e lo p ofit , e by mobile phone companies. sed by companies who want to break into a ne a et ic l , e o t e fi st edition o a ne a a ine
2 oss leaderpricin : roducts sold at or below cost price to attract customers into a store and get more sales. This practice is uite controversial low-cost retailers may force producers to supply p od cts at belo p ofitable le els
Predatorypricin : harging a very low price to drive competitors out of the market e.g. Tesco s petrol diesel . This usually leads to a price war. A downward cycle in prices is better for consumers.
igh pricestrategies
Prices immin : harging a high price in the short term to recover as much of the costs as possible. an be used for new and e isting products services or e ample, hotels increasing their prices when matches concerts sports events are on.
2 Premiumpricin (presti epricin ): harging a high price for goods deemed to be of high value. Aims to create an impression of superior uality, for e ample ercedes cars.
therpricingstrategies
ost pluspricin : The cost of producing goods pl s a p ofit a p ll costs st be co e ed, e.g. marketing, R D, production. A standard p ofit pe centa e is added to t e di ect costs o production or purchasing, e.g. buy at 100, markup by 0 and sell for 1 0 usinesses mark up items to pay for the business s overheads.
2 Psycholo icalpricin : any products are priced below psychological barriers, for e ample .99 instead of . These prices are based on customer e pectations.
Pricediscrimination: harging different prices to different customers for the same products or service. or e ample, airlines that o e t e sa e i t at di e ent prices depending on when the person booked, when they travel or if they are a student or OA .
4 ompetitivepricin : atching competitors prices. The price is determined by what the competitors are charging. or e ample, a new petrol station would have to charge prices in line with local competition.
Stop Colla orate
ake a list of the products you have used this week. onsider the prices you paid for each of these products. at p icin st ate did t e fi se n to a pa tne and disc ss o findin s t e p ice ad been alte ed for some of these products, would it have impacted your choice ould you have bought them anyway Revenue streams is in hapter 1 .
Theme
Business and Financial Literacy
This is the market or place e e c sto e s can b t e fi s goods and services. There are a number of routes to market for fi s to c oose o o e fi s ill c oose o e t an one, but it is important to choose the most appropriate channelof distribution. This is how the product gets from the producer to the consumer. It describes the various paths that goods may follow from producer to consumer.
Channels of distri
roducer holesaler Retailer Consumer
2 roducer Retailer Consumer
A producer sells large uantities to a wholesaler The wholesaler e.g. usgrave breaks bulk and sells the products in smaller uantities to retailers. The retailer in turn sells individual items to consumers. A retailer is a store either physical or online that buys a range of products from wholesalers and sells to individual consumers, e.g. local newsagents, Dunnes Stores, ASOS.
arge retailers can purchase in large uantities directly from producers, which means they can avail of discounts and pass these discounts on to their customers in the form of lower prices. any of these retailers have their own-brand goods produced by these large producers, e.g. ildare family bakery omerford rothers produces a range of cakes for idl stores nationwide.
roducer Agent Consumer se l o fi s t at ant to sell t ei p od cts on t e international market A producer sells directly to an a ent in a specific a et e a ent contacts etaile s in that market to stock the products.
4 roducer Consumer A producer sells its products direct to the target market This can be done in stores, at markets, trade fairs or online.
ast-moving consumer goods s , e.g. chocolate bars.
arge supermarket chains, e.g. Dunnes Stores, Tesco, Aldi, idl, Super alu.
Dairygold used this method to launch their altee pork sausages and bacon on the S market.
ustom-made or bespoke clothing sold directly from the producer the tailor or dressmaker to the consumer
actorsinchoosingachannelofdistri ution
Distribution costs need to be factored into unit costs when deciding on price. The more stages in the channel of distribution, the greater the costs will be for the consumer.
any businesses sell directly to consumers to minimise costs.
2 Type of product
or perishable goods or breakable goods a shorter channel of distribution will be chosen to make sure the goods get to the consumer as uickly as possible, e es e etables o o e s i t be sold di ectl to etaile s o di ect to consumers through farm shops.
e ta et a et in ences e e a p od ct is sold. or low-priced items e.g. sweets, chocolate businesses will try to get them into as many distribution outlets as possible.
If the product is more e pensive lu ury ewellery, perfume, etc. the business might prefer it to be sold in high-prestige outlets to ma imise e clusivity
4 ustomerlocation
If all the business s customers are in one location, a more direct channel of distribution will keep costs low.
If the product is being targeted at customers in different parts of the world, the business will generally need to use a range of wholesalers, retailers and or agents to get the product to the customers. or e ample, adbury distributes its chocolate bars throughout Ireland using wholesalers like usgraves.
Case Study: e Dou ros
Ronan and ugene reaney set up their thriving pi a business in 01 . It was the height of the recession and ugene had ust been made redundant. Inspired by the pi erias of Italy and a desire to create one of the best pi erias in the world on the west coast of Ireland, Ronan and ugene set up their own business. After spending si months researching and planning, their pi a food truck was on the road. They spent a year travelling to festivals and events around the country, building their brand, before opening a pop-up restaurant in alway ity in a acant ca t at appened to a e a ood fi ed oven. Ronan went to aples in Italy to train in one of the best pi a schools in the world. After two years of running the pop-up, they established a permanent restaurant in alway ity. The 0 0 ovid-19 pandemic forced the brothers to adapt, and they created a pi a kit . They realised there was a strong market for restaurant- uality pi a at home and their pi a kits have now become a permanent feature of their business. The Dough ros was named the o. 1 pi eria in Ireland at an event in aples and in 0 was named 1 th best pi eria in the world
Stop Research
ook at the products and services you and your family have used in the past month. here did you buy them ow did the producer get the product or service to you, the consumer to find e a ples o eac o t e o o tes ic o te as ost co on at in enced t e c oice o c annel o dist ib tion o e a ple, did it atte ic o o family was consuming the product or service
4 romotion
r m ti n e e s to all t e e o ts e cl din p ice ade b t e selle to co nicate and in ence the target market to buy a product. It is used to introduce a new product to the market or to boost sales or e tend the shelf life of e isting products. The promotional mi refers to the combination of methods a business uses to promote its products and encourage consumers to buy them.
dvertisin
is is paid o in o ation abo t a fi s oods o se ices con e ed t o ne spape s, adio, t e internet and T . It aims to persuade consumers to buy the product service.
ypes of advertising
ype planation
nformative ives information about a product or service.
ersuasive Aims to convince people that they cannot live without a product. sed for non-essential or lu ury items. sed in the launch stage of the product life cycle.
Competitive or comparative Tries to convince customers that one product is better than another sed when there are a large number of similar products on the market
Generic o otes a ole ind st ll t e fi s in an ind st oin together to launch a campaign and they share the cost between them. If it is successful several businesses will benefit
Reminder sually seen in the decline stage of the product life cycle. sed to remind consumers about the brand and its products.
actorsaffectingchoiceofadvertisingmedium
ost: ational media T and radio can be very e pensi e, so it ill not s it a fi it a li ited b d et
Tar et mar et: hoose a medium that suits your target a et ta etin a specific eo ap ic a ea, c oose local media outlets.
Type of product: If you are marketing paint , for e ample, you need a visual type of advertising print media is better than radio.
e islation: ertain products e.g. tobacco cannot be advertised on radio or T , and there are strict guidelines on advertising alcohol. Advertising is regulated by the onsumer rotection Act 00 , ompetition and onsumer rotection ommission and the Advertising Standards Authority of Ireland ASAI .
amples
Dunnes Stores sale starts today
Alcohol and perfumes elebrity endorsements
obile phone companies, e.g. eir, odafone,
ational Dairy ouncil Drink more milk ord ia uy Irish
ildare illage sending reminder emails a week before a private sale
oc r dio d er isin c n e ood o re c in our r e udience
Sta e of productlife cycle: aunch e tensive advertising to generate as much publicity as possible. aturity focus on online advertising to maintain increase consumer awareness
Advertisingmethods
aga ines
Always aimed at a particular target market
onger shelf life than newspapers
Ads can be full colour
A maga ine ad can cost up to 10,000
elevision Shows the product nationwide worldwide mass appeal
Ad can be timed so that the target market sees it at an appropriate time pensive ,000 for a 0-second slot at peak time
Radio
ery effective
Advertisingmethods
uch cheaper than T advertising
ocal target markets can be targeted via local radio stations
an choose from national, local and specialist e.g. yric fm stations
ack of visual appeal
ewspapers ational papers have nationwide readership
heaper to advertise in a local paper than a national one
ewspapers are thrown away uickly so the ad must be well designed for it to be effective
olour not always possible
Bill oards
nternet online socialmedia
ommon in cities and large towns
osters are permanently positioned to catch the attention of moving consumers on the road
acebook, Instagram, TikTok, etc. have ads that cons e s clic on to be edi ected to t e fi s website viral marketing
an pay to ensure company details appear at the top of search engines
Ads can be viewed by a global audience ost-effective
The medium used will depend on the market segment target market , the type of product or service, the message and cost-effectiveness.
Salespromotion
Salespromotion istheuseofshort-term incentives gimmicks toattractcustomers. Itisuseful for stimulatingsales by offering customersprice reductions buyone getone free O O ,coupons,samples,pri es,free draws,in-store displays, etc.
It aims to attract new consumers for the product, reward loyal consumers and increase buying fre uency among occasional consumers. Sales promotion techni ues involve some contact between the customer and the seller romotions last for a short period of time and may be repeated at a later date
These activities are all undertaken to support advertising they offer an incentive to customers but don t necessarily focus on the uality of the good.
romotions can be aimed at wholesalers, retailers or customers.
They are used either to introduce a new brand or product or to boost sales when they have fallen e.g. the Share a oke campaign .
Sales promotion is different from advertising in that it offers the consumer an incentive to buy whereas advertising offers a reas n to buy
Merchandising isan e tensionofthesellingprocess.Itistheuseofpromotionaldisplays and point-of-salematerial toattract attention to aproduct.
amples include indo displays, cardboard displays, att acti e ositionin oods on she es i in f ee sa es
Pu licrelations
Public relations refers to creatinga goodpublicimage forthe productorservice.Itaims to achieve favourablepublicityand builda goodcorporate imageofthebusiness. Ractivitiesinclude press releases pressconferences T programmes promotional fil s sponso s ip p blicit lite at e donations to c a it
Stop Research
repare a presentation to share with your class that analyses the promotional mi for a product or service of your choice.
Pu licity: ress releases or press conferences where the media are given information about the company.
Sponsorship: usinesses pay to have their product name displayed by individuals, organisations or at particular events, e.g. Aviva Stadium, ellogg s AA l amps, Investec hampions up rugby , Staycity Aparthotels Dublin AA teams .
ele rityendorsements: elebrities are paid to endorse or be associated with the business and its brand, e.g. amie Dornan Diet oke , Rhasidat Adeleke Allian , ike .
ther: Annual reports, brochures, company literature, p o otional fil s, c a itable donations, local co nit pro ects associations, after-sales service.
A business may sometimes have a spokesperson to speak about an issue. They may be the company s own public relations officer RO or a person engaged from a specialist ublic Relations R agency
ublic relations can pose challenges. egative product publicity can be a nightmare for businesses, e.g. when Toyota had to recall a number of cars following a safety issue. It can lead to loss in the market share and customers losing trust in the uality of the product service being offered.
sid de e e
eople
The people componentofthemarketingmi refers to everyoneinvolvedintheproductionanddeliveryofservices orproducts,includingemployeesandcustomers.
It emphasises the importance of customer service, employee training and personal selling. In service industries, where di ect inte action it c sto e s is e ent , a fi s people are crucial in shaping customer e periences and perceptions of the brand. They are the ones who interact with customers throughout their retail e perience and more often than not will become the person associated with the company for that individual customer. They need to have e tensive knowledge of the company s products and services, and the support knowledge to follow up any customer ueries.
It is essential that companies have the right people representing them at all stages of marketing. ood training and a strong leadership team who empower workers to perform to the best of their ability will help build strong, long-lasting relationships with customers.
rocess
eai o e e co pan is to c eate t e oste ficientandc sto e iendl o ne andt is isn tpossiblewithoutthecorrect processes inplacebe indt escenes nane ficientb siness worldanidealprocessminimisestimeandcostsandma imisesoutputandeffectiveness.
This process should integrate seamlessly into the marketing mi . An adaptable system based on c sto e eedbac ill elp t e fi i p o e, etain c sto e s and e tend t e p od ct li e c cle, ensuring that value is delivered consistently at every stage.
Tweaking the process to meet the diverse needs and wants of individuals further enhances the customer e perience, making the service not ust a means to an end but a valuable e perience in itself. This approach will enable a company to remain competitive and responsive to an ever-changing market.
ackaging physical evidence
Packaging meanspreparingaproduct for transportationand storage.Itmayinvolve wrapping,bottling,sealing,marking, c s ionin and o eat e p oofin
ac a in is o ten t e fi st inte action a consumer will have with a company and its p od ct a in a ood fi st i p ession is ital, so this is an important consideration for the marketing team. ackaging offers protection for the product as well as a means of differentiating the product from its competitors. It helps to identify, describe and promote the product.
ackaging should take into account
Protection: This may involve wrapping, bottling and or sealing using materials such as glass, cardboard and plastic. The type of packaging will depend on cost and the nature of the product. Sustainability should also be taken into account. Different layers of packaging will also be needed. o e a ple, oca ola bottle and can t ei so t d in s fi st la e t e cans and bottles o into cardboard packs second layer which are stacked onto pallets for transportation third layer .
Ima e: olour, shape and te t on packaging should align with the product position and image. or e a ple, pple ses ini al te t b t t e distincti e t ade a lo o on its pac a in e ects a high- uality product.
onvenience: It should be convenient for consumers. or e ample, ars sells altesers in bo es for gifts, pouches for sharing and mini-bags for children, as well as the traditional bag of altesers.
Information: utritional information, instructions for use and other relevant information such as storage re uirements and contact information.
eco nition: ackaging can increase consumer recognition. A business will want its products to be clea l identifiable and distinct o t ose o its co petito s and colo s, lo os and trademarks identify the product and increase sales.
Servicesdonot re uirepackaging,butthe physical evidence isanimportantconsideration for serviceproviders.This refers to the resourcesused to providetheservice,e.g.customerservice staff includingonline ,sales staff,thephysical storefrontorservicearea.
ample: he desi n c ean iness and a ea ance of e te io and inte io ocations sho d e conside ed as e as the a ea ance of staff e e s i the co an o ide a nifo fo e a e hat i this oo i e
A restaurant will need to consider the style and decor of the dining area. leanliness will be of pa a o nt i po tance ta ni o s s o ld be clean and e ect t e b and and i a e o t e esta ant e a a il iendl esta ant o fine dinin e pe ience e en s and ebsite a e also important items of physical evidence to consider
Stop Colla orate
orking in pairs or groups of three, list some of the items you have used in the past week. hat packaging was used ou could bring the packaging into class or research a picture of the packaging online if you need to. hat factors were important to the company when designing the packaging for your chosen products hat changes would you make to the packaging Remember to ustify the changes you suggest.
am ip
ou must be able to create devise a marketing mix for both a product and a service of your choice. It s important that you have one of each of these prepared for your e am. hoose a company that you are familiar with and remember to link theory with the relevant e amples. The e aminer is looking to see if you can apply your knowledge to a real-life e ample.
S analysis
Ina analysisacompany worksoutwhat differentiatesitsproduct servicefromthoseofits co petito sandt ies to find a s o placin t at p od ct se icefi l int e indso cons e s
A product s uni ueness is ultimately the reason why consumers buy it in preference to another product. A st on is a e bon s, b t it can be e t e el di fic lt to find nce one co pan establis es a , co petito s will try to mirror it so that they too can take advantage of increased consumer interest.
There are some simple steps in creating a S
Understand your rand: hat is the brand about hat does it stand for hat are its core values ntrepreneurs need to go back to when they started the business and ask themselves why hy did they do it and what made it uni ue then
Stop Research
sing the internet, research the S s of ten companies of your choice. repare o findin s and be illin to s a e them with the rest of the class.
2 Understand yourcustomers: If you are getting repeat customers, why is this hat is it about your customers that makes them buy from o to find o t i t e e is a ce tain de o ap ic o a e epeat p c ase s a e t e repeat purchasers
Identify your competitors: amine the brands that are in direct and indirect competition with you. ook at all aspects of their business, from target market and target audience to customer se ice o co pa e o co pan , idea and to t ei s is is one o t e ost si nificant steps in the process of a S analysis as it provides an opportunity for a company to really see where they sit in the market
Some of the biggest brands pride themselves on the strength of their S s. ere are a few e amples that really distinguish brands from their competitors and are easily recognisable in consumers minds mpowering the world to design anva ring inspiration and innovation to every athlete in the world. If you have a body you are an athlete ike Refresh the world. ake a difference oca- ola ayments infrastructure for the internet Stripe
amples of the marketingmi
Product: utlers hocolates
roduct
e oodsold b t efi t st meettheneedsofthetargetmarket andconsumers e pectations. Itshouldalsomeetalllegal re uirements,bothconsumer legislationandproductsafety legislation.A strongbrandnameis advisable,as wellasaclear S .
rice
Thepricing strategyshouldcover productioncosts,distributionand a etin costsandp ofit
utlers hocolates was established in 19 and is an Irish family-owned business that produces lu ury chocolates, made with high- uality ingredients. Sustainability sits at the heart of the company. All utlers hocolates are crafted using sustainably sourced cocoa and ero palm oil and the coffee served in utlers hocolate af s is airtrade ce tified tle s p od ce a ide an e of milk, dark and white chocolates with a a iet o fillin s and a o s e chocolates come in bo es and bars of various si es with variations and seasonal collections at hristmas, alentine s Day, other s Day and aster. Its house specialty, utlers ot hocolate, is served in their caf s and an at-home version is sold in retail stores.
utlers hocolates are positioned as an affordable lu ury , with many price points available to appeal to a variety of shopper needs.
lace
Thelocationwhereconsumerscan buytheproductandthechannelof distributionused to gettheproduct fromtheproducer ormanufacturer to t econs e efi a se morethanonechannelofdistribution.
romotion
o t efi inc eases a a eness ofitsproductandencourages consumers to buytheproduct. efi ill sead e tisin ,sales promotionsandpublic relations.
eople
Anyonewhocomesintocontact withthecustomer,eitherdirectly orindirectly. mployeesshouldbe properlytrained to ensurethebrand ethos remains strongandisdelivered consistently.Thecustomershould bethe focus for everyemployee, fromthosewhodesigntheproduct packaging to thosewho workwith customers.
ackaging physical evidence
Theproduct packagingshould differentiate theproduct fromthoseof itscompetitorsandprovideinformation suchasinstructionsoringredients.It shouldcomplywithlegal re uirements, e.g. foodpackagingmust list ingredients andshow allergyinformation.
rocess
owtheproductorserviceis delivered. rocessesthataffectthe customer e perienceshouldbe p io itised e s o ldbespecific andseamlesssothatallemployees cancarrythemouteffectively ande ficientl it o ti pactin the e perience forthecustomer. rocessesincludethelogisticsof thechannelofdistribution,delivery processes,supplyofmaterialsand staff rosters.
utlers hocolates are sold through retailers producer wholesaler retailer consumer and producer retailer consumer . There are utlers hocolate af s around the country producer consumer as well as franchises in the iddle ast and South Asia. utlers products are e ported to over 0 countries and sold in more than 0 airports around the world through travel retail channels.
A range of digital marketing tools, e.g. Instagram, TikTok and acebook, are used to promote the business. Its website has a wealth of information for consumers, including a baking section with chocolate recipes. It encourages consumers to engage with the brand via social media by using hashtags such as utlers oment. utlers also utilise media such as radio, press, out-of-home advertising and R to advertise the business.
e fi e nd ed sta a e e plo ed bet een t e acto in orth Dublin and the caf network. A spirit of family and togetherness permeates the working culture and day-today operations of the company. any staff have been with the company for over ten years. There is a special ethos of teamwork where every team member is committed to the craft of creating delicious chocolates and looking after the customer
The packaging protects the chocolates and ensures that they stay fresh and sealed. The packaging design is in line with the company s brand - for e ample, signature white e bossed bo es, finis ed it old oil and l io s ribbons. The packaging contains serving suggestions where relevant , nutritional information and best before and traceability details ensuring compliance with legal re uirements.
onsideration of the environment and sustainability is embedded into the fabric of utlers hocolates. The cocoa used in utlers hocolates is sustainably sourced and contains no pal oil e fi is co itted to ed cin sin le se plastic and reusing packaging where possible.
Ethics and Sustainability
utlers hocolate af takeaway paper cups are sourced and printed in Ireland and are 100 recyclable. It is involved in the onscious up campaign and the use of reusable cups is encouraged and incentivised. utlers has achieved e o aste to landfill at t e acto and co posts acto food waste. The company is a member of Ireland s ational Sustainability rogramme - Origin reen and the ove Irish ood initiative. tensive training and development and the utlers family ethos are embedded in every process to ensure a premium uality e perience for the consumer
i ital Trans rmati n
Theme
Theme
Stop Colla orate
ork in pairs to evaluate this marketing mi . See pages 1 - 1 . Is it an effective marketing mi for utlers hocolates hy an you support your viewpoint with a piece of information or fact If you had to make one recommendation to utlers, what would that be
Service: yanair
roduct Ryanair offers low-cost air travel and is known as a no-frills airline . It offers an intangible se ice, in to o e t an inte national destinations in countries. It is targeted at budget-conscious consumers who want to travel to international destinations. Ryanair offers optional add-ons such as seat selection, p io it boa din and in i t p c ases s c as food and beverages. As none of these are included in the initial fare charged to consumers they are known as additional income streams. Ryanair also has partnership agreements with ert car rental and some international hotel chains, which earns them a commission for each customer booking. This additional revenue helps keep Ryanair s overall costs down.
rice Ryanair uses a low-cost pricing strategy, which in this industry is uite aggressive. or the past number of years Ryanair has maintained the lowest fares in the industry, keeping its competitors at bay. hile aggressive in its approach, the company is incredibly competitive and aims to attract price-sensitive customers. Ryanair s pricing strategy uses a range of pricing models, one of which is dynamic pricing ad usting fares based on demand, seasonal factors, booking times and destination. Seventy per cent of seats are sold at the cheapest two fares, at i e ates and t e final at t e i est
lace Ryanair has almost 1 million views annually on its website and its business is primarily online route . The vast ma ority of bookings are made online or through Ryanair s mobile app. This cuts down costs because Ryanair doesn t use agents it doesn t pay agency fees, which saves up to 1 . Direct marketing techni ues are used to recruit and retain e isting customers.
The airline also uses predominantly secondary ai po ts o s o t a l opean i ts This reduces their costs and enables uick turnaround times. Ryanair can negotiate lower fares as these smaller airports rely on Ryanair using them.
romotion Ryanair does not spend a huge amount on promotion and mainly uses a mi of digital and traditional advertising. The vast ma ority of its promotional work is carried out in-house and only a small minority outsourced to advertising agencies. anai s ie ec ti e fice , ic ael ea , acts as a spo espe son o t e co pan t ns a lot o as sales and o e s conside able disco nts in an attempt to increase sales. Its advertisements are simple and colourful in design.
Entrepreneurial Thin in
Theme
i ital
Trans rmati n
Theme
eople The company currently employs ,000 people, with cabin crew accounting for o e t an al , o t e total sta fin bod anai cond cts ost o its customer service online through a chat service and its app. Staff need to be e ficient as t e a e t ained to prioritise uick turnaround times, d i e in i t sales and deal it customers complaints.
ackaging physical evidence
Ryanair has a strong, consistent branding of blue and yellow with the company logo visible on all aircraft. The interior of the planes is kept minimal, with no seat poc ets o pa p lets, e ectin t e no ills app oac
rocess All elements of the Ryanair marketing mi are aimed at minimising costs and a i isin e ficienc e p ocess ele ent is t e co pan s o tines, sc ed les and speed of turnaround at airports. The booking process is straightforward and allows customers the option to purchase several add-ons should they wish. It has removed airport check-in, so all customers must check in online before arriving at the airport. This saves a lot of money in customer service and also speeds up the process of travelling. All Ryanair s processes re uire detailed planning and organisation to work perfectly.
Stop Research
Research a product and a service of your choice. eate a a etin i o eac a e o findin s with your classmates and build up a bank of case studies for your Investigative older
Stop Colla orate
Share with a partner the marketing mi es you created for your product and service. Ask them to e amine your marketing mi and evaluate it udge it . Is it effective hat elements work well Are there suggestions for improvement in any of the elements in any of the s, for e ample o s o ld do t e sa e o t ei o isc ss o findin s
am ip
ou will need to be able to evaluate a marketing mi and suggest ways of improving it. Take a look at the two e amples provided here and analyse them. Identify the strengths and weaknesses. Suggest ways of improving the marketing mi for both utlers hocolates and Ryanair. ooking at the activity on pages 9 0 of your Student Activity ook will help you to evaluate a marketing mi .
Chapter uestions
Stop Check for nderstanding
1. in the term product life cycle . Draw a diagram illustrating the product life cycle and label each stage.
2. us r e your understanding of the term product in the marketing mi .
3. u ine t o p icin st ate ies t at a fi co ld se to la nc a ne p od ct
4. Dis in uis between route 1 and route in the place element of the marketing mi .
5. u es t o benefits o o n b and p od cts
. e d the information and answer the uestions that follow Sweets- -u, based in aterford since 00 , is a large manufacturer of sweets and confectionery items. The company will be celebrating 0 years in business and wishes to launch a promotional campaign to highlight this achievement. It has a strong brand and has both an online and physical shop where customers can purchase its products.
a Describe two sales promotion techni ues that Sweets- -u could use to launch its birthday celebration.
b Explain what is meant by the term channel of distribution .
c Outline one pricing strategy you feel Sweets- -u could use to attract additional customers.
. Descri e the elements of a marketing mi using a product or service of your choice.
. Define the term S analysis .
evelopin your no led e
1. in the term product life cycle . Illustrate your understanding of the term with a clear description of each stage.
2. u ine the factors a business should consider when designing a product.
3. u ine your understanding of the term product in relation to the marketing mi . Describe two factors that a business should consider when designing a product.
4. Dis in uis between the following pricing strategies a psychological pricing b penetration pricing.
5. us r e a channel of distribution for a product of your choice.
. The following table gives e amples of promotion. sing a tick , iden i the type of sales promotion described in each e ample.
Example d ertisin Sales promotion Public relations
uy one, get one free
Radio
oyalty cards
ndorsements
ewspapers
. c ors should be considered when choosing a channel of distribution
. Di eren i e between sales promotion and public relations.
. Dis in uis between the people and process phases of the marketing mi .
1 . Cre e a marketing mi for a product service of your choice.
11. in the term S analysis and outline the steps involved in creating a S analysis.
Store t earn t
randin : reating an identity brand name and logo for a product that clearly distinguishes it from its competitors.
hannel of distri ution: The way a product gets from the producer to the consumer
ar etin : Identifying the needs of the customer and producing products that customers will buy at the right price in the right place.
ar etin mi : A set of controllable elements t at a b siness can se to in ence and eet the needs of its target market It comprises multiple areas of focus in the company s overall marketing plan.
erchandisin : sing promotional displays and point-of-sale material to attract attention to a product.
Pac a in : The preparation of a product for transportation and storage.
Patent: egal protection of an invention or a product design.
Theme
Business and Financial Literacy
Price: ow much a consumer will pay for the product or service
Process: ow a product or service is delivered.
Product: The good or service provided by a business to satisfy its customer s needs and wants.
Productlife cycle: Tracks sales of a product o e a specific ti e pe iod int od ction, growth, maturity, saturation, decline.
Promotion: All the efforts e cluding price made by the seller to communicate and in ence t e ta et a et to b a p od ct
Pu licrelations: All the activities related to creating a good public image for the product or service among stakeholders.
Salespromotion: Short-term incentives gimmicks to attract customers.
Trademar : A logo legally registered by a business to distinguish it and its products from competitors.
People: Anyone who comes into contact with the customer, either directly or indirectly
Physicalevidence: The resources used to provide a service.
Place: The location where consumers can buy a product and the channel of distribution used to get the product from the producer or manufacturer to the consumer
Uni uesellin point(USP): A feature or characteristic of a product or service that distinguishes it from other similar products. It is what makes that product service better than a competitor s.
ChapterChecklist
roduct
Design
randing
roduct life cycle draw and e plain
rice
acto s t at in ence p ice ricing strategies e plain
romotion
Advertising
Sales promotion
ublic relations
lace
hannels of distribution e plain and apply
actors that affect choice of channel of distribution
eople rocess
ackaging physical evidence
unctions of packaging product
Importance of physical evidence service
evisea marketingmi foraproduct
evisea marketingmi foraservice
valuatea marketingmi andsuggest ways of improvingan e isting marketingmi
S analysis
plain
onduct a S analysis to inform marketing strategy
perationsand inance
earningoutcomes Strand 2
At the end of this chapter you should be able to: the main elements that are key to the operational model of a business and explain why these may change over time.
2 the key costs and sources of finance for a business and explore why these may change over the lifecycle of the product or service.
A A S the cash flow of a business and recommend a suitable course of action for the business to address the issues arising from the analysis.
Recap
efore we begin this chapter, turn to hapter 1 for a look at the usiness odel anvas. In groups, complete a placemat activity sheet on business models and the usiness odel anvas.
Airbnb is a provider of affordable accommodation around the globe. Its usiness odel anvas might look like this
osts, tourism partners and bodies, Technology software partners
panding hosts, operational e cellence consistency , platform development e panding markets e.g. Airbnb u e
reating a network that allows hosts to generate revenue from idle spaces properties. enerating new customer e periences.
m listings in 100k cities
osts and guests, neighbours and communities of hosts, trust, regulation
SEG E TS arket segmentation geographical, behavioural ong-stay customers
ebsite, listed properties
ebsite and technology, marketing and customer support , wages, product development , administration and operational
ebsite, app, social media, word of mouth, referrals, digital advertising
traveller fees
ni ue ue ro osi ion
An important component of the usiness odel anvas is the value proposition, which is what makes the business different from its competitors. It is the product or service on offer and the value that this product or service brings to the consumers. It should be a sol tion to a cons e p oble o a p od ct o se ice t at satisfies a cons e need unique valueproposition asa ide an eo benefitsand al et ana uni ue sellingpoint , ic iso ten oc sedonasin lebenefito eat e The operational model of the business supports the value proposition. It is the structures that enable the business to meet its customers needs. The operationalmodel focusesonthe key partners forthebusiness,the keyactivitiesofthebusinessandits key resources.
ey partners
Thesearethe e ternal relationshipsemployed to create oradd value forcustomers.This componentoftheoperationalmodel focuses onidentifyingthe e ternalorganisationsand suppliersthatacompanywillcollaborate with to create anddeliveritsproductorservice.
These partnerships aid the delivery of the business s value proposition. They are important as they can reduce costs, reduce risk and provide valuable resources that the company does not have.
The business should consider
ow the partner contributes to the overall value proposition. artners can enhance a product feature, aid distribution or enhance the customer e perience.
The key activity that is outsourced to a partner or relies on a partner.
ow partnerships can moderate risk. or e ample, a partnership may reduce the risk of possible supply chain disruption or it may help the business meet sustainability targets or government regulations.
ow a partnership will impact on the company s costs. It may lead to additional e penses but may also result in cost savings.
They can take a number of forms
Strate icalliances
A strategicalliance iswhentwoormore independent fi s oa enotco petito s agree to co-operate andshare resourcesand e pe tise it eac ot e o t e t albenefito allpa tiesin ol ed efi s e ainco pletel independentle all andeac fi aintainsits ownseparate tradingidentity.
ac fi benefits b a in access to eso ces and talent t at it ot e ise o ldn t a e access to ither party can end the arrangement easily if they choose to do so.
ample: e and otif ha e a st ate ic a iance that a o s e ide s to st ea otif playlists during their rides.
o opetition
Co-opetition isaco binationo co ope ationandco petition oco petin fi s o togetherandco-operate withoneanother to achieve acommon goal.
t can sa e costs o bot fi s and a oid d plication o eso ces and e o t t can also sp ead t e is o bot fi s n so e cases one fi as a co petiti e ad anta e in a pa tic la a ea and co opetition allo s fi s to t ade o t ese specialist s ills
Theme
i ital
ample: amsung supplies Apple ith its uper etina edge to ed e sc een fo the i hone ince a s n and e a e competitors in the smartphone mar et , amsung could have dec ined to s e t if it had e i ht ha e one to an a te nati e s ie fo e a e e a so ea ised that as e as s in s a t hones a s n is a so one of the a est s ie s to hone an fact e s oth co anies enefited
id ou now
In 0 , competing airlines Aer ingus and Ryanair co-operated when industrial action by Aer ingus pilots during the busy summer period resulted in nd eds o i ts bein cancelled. Ryanair worked with Aer ingus to accept some of its c sto e s and p t on e t a i ts to accommodate passengers.
ointventure
id ou now
Trans rmati n
oo o efi s oa enotco petito s a ee to s a e eso ces and e pe tise it eac ot e to ac ie e aspecific oalo ob ecti e, o t e t albenefito allpa ties ne e a entit isfo ed
The parties involved share ownership, risk and returns. oint ventures are usually temporary arrangements they will be dissolved after the pro ect is completed or the goal achieved.
ample: as c eated as a oint ent e et een se e a edia co anies inc din ni e sa e s o o ation the a t isne o an and o idence it a tne s he oo ed thei edia i a ies and eso ces to c eate a st ea in atfo
Did you know Starbucks and epsi o have had a oint venture since 199 called orth American offee artnership
A to produce and distribute readyto-drink coffee beverages such as Starbucks rappuccino.
uyer supplierrelationships
These are some of the more common types of partnership. It is important that businesses have reliable suppliers to ensure a steady supply of uality raw materials and components. The pa tne s ip benefits bot sides as one as a eliable s pplie and t e ot e a confi ed b e
id ou now
Outsourcing is different from subcontracting. Subcontracting involves hiring another company to complete a specialised task that cannot be completed internally. It is done on a contract basis and is not permanent.
Outsourcing eansfindin as pplie to an act epa to ap od cto t eenti ep od ct ep ice, alit anddeli e datesa ealla eedinad ance tsi plifies ana e entandcan oftenbecheaperas e traproduction staffwillnotbeneeded.
It is particularly suitable for businesses who need items on a seasonal basis. It does have challenges. b siness is andin o e cont ol o alit to anot e fi and passin on intellect al p ope t o t ade sec ets , ic a lead to t e second fi beco in a co petito o e a ple, a tec nolo fi a o tso ce its c sto e se ice o a fi a o tso ce its s ppo t and se ices to a specialist fi
Distributionpartnerships arethepartners abusinessmayhave to gettheirproduct to theirtargetmarket.Thesepartnerswillhelp deliverordistributetheproductorservice to consumers.
or e ample, car manufacturers partner with dealerships to distribute and sell their vehicles.
Stop Research
Research the suppliers for a local or national company of your choice. ist the businesses that supply them with raw materials or components. Do they outsource any of their operation
enefi
id ou now
In 0 ringles owned by ellogg s , partnered with the aviar o. in a risps and aviar ollection , embracing a TikTok trend for lu ury snacking
mplications of key partnerships
Challenges
artnerships can improve a company’s competitiveness by increasing innovation and t e fi s abilit to scale its b siness odel t is means growing the business . They can provide access to ne mar ets, new technologies and new materials. This provides oppo t nities o a fi to e pand and achieve economies of scale.
A partnership can improve the customer experience, offering further value to the customer, which will increase sales and improve customer retention.
anaging partnerships re uires clear channels of communication This may be challenging if there are multiple partnerships to manage. ood procedures with clear guidelines and open communication are essential.
artnering businesses may have different cultures and values is a lead to con ict and disagreements. oals and values should be aligned and clearly defined at t e sta t o the agreement.
artners needs may change and evolve over time. The relationship will need to be constantly e aluated and ad usted as necessary
Stop Research
hoose a business and research some of the key partners they have worked with over the course of their lifetime. ave their partnerships changed over the years hat kind of partners did they have at start-up stage ho are their key partners now
2 eyactivities
These are the essential tasks a business must carry out to achieve its goal or meet its value proposition to sustain customer relationships and generate re enue streams The types of activity vary according to the company s chosen business model, but in general will include the following
esearchanddevelopment( )
The R D department works closely with other departments. It is involved in new product research and development evaluating the design and feasibility of potential new products , and updating e isting products to ensure they meet the demands of a dynamic market. It may perform uality checks and audits on production to ensure high standards are being met. It is also responsible for innovation, looking at trends in the marketplace and generating ideas to meet those consumer needs.
Production
The production department designs and manages the p od ction p ocess to p od ce s ficient antities o t e best- uality product at the best price. This involves choosing suitable manufacturing processes, machinery and technology planning and organising resources to ensure demand is met. It runs control procedures to monitor and control production and correct deviations from re uired standards and maintains machinery and production processes to ensure a continuous supply of product.
ar etin
The marketing department is responsible for creating awareness about the company and its product and value proposition. Among its functions is market research and developing a comprehensive marketing strategy.
Salesandcustomerservice
Theme
Business and Financial Literacy
Stop Colla orate
omplete the worksheet on pages - of your Student Activity ook which e amines different production types and when they are used.
Recap
or more on marketing go to hapter 1 .
The sales team ensure that there is a demand for the company s value proposition its product or service . They meet prospective clients, generate interest in the product or service and persuade c sto e s and cons e s to pa t it t ei one to inc ease co pan sales and p ofits ildin and maintaining client relationships is an important part of this ob to create customer loyalty. The customer service team handle customer complaints and ueries. They are often the front line of the company and play a key role in the customer e perience.
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n t e p e io s acti it , o esea c ed t e e pa tne s o a fi o o c oice n esti ate further and e amine the different activities this business engages in. reate a presentation o in o ap ic to ill st ate o findin s
ey resources
fi s key resources aretheessential elementsneeded to create the value proposition.Theyareoftendescribedas assetsorcapitalthecompanywilluse to delivertheproductorservice to thecustomer.
Ac uiring the right key resources will give the business a competitive advantage. The resources needed will change over time, so it is important that they are scalable they can grow so that the business can e pand to meet growing demand and increase its market share.
The business should consider whether it needs access to the resource or whether it needs to own the resource. Ac uiring the use of a resource without owning it may be an option through lease agreements which may be more cost-effective o so e fi s ontin enc plans s o ld be p t in place to avoid the business becoming overdependent on one supplier for a critical resource.
Physical capital: The physical items of value for the business, e.g. premises, machinery, e uipment and vehicles. They are often referred to as tangible assets because they are isible and clea l identified and eas ed
Intellectual capital: These are intangible assets. They include trademarks, patents, copyrights, databases and proprietary knowledge information or knowledge that the business as, e t ade sec ets t can be di fic lt to measure or put a value on intellectual property o e a ple, it can be di fic lt to eas e t e strength or value of a brand.
inancial capital: e finance t e b siness can access to fund its key activities It may be in the form of equitycapital or debt capital.
uman capital: The people, including employees, that a business needs to deliver its value proposition. They are one of the most i po tant eso ces o a fi , pa tic la l o service-driven sectors and knowledge-based industries.
Take a look at the completed usiness odel anvas for on page . In pairs, choose another business and complete a usiness odel anvas for that business.
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sic
P T E S
Suppliers and manufacturers
Designers and celebrities
ranchises
Delivery
TI ITIES
ashion design and development
arketing and production
Distribution Sales
hysical assets
rand and recognition filiated b ands uman capital
ST U TU E
roduction and manufacturing costs
arketing and advertising
Operational costs
P P SITI S
rovides latest fashion at low prices
Appeals to green consumers with onscious range ollaborations with famous designers and celebrities
ustomer service support
Social media engagement oyalty programmes co-conscious consumers
Retail sales of clothing and accessories in-store and online
ranchising and licensing holesale distribution
Donations of garments
s usiness ode C n s
ey partners, key activities and key resources may change over time. ou will have seen from your research that the main elements of the operational model of a business are constantly evolving. This may occur for a number of reasons
ependency: fi a be o e dependent on e pa tne s at t e sta t p sta e to elp it o its brand or create awareness of its product. As the business grows its needs will change, and it will be less reliant on some key partners as the business s own skills develop.
or e ample, a sta t fi a o tso ce to a s ecia ist co an t as it o s it a bring this role in house.
Evolvin needs: fi a e i e di e ent eso ces at di e ent sta es o its o ne t sta t up stage it will focus on R D and production. As it grows, sales and marketing will become more i po tant to iden its a et s a e and inc ease sales and p ofits t it ill contin e to p io itise R D so that it continues to develop products that meet customers changing needs.
osts: sta t p fi ill not a e t e sa e pool o financial eso ces as a la e fi t ill el on pa tne s ips t at a e c eap o ee s t e fi o s, so ill t e financial resources available.
or e ample, it may have less physical capital at the start up stage but prioritises protecting its intellectual capital.
ccessin financial capital can be a st le o sta t p b sinesses and o in co panies, b t la e fi s ill a e access to more e uity and debt capital.
Diversification: As businesses grow and e pand, they diversify, widening their product portfolio and customer reach. This may re uire new activities, resources and partners or changing the operational model. eographical e pansion may result in duplication of roles, which may re uire rationalisation.
4 Costs
The cost structure is the last important piece of the usiness odel anvas. The other components st be clea l defined so t at costs can be acc atel esti ated b siness s o ld conside its key activities and calculate the costs associated with each activity It should also analyse the key resources and the costs associated with these resources.
osts can be fi ed o a iable
i ed costs are e penses that don t change as output changes, e.g. loan repayments, insurance and rent.
aria le costs are e penses that vary according to use, e.g. direct wages, raw materials, energy costs. They are sensitive to demand and sub ect to change.
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ork in pairs or small groups to list the costs associated with a business of your c oice ate o ise t ese costs into fi ed and a iable costs
Revenue
A business needs a clear path for bringing money and resources into t e co pan t a a e an inno ati e idea, b t it st find a way for this brilliant idea to generate revenue.
Revenueisa keyperformanceindicator a measurable indicatorofprogress towardsa goal .A re enue stream isasourceofincome forthebusiness.Inthe usiness odel anvas,the revenue streamscomponentdetermines income generatedfromthe valueproposition.
If a business has more than one revenue stream it should consider the contribution each revenue stream makes to overall revenue.
The business will need to determine how much the target market is willing to pay for the product or service. In other words, how will the company generate money from selling this particular product or service It should look at each target market segment to determine the price that each segment would be willing to pay and the price the business will charge in each. The position of the product in the product life cycle will also affect the price charged. A new product may command a higher price than a product in a saturated market.
In considering the appropriate revenue stream the business should
Choosethemost realistic revenue stream. t s o ld be t e st ea t at fits ost closel it t e fi s e acti ities and al e p oposition t s o ld c oose a e en e st ea t at ali ns it the needs of its target market
2 Look at ways to extend value. The business must highlight its S and differentiate itself from its competitors. The revenue stream should increase the value of the company.
Beflexible. usinesses will evolve over time, customer needs will change, and the business must be ready to adapt.
Types of revenue stream
Singletransactions
The singletransaction revenue streamis generated by once-offcustomerpayments foraproductorservice. Itmaybeonline e.g. arasellingclothesviaitsapp or instore e.g. arasellingclothesinits stores .Salescan comefromsellingtickets to events e.g.concerts .
e r o i e ndon ine s ore ron
ese t ansactions a e eas to eco d and onito and allo o e ibilit to ad st p ices based on market trends and demand. They also enable the brand to build a more personal one-on-one connection with each customer
e e a e c allen es, o e e , e p ice co petition, ic co ld ed ce p ofit a ins
Recurringsales
Recurringsales are regularpayments foracontinuedserviceorafter-salessupport.
ecause they are ongoing they are a predictable and stable source of income, but customers may become disengaged because there is no personal connection, as there is with single transactions. There may also be intense competition in sectors offering recurring sales, which may result in loss of customers.
Su scriptionservice: A monthly or annual fee is charged for access to a service, e.g. a monthly poti o et i s bsc iption
Usa efee: ustomers pay for access to particular facilities or infrastructure, e.g. hotel leisure acilities, co o in o fice acilities, a ont l e be s ip
ental: Renting out or leasin properties or vehicles, e.g. renting a car on holiday. aintenancefees: or ongoing maintenance and support services, e.g. a yearly monthly fee for a monitored home alarm system.
et s take Ama on as an e ample It generates revenue primarily through three streams
Onlinesales: It sells a wide range of products through its website and app, which generates large volumes of revenue.
2 Subscriptionservice: Subscription to Ama on rime, which offers free shipping, e tra online deals and access to a streaming service.
Amazon WebServices (AWS): rovides cloud computing services to businesses and individuals.
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ind out more about Ama on and A S at the link below. hat services does it offer hat are the company s values ho are its key partners hat are its key activities Identify its key resources and key costs.
edco.ie/n7j2
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ork with a partner to choose another company and list its e en e st ea s o co ld c oose et i , Apple, Disney, oca- ola or a different company. hy not choose one local company and one international company and compare them
There are other types of revenue stream. In hapter 1 , usiness lanning, we look at different business models, and many of these generate revenue in different ways.
icensin or franchisin : Allowing other businesses to use your brand or business model through a licensing or franchising agreement and charging a fee in return.
Affiliate marketing: arning commission for promoting particular products or services to customers.
oyalties: aying for use of intellectual property, e.g. royalties for writing a song.
reemium model: A basic service is offered for free but customers are charged for premium services or upgrades, e.g. Spotify streaming services.
Revenue is an important consideration for businesses inancial sta ilityand ro th: Revenue streams fund the operational costs of the business and enable it to grow and e pand.
le i ility: aving multiple revenue streams ensures that a business can adapt to changing markets, changing customers and changing economic conditions. It allows a business to diversify and to spread risk, creating a better chance of long-term survival.
ompetitiveadvanta e: ni ue and innovative revenue streams differentiate the business in the eyes of the consumer This can inc ease sales o t e fi
ar etse mentation: roviding a diverse range of revenue streams enables a business to cater for its entire target market and a variety of different market segments. ach customer s needs and preferences are targeted, ensuring a consumer-centric approach.
n an cases a b siness ill need to see alte nati e so ces o finance to nd t ei acti ities e e are many sources available and these are divided into three categories short-term, medium-term and long-term.
fi s o ld c oose a so ce o finance based on t ese acto s
Purpose the matchin principle: The business should consider the time frame of the item being purchased and use a similar time frame source o finance n ot e o ds, a s o t te so ce o finance s o ld be sed to nd a s o t te need ollateral: n an cases t e financial instit tion p o idin t e finance ill e i e sec it is is usually an asset that the business can offer in the event that they cannot make their repayments. e asset ill be ta en b t e financial instit tion and sold to repay the debt.
Ta implications: o e so ces o finance a be a ta -deductible business e pense, which will reduce the amount of ta paid to the Revenue ommissioners.
ost: usinesses should look for the cheapest so ces o finance fi st ebt capital ill e i e monthly repayments, unlike retained earnings or grants.
ontrol: o e so ces o finance ill i pact on o
the business may need to provide shares in the business, which gives other people a say in how the business is run.
Short-term sources of finance
These are used to cover short-term e penditure, e.g. wages and salaries, insurance, energy, utilities and purchasing stock. They will be repaid within one year.
radecreditors
It is also referred to as leaning on the trade
2 Bankoverdraft
The bank allows the business to withdraw more than is in their current account , up to an
Accruede penses
ustomers are allowed to use the service and pay for it later. sually used for utilities, e.g. electricity, telephone.
Advantages isadvantages
ee so ce o finance
o security needed
p o es cas o as t e se ice p o ide is paid in arrears
4 actoring
There may be a loss of service if the bill is unpaid
imited availability can only be used with service providers
oss of discounts if bills are not paid on time
fi passes on its t ade debto s t e people o o e it one to a acto in fi a debt collection a enc The debts are sold for less than full value, e.g. a company has debts of 0,000 which they sell to a factoring agency for ,000 The factoring company collects the ll al e i e , e fi as a s o one that it does not have to collect itself
Advantages isadvantages
Immediately releases cash
o loss o cont ol o t e fi
o security re uired
Medium-term sources of finance
These are used to cover medium-term business e penditure, e.g. delivery vans, e uipment , computers, company cars. They will be repaid within between one and fi e ea s
easing
e fi leases ents an ite o a leasin co pan owner of the asset the lessor . The lease is usually for a specific n be o ea s e c sto e lessee ill never own the item but they will have use of it without having to borrow money. The lessee is responsible for insurance and maintenance.
ostl so ce o finance ustomer relationships can be damaged
Advantages isadvantages
The business will have the most up-to-date e uipment it can trade in an obsolete item for a newer model for an increase in lease payments
o security re uired
Immediate use of the item
The business will never own the item
The cost can be more e pensive in the long run than buying the item
Risk of repossession if the business fails to make its repayments
2 irepurchase
is is a s ste o instal ent b in t e fi b s no b t pa s late e e a e t ee pa ties in ol ed in each hire purchase agreement the buyer, the seller and the company.
ample: A business needs machinery, hich costs t s the achine f o the se e he siness a s a de osit and a an es ith the se e fo a hi e purchase agreement to pay the balance. he e ainin is aid in insta ents ith inte est o e a e iod of ti e s a ess than fi e ea s he siness o ns the achine on hen the last instalment is paid.
Advantages
The company gets immediate possession and use of the item ayments are spread over time o security needed
Increases standard of living of customers who purchase necessities
If one-third has been paid the asset cannot be repossessed without a court order
isadvantages
pensive a high rate of interest is charged
The business will not own the asset until the last payment is made
Risk of repossession if the buyer does not make the repayments
ersonal Contract lan C
This is a form of hire purchase agreement commonly used when buying cars. It will have lower monthly payments over three years when compared to an HP agreement over the same time period. PCPs offer flexible finance plans and there is a guaranteed minimum future value (GMFV) – this is the portion of the cost of the car that customers can pay at the end of the contract to own the car outright. At the end of a PCP the customer has the option to part exchange the vehicle for another vehicle, keep their current vehicle and pay the GMFV or return the vehicle with no further payments.
edium termloan
s o one i en b a financial instit tion ic st be epaid, it inte est, in instal ents t is anted o a specific eason epa ents o an a eed a o nt ill be paid e la l o e a pe iod o one to fi e ea s
Advantages isadvantages
The interest on a term loan is a ta -allowable business e pense and is usually lower than hire purchase o loss of control
e fi st s o it can a e t e pa ents
Interest is charged
Repayments may increase if the bank changes its interest rates
If the business fails to make its repayments the item used as collateral or security could be repossessed
Long-term sources of finance
These are used to fund long-term or capital e penditure items such as purchasing a new business, new premises, machinery, business e pansion or business start-up. They are usually for e la e s s o one and ill ta e o e fi e ea s to pa back.
uitycapital
fi sells s a es in et n o in est ent t is is called e it share capital. One share is e ual to one vote so an investor with 1 of the shares controls the vote and any decision-making.
Advantages isadvantages
o interest repayments
o security or collateral re uired
oss of control. Shareholders do have votes at Annual eneral eetings, which means they can appoint directors and make other decisions
Shareholders may sell shares if they become dissatisfied o p blic co panies t is a result in a fall in share value
2 e enture
is is lon te finance o a ban e b siness pa s inte est onl at a fi ed ate on t e debent e and t en pa s t e total a o nt at a specified date in t e t e e inte est on debentures must be paid before dividends to shareholders.
Advantages isadvantages
Debenture interest is a ta -allowable business e pense
i ed interest rate
o loss of control as debenture holders do not have a say in the running of a business arge amounts available
Retainedearnings
Security collateral must be provided. The asset is at risk if repayments are not met
Interest is charged on debentures so there is a cost involved
Risk of business failure as debentures are debt capital and ill a ect t e fi s earin
is is a ee lon te so ce o finance also called plo in bac p ofits t t e end o t e ea p ofits can be paid as dividends or reinvested in the business to fund future e pansion.
Advantages isadvantages
ont ol o t e fi is not a ected as no shares are sold
o interest repayments
oney available for immediate use
o security needed
It can take time to build up retained earnings
Available only once once the money has been spent it will take time to accumulate again
Retained earnings reduces the dividend available for shareholders
4 Grants
A rant is money given by a state agency to an enterprise or organisation that is then used to fund e pansion. They can be in the form of capital e penditure grants e.g. from Industrial Development Agency IDA Ireland , feasibility study grants ocal nterprise fice nte p ise eland , t ainin ants o b siness enterprise grants O . They are usually non-repayable but some may be linked to ob targets, so if the target is not reached the grant may have to be repaid.
Advantages isadvantages
arge amounts available to support a variety of business activities
There is no cost as they do not have to be repaid as long as terms and conditions are met o security re uired
enturecapital
Some grants re uire criteria to be met Application process can be slow rants may not fund the entire e pense, so another source will also be needed
Venturecapital is investment in a company by e uity participation. e is is i , b t potential p ofit is also i i t e ent e succeeds. A company sells shares to a venture capital company risk investor in return for an agreed cash investment. The venture capital co pan ill ta e a pe centa e o t e p ofits in et n is is suitable for
Seed capital start-ups
e elop ent capital o t o an e istin fi
ana e ent b o t ana e ent b t e fi as a going concern.
Advantages isadvantages
ent e capital fi a b in e pe tise and s ills to t e fi as ell as finance
o interest is charged as the money is not borrowed
arge amounts of capital are available
Saleandlease ack
e ent e capital fi ill p o ide capital in return for shares in the business. This means they have a say in the running of the business
The venture capital company will also get a s a e o t e p ofits unds may be given over a period of time rather than all at once
A business sells an asset e.g. premises or warehouse and then leases it back from the buyer The business can continue to use t e asset b t also a ail o t e e t a finance
Advantages
arge sum of capital raised
o loss of control
isadvantages
ne o so ce o finance
e al e o t e fi s fi ed asset is permanently reduced
Stop Colla orate
orking in small groups, prepare an infographic or poster summarising t e so ces o finance a ailable to a fi ispla o in o ap ics on o classroom walls or on digital classroom collaboration spaces.
Recap
hapter 1 covers product life cycle. sing your copy or mini-whiteboards, draw the product life cycle. Identify possible costs and app op iate so ces o finance t at a business may re uire for each cost at each different stage.
Cashflow ist edi e encebet eent e one o in inando to ab sinesso o se old cashflow forecast isadocumentthatshowstheplannedincomeand e penditure ofabusiness orhousehold overacertainperiodoftime.It forecasts predicts the receiptsabusinesswill haveoveraperiodoftimeandthepaymentsitwillneed to payoutinthatsametimeperiod.
There are three possible outcomes of a cash o o ecast
ashsurplus: Receipts ayments. ore money is coming in than going out.
2 Cashdeficit: Receipts ayments. The business has a shortfall of cash and will not have enough money coming in to pay all the bills.
alanced: Receipts ayments. The business has the e act amount of money coming in to meet the payments going out.
t is ital t at a b siness ana es its cas o e ecti el en a see in l s ccess l co pan ill o o t o b siness i it does not ana e its cas o e b siness st a e eno cas o one o in into t e b siness to eet all its pa ent e i e ents
n e ecti e cas o o ecast is ealistic t ta es seasonal acto s into acco nt ta es c edit sales into account allows for bad debts and includes ta es.
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To learn a little more about the i po tance o ana in cas o , watch this short video at the link below about a mother and daughter duo who entered a on s en when they re-established a business, aggers Original, that had originally been set up twenty years ago but failed.
edco.ie/mabq
Benefits of a cashflow forecast
Assists financialplanning: It enables a fi to identi t e ti in and so ces o cas in o s and o t o s is is an essential pa t o t e financial plannin p ocess
Establishesnetinflows/outflows: It can help a business plan effectively to meet cash shortages or consider their options in relation to a large cash surplus.
Improvesfinancial control: It provides a benchmark against which actual performance can be co pa ed, actin as a financial cont ol mechanism.
ou will need to be able to look at a cash o o ecast and o e ad ice to t e b siness on its c ent financial sit ation
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o plete t e estion on cas o forecasts on pages - of your Student cti it oo en o a e finis ed, swap your answers with a partner and peer assess each other s work.
Access to finance: hen seeking a loan from a financial instit tion in esto , cas o o ecasts will be re uired. They will show the investor the amount of money re uired and that the business is being well managed. et s ta e a close loo at a cas o o ecast and o it is calc lated Cash Flow Forecast for Thompsons
es o recei s s es in es en inco e s e o sse s recei o r n s
Receipts
es o en s urc ses es nd s ries o er e ds d o d runnin e enses e i nd e os e s ioner ereis osi i e c s t e nt i e recei s re re er n en s ec osin c s orone on eco es eo enin c s or ene
Analysingthe cashflow forecast
e have already learned that a business will be faced it t ee di e ent scena ios in a cas o o ecast s pl s, deficit o balanced cas o en anal sin t e cas o o ecast it ill be i po tant to c ec for irregularities such as lower receipts for a particular month, very high payments in another month or a large item of capital or one-off spending. These may all lead to cas o deficits and ill e i e action b the business to rectify them. There are a number of options a ailable to deal it a cas o deficit am ip
isis ne i e
Theme
nal se t e cas o o ecast abo e hat issues are facing the company hat actions would you take as the manager of this business to address the issues i ital Trans rmati n
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Borrow: ail o a s o t te so ce o finance s c as an o e d a t to co e ont s e e t e e a be a deficit e fi ill need to be a a e t at t e ban o financial instit tion ill c a e i inte est ates e b siness co ld also consider using trade creditors as an alternative short-term source if appropriate
Cut down: Decrease payments by sourcing cheaper, alternative suppliers, restructuring loan repayments or reducing business costs or overheads business e penses . ook at reducing non-essential spending.
efer payments: Delay payments or spread large payments over a number of ont s is eans t e financial b den on t e co pan o ldn t all co e at t e same time. It could also look to delay some payments until months when there will be an increase in receipts to cover those costs. It could also look at restructuring loan payments if necessary or ask creditors for better trading terms.
arn e traincome: Increase receipts by increasing prices depending on how price-sensitive its customers are to price changes, in other words the price elasticity of demand or ad usting an element of the marketing mi to increase sales. It could also ensure debtors pay on time by having an effective credit control system.
i ed assets factoringde ts: onsider purchasing larger items through term loans, hire purchase or leasing. ook at factoring selling some debts to a third pa t at a disco nt is sp eads t e cost and t e fi on t be pa in p ont o e pensi e fi ed assets
Stop Colla orate
hat are the implications for a business that is facing a cas o s pl s isc ss it a pa tne at actions a business might take if it has a surplus.
Chapter uestions
Stop Check for nderstanding
Q1. u ine the factors a business should consider when identifying its key partners.
2. in what is meant by
a Strategic alliance
b oint venture
c o-opetition.
3. us r e your understanding of the term buyer supplier relationships .
4. u ine t e benefits and c allen es o a b siness de elopin e pa tne s ips
5. u ine four key activities of a business.
. in what is meant by a hysical capital
b uman capital
c Intellectual capital
d inancial capital.
Q. e and e plain two types of costs a business may have Support your answers with suitable e amples.
. in what is meant by revenue stream.
. in t e t o t pes o e en e st ea a ailable to a fi
1 . in t ee s o t te so ces o finance and identi an app op iate se o eac
11. us r e your understanding of the term leasing .
12. in it a s itable e a ple, i e p c ase as a so ce o finance
13. in the term term loan .
14. u ine o lon te so ces o finance and identi an app op iate se o eac
15. in at is eant b a cas o o ecast
1 . Discuss t e easons a fi p epa es a cas o o ecast
evelopin your no led e
1. Dis in uis between strategic alliance and oint venture.
2. Discuss the implications for a business of developing key partnerships.
3. u e t o cont astin lon te so ces o finance
4. Discuss the reasons why the main elements of the operation model of the business may change over time.
5. e b siness cas o o ecast o ase ec it td is set o t belo
a Outline t easons ase ec it td o ld p epa e a cas o o ecast b nal se t e cas o o ecast o ase ec it td plain an p oble s o t in t e b siness i t a e and p o ide a sol tion to an p oble s o a e identified . ol n is a list o finance te s ol n is a list o possible e planation o t ese te s ne e planation does not e e to an o t ese finance te s
Column 1: terms
Column 2: explanations
1. easing . A service provided by banks that allows current account holders to withdraw more funds than available in their current accounts.
2. ire purchase B. one p o ided b an o anisation o a specific p pose t does not have to be repaid provided certain conditions have been met.
3. Overdraft . Selling a trade debt to a third party at a reduced price.
4. rant . urchasing an asset by pay installments over time. Ownership does not t ans e ntil t e final pa ent
5. Trade credit . aying for the use of an item without ever owning it.
F. Receiving goods from suppliers and paying for them at a later stage. c the two lists by placing the letter of the correct e planation under the relevant number below. 1. 2. 3. 4. 5.
. elow is a copy of the
Store t earn t Business and
ccruede penses: ustomers use the se ice fi st and pa o it late t e se ice is provided before the bill is sent. sually applies to utilities, e.g. S , telephone.
an overdraft: e ban i es t e fi permission to withdraw more than is in their current account , up to an agreed limit. Cash flow forecast: Shows the planned income and e penditure of a business or household over a certain period of time. It is a financial plan o a b siness
ollateral: Something that is pledged as security for a loan. This item will be forfeited if the loan cannot be repaid, e.g. the deeds to a house may be given as collateral or security for a mortgage.
o opetition: o petin fi s o to et e to achieve a common goal.
e enture: A long-term loan from a bank, available to businesses. The business pa s inte est onl at a fi ed ate on t e debenture and then pays the total amount on a specified date in t e t e e inte est on debentures must be paid before dividends to shareholders.
istri utionpartnerships: The partners a business uses to get a product to the target market.
E uity capital: fi sells s a es in t e company in return for investment.
i ed costs: penses that don t change as output changes, e.g. loan repayments, insurance, rent.
Gearin : The ratio of a company s debt capital to its e uity capital. It shows the capital st ct e o a fi and o c o a fi s operations are funded by lenders compared to shareholders.
Grants: oney given by a state agency to an enterprise or organisation that is then used to fund e pansion. They are usually non-repayable.
irepurchase: A system of instalment buying. A buyer pays for an item in regular instalments, with interest, over a period of time. They will not own the item until the last payment is made.
uman capital: The competencies embodied in people, invested in and developed to help them to be more productive and realise their potential. The people a business needs to deliver its value proposition.
Intellectual capital: Also referred to as intangible assets. Trademarks, patents, copyrights, databases and proprietary knowledge information or knowledge the business has, e.g. trade secrets
actorin : Selling trade creditors or debts to a acto in fi
inancial capital: e finance a b siness ses to fund its key activities. It may be in the form of e uity capital or debt capital.
ointventure: en t o o o e fi s o are not competitors agree to co-operate and share resources and e pertise with each other o t e t al benefit o all pa ties to ac ie e a specific oal o ob ecti e ne le al entit is formed.
eypartners: The business s e ternal relationships employed to create or add value for customers.
eyresources: The elements needed to c eate a fi s al e p oposition easin : aying for the use of an item without ever owning it.
perational model: The structures that enable the business to meet its customers needs. ocuses on the business s key partners, key activities and key resources.
utsourcin : inding a supplier to manufacture part of or the entire product.
Physical capital: The physical items of value for the business, e.g. its premises, machinery, e uipment and vehicles. Often referred to as tangible assets.
ecurrin sales: Sales that are continuously generated. Regular payments for a continued service or after-sales support.
etainedearnin s: Also called ploughing bac p ofits t t e end o t e ea p ofits can be paid as dividends or re-invested in business.
evenue stream: A clear path for bringing money and resources into the company,
Saleandlease ac : A business sells an asset e.g. premises and then leases it back from
ChapterChecklist
perational model of a usiness
ey partnerships
1. Identify types
. Analyse implications ey activities
1. Identify and e plain main activities of a business ey resources
1. plain physical, human, intellectual and financial capital
. plain why these may change over time
Costs
istin is bet een fi ed and a iable costs
denti costs o a fi
the buyer The business can continue to use t e asset and also a ail o t e e t a finance
Sin letransaction: A revenue stream that comes from one-time customer payments for a product or service
Strate icalliance: Two or more independent fi s o a e not co petito s a ee to co operate and share resources and e pertise it eac ot e o t e t al benefit o all pa ties in ol ed e fi s e ain co pletel independent le all and eac fi aintains its own separate trading identity.
Termloan: A sum of money given by a financial instit tion ic st be epaid, it interest, in instalments.
Tradecreditors: fi ecei es a ate ials or products now and pays for them in the future, usually within about 0 days. Also referred to as leaning on the trade .
aria le costs: penses that vary according to use, e.g. direct wages, raw materials.
Sensitive to demand and sub ect to change. enture capital: Investment in a company by means of e uity participation the risk is high b t potential p ofit is also i
Revenue
plain revenue stream
Distinguish between single transaction and recurring sales
o ces o finance
Distinguish between short-, mediumand long-term sources
plain and outline advantages and disadvantages of each f ec
plain what it is
Discuss reasons for preparing a nderstand how is calculated
Analyse a and give recommendations
Growth evelopment and pansion
earningoutcomes Strand 2
At the end of this chapter you should be able to:
S RA an understanding of the importance of identifying competition in the market.
S Porter’s Five Forces model to identify and analyse competition in the market and use these findings to identify the competitive advantage of a business. the strategies employed by a business to adapt or expand.
4 A R C A the potential of technology to support adaption and expansion.
C C a cost–benefit analysis to analyse the implications of business expansion. strategies that a business may employ to adapt based on their marketing mix and/or business model.
Case Study: o i
Spotify, which was founded in 00 , is a Swedish music, podcast and video streaming service. It gives customers access to millions of songs and content from creators and artists who are based around the world. ith a strong competitive advantage over its rivals, Spotify is available across a range of devices including computers, phones, tablets, speakers, T s and cars. Spotify remium is a feature that allows customers to transition their account from one device to another. In 00 Spotify was presented to consumers as an app for smartphones and in 011 it became established in the S and began to compete with iTunes. Signing contracts with record labels such as Sony , arner and niversal usic put Spotify in a position to launch into the music world on a larger scale. It di e sified into se ices s c as specialised a a ines and other related applications. Spotify has successfully connected with users who stream music for free but also generates huge revenue from its Spotify remium platform, facilitated through alliances with social media giants such as eta, and Snapchat. y 0 , Spotify boasted over 10 million premium subscribers and 1 million active users. It has e panded organically, diversifying its content offerings, investing heavily in podcasts, ac uiring ma or podcast networks like imlet edia and signing e clusive deals with prominent creators. The threat ne entrants will always be there, but with over 10 million users across countries in urope, America, Asia and Oceania, Spotify has proved itself a master in the music application service. e are in the discovery business If discovery drives delight , and delight drives engagement , and engagement drives discovery, we believe Spotify wins and so do our users Spotify .
Premium Users
295 million of Spotify subscribers are premium users
emo raphics
18-35 year olds make up the majority of Spotify user base
Spotify Users
Gender rea do n
58% of Spotify users are men ardcore Spotify ans 75% of both genders in the US considered Spotify premium an essential source of entertainment
Competitioninthe market
Competition isrivalrybetweenbusinessesinthesame industry. usinessescompete againstoneanotheron issuessuchasprice,customerserviceanddesignin order to increasesalesandgainmarket share.
ompetition in an industry can be either direct or indirect.
irect competition: usinesses selling the same product or service. The products and services are substitutes for each other and uite similar. or e ample, Domino s i a and our Star i a both offer pi a delivery services or take-out pi a and are direct competitors.
Indirect competition: ompetition between companies offering different products or services t at lfil t e sa e need o ta et t e sa e customers. or e ample, Domino s is also competing it ot e ta ea a ood o tlets, e fis and c ips, Thai and hinese.
ource techreport.com
Stop Research
ist e amples of competitors in different sectors of the economy. Include e amples of both direct and indirect competition, e.g. idl and Aldi, Ryanair and Stena ine.
hy is it important to identify competition in the market
Identify stren ths: y analysing its competitors a business can identify its own strengths. It can then identify its position in the market and understand how it can differentiate itself from its competitors and develop its uni ue value proposition . is mana ement: A business can develop an understanding of its weaknesses and allocate resources and contingency plans to anticipate and p e ent an is s o t eats to t e fi
Understandthe mar et: nderstanding the competitive forces at work in a market creates a deeper understanding of the whole ide a et fi can identi all t e co panies se icin t at market and the different customer needs they are meeting. This will enable the business to make more informed decisions.
Spotindustrytrends: Analysing competition highlights changes in the market , enabling a business to identify and predict trends, spot gaps in the market and develop innovative solutions to meet customer needs.
enchmar for future ro th: ompetitor analysis highlights companies that are either larger or smaller than the business. Studying larger companies provides a reference point or benchmark for the business against which it can compare its own future growth.
Porter s ive orces model
There are a number of tools a business can use to carry out competitor analysis, for e ample a competitive matri or a S OT Strengths eaknesses Opportunities Threats analysis, which you can find in apte
Porter’sFive Forcesmodel isa strategicmanagement frameworkthatbusinessescanuse to understandthe competitive forces at workintheirindustry.
It was developed by arvard usiness School s rofessor ichael orter in 19 9. It analyses the nature of competition within an industry, providing a framework to nde stand ind st p ofitabilit and attractiveness in other words, how and so e ind st ies a e i p ofits and ot e s a e lo p ofits o te identified fi e o ces o so ces o co petiti e pressure within an industry. They are ompetitive rivalry
2 Supplier power uyer power
4 Threat of substitution Threat of new entrants.
et s look at an e ample, taking the pharmaceutical industry and the confectionery industry as a model.
There is intense competition, mainly on price over 1 trillion in global sales and workforce recruiting the most e perienced workforce also from companies maintaining the security of intellectual property taking out patents on products and new technologies .
uppliers have very little power in the pharma industry as all the raw materials generally come from the chemical industry and most of the additional e uipment is available from numerous manufacturers.
harmaceutical ndustry
hen it comes to prescribed medication, it is doctors and consultants who decide and choose the brand for the consumer buyer po er , so the price consumers pay is out of their hands. The price wars happen between the medical companies and the p ofit a ins a e not passed on to t e cons e
ith regard to ne mar et entrants, the payoffs available from the pharmaceutical industry means t e e ill al a s be a stead o o new companies backed by venture capitalists entering the market
ubstitutions are always dependent on the individual drug. The pharma industry is constantly launching new products, so threats of substitutes will always be present.
aces intense competition from a broad range of companies. The value of the market in Ireland was over 9 million in 0 1, and gaining a share of that market is of key importance to each company in the sector.
The threat of substitutes in this industry is immense. onsumers want reduced sugar products and more natural ingredients, so emerging substitutes in this industry may start to take over.
ustomers hold huge power and strength in the confectionery industry if they don t like a product, they won t buy it. Trends are moving towards healthier options and convenience, which are shaping the industry manufacturers need to be one step ahead all the time.
The power of suppliers can vary The number of suppliers available, how uni ue their products are also from companies and the threat of s bstit tes can all a e an in ence on their power.
et s e a ine eac o t e fi e o ces in o e detail on t e ollo in pa e
hen it comes to potential of ne mar et entrants, there is currently a surge of these across the globe due to customer preferences the market is changing as consumers become more health conscious. The payoffs may not be as big as in the pharma industry, but new entrants will always be a threat.
Confectionery ndustry
Competitiverivalry
actors to consider are
um er of competitors: The more competitors, the more intense the competition, with reduced market share for each competitor
Industry ro th: If an industry is growing uickly and e panding, competition will be less intense as all fi s a e seein inc easin sales en a ets a e declinin , co petition beco es c more intense as more companies are competing for a larger slice of a decreasing market vaila ility of closesu stitutes: hen products and services on offer are very similar or very close substitutes competition will be intense as customers can easily switch to alternative providers. ompanies that offer uni ue products will generate brand loyalty and see less intense competition.
E it arriers: it is di fic lt to lea e a a et fi s ill sta and compete in the market rather than face the cost and challenges of leaving. or e ample, in the airline industry high capital costs, contractual obligations and regulations mean t at ai lines find it o e c allen in to lea e a a et
i ed costs: nd st ies t at a e i fi ed costs a e o e li el to ed ce p ices t an dec ease s ppl en de and slo s beca se p ofits depend on ol e
2 Supplierpower
A business that is measuring supplier power should consider the following
Thenum er of suppliers: The more suppliers there are, the less power each supplier has. hen there are few suppliers, each has greater bargaining power and can raise prices easily or reduce alit , i pactin on a fi s p ofits
Uni ueness: A supplier that is providing an essential resource to the business with no or limited alternatives is very powerful. hen there are lots of alternatives available this reduces the power for each supplier
S itchin costs: en it is e pensi e o di fic lt to s itc s pplie s, t e s pplie s a e o e power. usinesses will be less likely to switch even if it means increasing prices.
Industryimportance: If the resource or component being supplied is demanded in more than one industry, the suppliers have uite a lot of power. They can easily sell their products elsewhere. or ardinte ration: A supplier that has moved into the same industry as the buyer holds more power. They have direct access to the necessary supplies, making them a direct competitor.
u ier o er
Buyerpower customerpower
The more buyers or customers in a market , the less power each individual buyer has. ewer customers means each customer holds greater power. They can switch to competitors, which will reduce prices.
or e ample, the int od ction of o cost no f i s s e a ets has chan ed the s e a et secto sto e s ha e eate o e as the can o e to chea e s e a ets fo cin othe s to reduce their prices too.
n encin acto s
um er of uyers: The fewer buyers customers there are, the more power each one holds.
Purchasesi e: ustomers who buy in larger uantities can negotiate better prices and terms and will be more powerful. S itchin costs: In some industries customers can easily switch from one business to another. This forces the business to offer competitive prices and terms.
Pricesensitivity: ustomers are more price sensitive in certain sectors. They will uickly move to cheaper alternatives o ed ce t ei spendin en a fi inc eases its p ices
Informed uyers: ustomers who are well informed have greater power to negotiate better prices.
4 hreatofsu stitution
s bstit te p od ct is one t at satisfies t e sa e need does the same thing as another product.
or e ample, s stit tes fo es esso coffee ods inc de a s e a et s o n and coffee ods ta c s coffee ods o e en instant coffee
elativepriceperformance: hen the substitute is a lower price, coupled with a comparable or better performance, customers will be more li el to s itc , posin a i e t eat o b sinesses o e a ple, et i att acted lots o ne customers from Sky as it was cheaper and offered a more accessible streaming service. ustomers illin ness to chan e: b e s find it eas to s itc to s bstit tes, t e t eat is high.
or e ample, the int od ction of e and chan ed the a et fo ta is
vaila ility of closesu stitutes: hen customers perceive that two products are very similar, they are more likely to choose the cheaper option, for e ample a generic paracetamol versus a branded paracetamol.
hreatofnewentrants
e abilit o ne fi s to ente t e a et can i pact on a b siness s pe o ance and a et s a e a ie s to ent can allo e istin fi s to maintain strong market share, reducing rivalry in an industry. actors t at can in ence t e t eat o ne ent ants incl de cost ad anta es, access to raw materials, government policy and brand loyalty A market is easy to enter if there is common technology, access to distribution channels, low capital re uirements and an absence of strong brands and customer loyalty
Cus o er o er
n r nd co ee ods
et s e amine the barriers to entry
i h capital costs: i capital sta t p costs ill dete so e fi s o ente in an ind st , which means that only large businesses can compete effectively
Economies of scale: An economy of scale is a reduction in unit cost cost per unit that results o a fi inc easin in si e a e fi s can p od ce and sell on a la e scale and ene ate i economies of scale. This allows them to sell products at a cheaper price, making it harder for new entrants to challenge them.
Productdifferentiation: rands with strong ni ue Selling oints S s will have high brand loyalty. ustomers will be less likely to move away from the product and try something new. This can be a dete ent o ne fi s and a e it a de o ne fi s to ain a et s a e
e ulations: egal restrictions and regulations such as licences, safety standards or patents can a e it c allen in o ne fi s to ente a a et o e a ple, a fi a a e a patent on a pa tic la tec nolo o ate ial ic o ld a e it di fic lt o ne fi s to co pete
ccess to distri utionchannels: en e istin fi s cont ol t e dist ib tion c annels s c as etail sto es, online sto es, cable in ast ct e, etc , ne ent ants ill find it di fic lt to access the market
etaliation: The threat of a price war would discourage new entrants.
orter s ive orces modelapplied to er
hreat of Su stitutes
Low threat: ar sharing, improved public transport , remote working
Medium threat: Self-driving cars, bike sharing
Threat of substitutes: LOW (two different value propositions)
Bargaining ower of rivers
Low threat: argaining power of drivers, switching costs for drivers, barriers to entry e ist
Medium threat: alue proposition for drivers
Bargaining power of drivers: LOW but potentially RISING
Rivalry among Competitors
i h ri alry among competitors
Bargaining ower of Customers
Low threat: Switching barriers for customers
Medium threat: alue proposition for customers, customer information availability
High threat: argaining power of customers
Bargaining power of customers: HIGH
hreat of ew ntrants
Low threat: a ie s to e it , econo ies o scale, p ofitabilit
Medium/ High: arriers to entry Threat of New Entrants: MEDIUM
Stop Colla orate
orking in small groups, complete a orter s ive orces analysis of a company of your choice. ou can use the ber e ample on page to guide you
Case Study: cu ed i ee
i ee Conno ounder o cu ed i ee
Stop atch
atc t is fi e in te clip, ic oes t o orter s ive orces comparing two different industries.
edco.ie/dk wq
Aimee onnolly developed a love of make-up working on the rban Decay counter in ouse o ase , nd ollo in a ansition ea o e pe ience it enefit n s e founded Sculpted y Aimee, which has since grown to a multimillion euro business She is a determined, ambitious, independent woman and not afraid of hard work. Aimee is a ad ate o fit siness c ool and on t e merging ntrepreneur of the ear in 0 1. She started out as a make-up artist, using social media to showcase and market her image and skills. She partnered with a -based company in 01 to launch a contouring palette but soon realised that cutting out the middleman and dealing directly with suppliers o ld be o e p ofitable n s e de eloped t e c lpted Aimee ake-up Academy, offering a range of courses and tutorials, and in 019 opened a store in Dundrum. Sculpted y Aimee now boasts a range of over a hundred products, which are manufactured in South orea and Italy Aimee onnolly started out as a solo entrepreneur and singlehandedly worked on buying, sales, distribution and acco nts ealisin t e i po tance o a in a ood tea a o nd e , s e i ed e fi st employee in 01 and now credits the team of people working for her as the driving force behind the brand. They are as passionate as she is to scale the business.
Sculpted y Aimee products are now sold in more than 00 stores around Ireland. It has four sto es a ton t eet, blin, its a s ip is sto e, opened in and t e e a e also sto es in ildare illage, elfast and arnaby Street, ondon. The company ships to countries and launched in the iddle ast in 0 . Developing and working with key partners has been key to onnolly s success. A distribution deal with oots saw Sculpted y Aimee products in every oots store and in 0 Sculpted was announced as the number one beauty brand in mass cosmetics across all oots Ireland stores. onnolly has also partnered with shopping channel and festivals such as lectric icnic, of which the company is the o ficial bea t sponso
e co pan eco ded p ofits o illion in it e en es o n it epo ted cas nds o t as beco e a el p ofitable b siness it o t inc in la e a o nts o debt c lpted i ee s ission is to a e it ic and eas to find o glow, with ust a few good products you totally love and know how to use . Its customers clearly agree that this brand does ust that.
Stop Research
esea c a national and an inte national fi t at a e s ccess ll o n t ei b siness e e be to file o esea c in o n esti ati e olde a e o es lts it o class an you identify common characteristics hat strategies did the businesses use
Strategies for e pansionoradaptation
There are two main paths of e pansion organicgrowth and inorganicgrowth r anic ro th is a slower, more natural process. The business increases in si e by selling in new markets or de elopin ne p od cts, o e a ple t can be financed through retained earnings or by seeking new e uity capital.
Inor anic ro th is a uicker growth process. A business e pands rapidly through mergers and takeovers. There is o e is attac ed to t is and t e fi a need to inc ease its debt capital to finance it
r anic ro th strate ies
Recap
ook at the types of business model in hapter 1 , usiness lanning. rite down some types and see if your partner can e plain them.
ncreasedomesticsales
A simple strategy growing sales of an e isting product or introducing a new product to increase market share and turnover. If the product is already well known, no e tra R D Research and Development is re uired. It can be done very easily through promotion of the product service, e.g. sponsoring a team at a local or national event.
Advantages
arketplace o or low e tra costs. ill save the business time and resources that would usually be re uired. oney that was available can be spent in other areas of the company.
nowledge roduct already known within the country The business can use its knowledge of previous product launches they have done to increase their sales. They may be in a position to use some of their marketing campaigns again or even ust change elements of them.
isadvantages
Speed Ireland is a small country so growth e pansion can be slow. It would involve a company having a business in one town and then setting up in another one before they might see additional p ofits bein ade
inance an bring additional risk and t e need o e t a finance e a find it di fic lt to so ce t e additional finance re uired to invest in new markets.
e c e e en i e ific i n
Stop Research
Read the article at the link below to learn more about why uinness ight wasn t a success.
edco.ie/8key
It will need to invest in R D If its current product portfolio isn t generating enough business it could look at developing a completely new product. or e ample, aileys Irish ream li ueur was developed in Ireland and sold globally as an innovative product, and sales are now running at hundreds of millions of euros per year A business can e pand by developing new products with a distinctive S that appeals to its target market.
Advantages
fi otentially very high. usinesses constantly seek to develop new products to replace those coming to the end of their life cycle.
Consumers onsumers are always more willing to purchase items service from a company they are already familiar with, so there is nearly a following before the product has actually launched.
porting
isadvantages
Costs
G an be high product development , testing costs, market research and speed of development can be slow. Additional R D will be e i ed and it can be di fic lt to establish new distribution channels within the company.
ailure rates an be high if not enough market research has been carried out e.g. uinness ight . This is usually down to a poor marketing mi or not enough research carried out at the preliminary stages.
It can do this in a number of ways, e.g. direct e porting. This might involve getting a distributor that is already established in the foreign market using an e port agent promotes and ets o de s findin ne e po t c sto e s at ai s and e hibitions or establishing a wholly owned foreign company.
Recap
hapter looks at the opportunities and challenges of trading internationally. orking with a partner, take a minute to recall some of the advantages and disadvantages of e porting for Irish businesses.
Licensing isacont act ala ee ent e eonefi licenso allo sanot e fi licensee to a et ei p od ctin et n o a fee royalty . oodsareproduced to e act standards.
is is e pop la in t e fil ind st o p od cin spin o e c andise o pa tic la o ies, e alt isne licenses fi s to se names such as Donald Duck and ickey ouse on merchandise. alkers risps allowed Tayto to manufacture its onster unch brand under licence for many years and udweiser is produced under licence in the uinness brewery in Dublin. y licensing a product the copyright holder as t e oppo t nit to a i ise t ei p ofits b entin t ei p ope t rights, e.g. rimark producing arry otter clothing and merchandise.
Advantages isadvantages
ow costs This is a fast method of e pansion as the licensor has already borne all the costs of design, manufacturing, marketing, etc. The licensee is in a very favourable position right from the beginning.
ncome The licensor has continuous income, while the licensee is overseeing the work.
uality control
Control
oor uality control will damage the licensor s reputation. The licensor takes this risk when they agree to licence a product.
The licensor loses some control as the licensee makes the decisions about distribution, production, etc. of the licensed products.
ranchising
Franchising isabusinessarrangementwherebythe franchisor an e istingbusinesswithaprovenbusiness model grantsacontractuallicence permission to the franchisee personsettingupthebusiness to useits name,logo andbusinessideain return fora feeora pe centa eo p ofitso sales
Recap
hapter looks at franchising, which might be useful here.
The franchisor can e pand their business without having to invest further capital or take additional risks, as these are passed on to the franchisee in the contractual arrangement.
This is a cost-effective form of e pansion for the franchisor, but it can be risky if the franchisee does not maintain standards the image of the franchisor could be affected. Some franchises in Ireland are The ip ard, cDonald s and ems offee.
Inor anic ro th strate ies erger
A mer er is a friendlyor voluntary a al a ation o oinin to et e o t o o o e fi s o t ei t al benefit , t adin nde a co on na e
A sin lene le alentity is formed once it is approved by shareholders or e ample, Irish ermanent and Trustee Savings ank merged to form ermanent TS Avonmore o-op and aterford oods merged to form lanbia plc.
It is a defensive strate y as t e e e a in ol e di e sification into ne p od ct a eas, ic ed ces t e is o t e fi a in all its e s in one bas et osts ill be lo e beca se of economies of scale and the sharing of costs and resources. irms may be able to access new markets and new technologies.
Stop Research
Research recent e amples of mergers and ac uisitions. repare a report for your teacher outlining the companies involved and the impact the merger or ac uisition had on the business stakeholders.
Ac uisition takeover
An acquisition is when one company purchases or more of the shares in another company in either a hostile or friendly manner
The ac uiring company a sor s the other company, which loses its identity after the ac uisition and becomes part of the ac uiring company.
The cost of the takeover can be very e pensive. It is the product of the share price multiplied by the number of shares purchased.
Takeovers can cause industrialrelations pro lems There could be redundancies, which could cause industrial relations disputes. or e ample, when Sir im Ratcliffe ac uired anchester nited in ebruary 0 the subse uent cost-cutting and redundancy eas es ca sed con ict
i e ent o anisational c lt es can lead to con ict bet een co petin ana e ent tea s who are used to their own work practices and management styles and systems. This may cause a lac of co operation in the new merged entity, leading to poor management decision-making.
Strategicalliance
In a strategicalliance two or more independent fi s a ee to co ope ate and s a e eso ces and e pe tise it eac ot e o t e t al benefit o all pa ties in ol ed e fi s e ain completelyindependentle ally and eac fi aintains its o n sepa ate trading identity.
e fi s benefit o s a in eso ces and talent that they wouldn t otherwise have access to ither party can end the arrangement easily
ample: n o ise and his od ction company announced a strategic alliance ith o ie st dio a ne os isco e to od ce o i ina and f anchise fi s sta in o ise oth ise and a ne os i enefit a ne os i ha e a e enda o ood acto sta in in thei fi s and ise i ha e access to eso ces inte ect a o e t sto te in and othe ta ent f o the st dio
id ou now
amile Thai partners with anna Drone Delivery as part of its food delivery service.
c or o Cruise
he role of technology in e pansionandadaptation
Stop Colla orate
ork with a partner to look at how oom e panded its business. ave a class discussion looking at why oom s e pansion strategy was so successful.
Technology plays an important role in supporting businesses to grow and helping them to adapt or e pand. or e ample
utomation: Improvements in technology, such as new software, robotics and AD, means that tasks that would have taken some time to complete can now be done in seconds or minutes. This frees up employees and managers to focus on other areas such as product design and improvement.
ample: s all b siness ses acco ntin so t a e to ana e its finances instead o e plo in a full-time accountant.
nline mar etplace: The growth of social media platforms such as Instagram, TikTok and ouTube allows businesses to target and access millions of potential customers at a much lower cost than traditional advertising and marketing methods.
ample: A local restaurant promoting a new menu, a local craft shop selling handmade gifts to a global audience.
e opportunities: any businesses use online marketplaces to sell and promote their products. Technology creates opportunities for businesses to sell to wider markets or to create new products and services.
ample: latforms such as Shopify and tsy enable people to set up an online store with minimal cost.
daptin to chan e: sinesses t at e b ace tec nolo a e o ten o e e ible and can adapt more uickly to new challenges or market trends. This means they can continue to stay competitive in a rapidly changing world.
ample: usinesses that had embraced technology were able to adapt faster during the ovid-19 pandemic, selling online and enabling employees to work from home.
Recap Activity
In hapter 1 we look a range of different technology-driven business models. omplete the activity on page 9 of your Student Activity ook now to refresh your knowledge
Case Study: oo
oom was founded in 011 by ric uan, who had a goal of developing the best video conferencing solution on the market. e spent two years with a team of forty engineers developing his product, which he launched in 01 . One year later oom hat, oom ebinars and oom Rooms were launched. y 01 oom had 100 employees and had introduced screen sharing and breakout rooms as new key features. y 01 it was valued at 1bn and announced the launch of oom Developer latform. oom hone and oom App arketplace were launched in 01 and oom became a public company in 019 In 0 0 it e perienced e ponential growth.
etween December 019 and April 0 0 daily meeting participants grew by 0 times as more people turned to video conferencing to stay connected. oom ares a charitable arm of the company and On oom beta, a virtual events marketplace, were launched. y 0 1 oom hone had reached one million licences and was available in over 0 countries. The oom App arketplace had over 1,000 apps and the company was celebrating its tenth anniversary. oom AI ompanion was launched in 0 and oom orkplace, an AI-powered open collabo ation plat o , in oo c entl as fi teen o fices a o nd t e o ld ts mission is for one platform to deliver limitless human connection and its core value is care for all stakeholders .
enefi n y i
A cost–benefitanalysis
A isa systematic e aminationand evaluation o t efinancialandsocial costsandbenefitso a pro ect, decisionorpolicy.It iscarriedout to determine et e t ebenefitso a pro ect decisionoutweigh thecostsand to decide whetherthepro ectisa worthwhileinvestment.
t e benefits o t ei t e costs, the business will proceed with the pro ect. If the costs outweigh the potential benefits, t e enti e pro ect or part of it may need to be reconsidered.
There are several steps a company must follow when carrying out a cost benefit anal sis
Identify oalsand o ectives
stablish the key goals and ob ectives of the proposed pro ect. hat are the success criteria for this pro ect ow will success be measured The pro ect team will decide how the success criteria will be assessed and eas ed and ens e all costs and benefits a e eas ed sin t e sa e et ic to enable accurate analysis.
2.List costs andbenefits
o pile lists o all t e p o ected costs and potential benefits o t e p o ected plan e in it di ect costs, e.g. labour costs, costs of raw materials, manufacturing costs. Also take into account
Intan i le costs: ent and t e costs t at a e di fic lt to eas e and anti o e a ple, c sto e s bein dissatisfied it t e p od ct, leadin to less epeat c sto
pportunity costs: The costs that may arise when choosing one particular strategy over another
Indirect costs: These include costs that contribute to the running of a business, e.g. rent , utilities light and heat , etc.
en loo at t e possible benefits t at co ld arise from the proposed pro ect
Intangiblebenefits: Improved morale among employees.
Indirectbenefits: ew customers or increased interest from current customers.
Directbenefits: n inc ease in e en e and p ofits
3.Quantify costs andbenefits
ssi n a al e to all costs and benefits lace a a et p ice on all tan ible ite s and t en t to estimate the costs of intangible items e.g. consider the environmental impact of the pro ect . If a b siness ails to i e all t e costs and benefits a al e it ill be al ost i possible to a e an acc ate comparison between them. Some of the costs will be challenging to uantify.
4. Compare costs andbenefits
o t at e e cost and benefit as been i en a al e, total p bot lists and co pa e t e t o t e benefits o t ei t e total costs t e b siness s o ld p oceed it t e planned p oposal t e total costs a e i e t an t e benefits, econside t e enti e p o ect o pa t o it a ine alte nati es is there a way of reducing costs ould the company reduce indirect costs or perhaps take a closer look at any opportunity costs
a erecommendations andimplement
o all t ese findin s a e p esented to management in a report comprising summaries o t e costs and benefits and et e t e pro ect is in fact viable. ear in mind that t e co pan ill not a e li itless finance o capital, so e en i a cost benefit anal sis suggests going ahead with a pro ect the capital may not be there to support it.
A newplayground
A local town is considering building a new playground. There are several costs: acquiring land; the physical construction of the playground; maintenance of the playground. The benefits include: better morale in the community; heightened social cohesion; improved health with access to outdoor facilities. A cost–benefit analysis would:
Estimate the total costs over the lifespan of the playground
Try to quantify the expected increase or decrease in property values, the health benefits to the children, the recreational value to all those who will visit the playground
Compare the benefits with the costs and see if the playground is a worthwhile project.
Stop Research
sin o no led e o cost benefit anal sis, e a ine t e steps eit e c lpted i ee o another company of your choice would go through to launch a new product. Alternatively, research a co pan t at as ca ied o t a cost benefit anal sis and p epa e a s o t epo t
he e ternalenvironment
usinesses may have to adapt to a number of e te nal in ences et s e a ine so e o t ese
ustomerdemo raphics
In hapter 1 we look at market research and how when a b siness loo s to find its ta et a et it e a ines its customer demographics to make sure it is targeting its products or services at the right people. It is vital to discover whether or not the consumers needs are being met. nowing your customer demographic means that you serve your customers better and are able to shape the decision-making process on new products or forecast the success or failure of a proposed plan. ustomer demographics comprise income level, occupation, marital status, age, race, religion, etc.
Economic factors
Recap
hapter 1 covers market analysis strategies.
conomic factors play a strong role in the lifespan and daily operations of a business.
Entrepreneurial Thin in
In hapter we learned about economic indicators such as economic o t , ne plo ent and inte est ates and o t e in ence an organisation. or e ample, if a country is in a recession the unemployment ate ill be i i in ation ates a e i cons e s ill a e less disposable income to spend on lu ury items. ompanies will have to a e to decisions and sac ifices in o de to eep t ei b siness a oat in ti es li e a ecession o a pe iod o i in ation e a a e to ed ce t ei p ices to aintain p ofitabilit o panies ill a e t ese decisions based on t e economic climate they are faced with.
Theme
Stop Research
sing the information above and the theory in hapter conomic Indicators and hapter 1 arket Research and arket Analysis , read the article at the link below and prepare a short synopsis o t e in ence o t e e te nal environment.
edco.ie/ksfm
ompetition
Stop Colla orate
Read this article on how cDonald s adapted its business when e panding in India. Discuss in small groups or pairs the elements of the business model that cDonald s adapted. o did its en i on ent in ence its a etin i
edco.ie/bbp6
tension activity That article was written some time ago, but how has cDonald s performed since then an you find ot e e a ples o co panies o a e adapted t ei marketing mi and or business model to meet the needs of a changing e ternal environment
very business faces some sort of competition and this often has an impact on the decisions it makes. Take two supermarkets, for e ample. If one offers a discount on ready meals, the other may offer the same or a similar deal. If a garden centre offers a discount on hanging baskets its competitors may follow suit. ompetition is always a good thing for consumers because it means that businesses need to provide gooduality products and services at competitive prices. It also means that businesses must constantly update their resources and launch new products in line with their competitors.
hile competition keeps business healthy, it can also be uite problematic, as we see in our ST analysis in hapter 1 . ompanies face the threat of new entrants or price wars and some businesses will struggle with this competition and face the threat of closure.
Enhancingfinancial stability
o en ance its financial stabilit a b siness st be illin to i ple ent certain strategies that will guarantee long-term success and make the business resilient to economic pressures. In order to do this companies adopt some of the following approaches inancialplannin : ecti e financial plannin alon side detailed plans s o in all p o ected in o s and o t o s in b d eta o ese may need to be updated from time to time.
Diversification: eing willing to spread the risk in the business and not relying solely on revenue from one source. usinesses should try to e pand their product portfolio and gain revenue from a range of sources.
Investmentandinnovation: Investing in technologies that will help reduce costs encouraging intrapreneurship and innovation so as to remain competitive and meet the changing needs of society Trainin anddevelopment: othing is more important than skilled and well-trained employees. If employees know they can ask to be upskilled it will foster a culture of responsibility in the workforce.
Sta eholderrelationships: uilding and maintaining relationships with stakeholders is critical for the success of a business ommunication with suppliers, investors and customers throughout the life cycle of a business forms strong relationships.
ple entin t ese st ate ies ill en ance a b siness s financial stabilit , enablin it
for any economic challenges and ready for any opportunities that may arise.
Adaptingthe usiness model
e have e amined the impact e ternal drivers have on a business and when these e ternal drivers occur businesses may have to adapt one or even several elements of the marketing mi . In the table below are some e amples of what could be done.
arketingmi Strategy
roduct
rice
Ad ust certain product features or launch more cost-effective versions of certain products during an economic downturn
Incorporate the latest technological developments into their products nhance a product s features to stand out from competitors
Speed up new product developments to get ahead of its competitors
Ad ust pricing strategies
Introduce business promotions
onsider crowdfunding or using a subscription model to gain access to new customer demographics
ndercut competitors if necessary
lace Increase online presence, e.g. to cut down on e penses such as rent se more cost-effective distribution channels amine distribution channels to cater for any cultural differences that a be si nificant
ontinue to engage with the local community to understand their needs and wants
romotion
eople
Ad ust marketing campaigns to highlight value for money and long-term savings e financin plans o st en t en lo alt p o a es to etain customers and attract new ones, e.g. Dunnes Stores 10 off 0 campaign ollabo ate it in ence s o a e a la e online social edia p esence and o i t in ence c sto e s to spend one
est ct e sta fin le els and s o ten o in o s o cont acts i necessary
ackaging se environmentally friendly recyclable packaging
se less packaging
se packaging that can double up for another use, e.g. at hristmas enneys launched a paper bag that could be used as wrapping paper
edco.ie/yxag
rocess ake use of innovations in operational technologies to streamline business processes
ompetitors who do this can drive process improvements for other companies as no business will want to be left behind
Chapter uestions
Stop Check for nderstanding
1. Define competition.
2. Dis in uis between indirect and direct competition. Illustrate your answer with appropriate e amples.
3. in what is meant by competitor analysis.
4. in the terms organic growth and inorganic growth .
5. den i three different methods of inorganic growth.
. De ons r e the importance of identifying competition in the market
. De ons r e an understanding of how orter s ive orces model can be used to identify and analyse competition in the market
. is two e ternal factors of the business environment that impact a business.
. Conduc n n sis of a market of your choice, using orter s ive orces analysis. Discuss how a business in this market might use this information.
1 . e and e in the ive orces of competitive pressure outlined by ichael orter.
11. u ine the factors a business should consider when analysing a competitive rivalry and b supplier power.
12. u ine t e in encin acto s o a c sto e po e and b t eat o s bstit tion, t o o o te s ive orces.
13. in what is meant by threat of new entrants and outline barriers to entry that may e ist in an industry
evelopin your no led e
1. n se the importance for a business of having a scalable business model to aid business growth and development. Support your answer with appropriate e amples.
2. De ons r e your understanding of a competitor analysis.
3. Dis in uis between a growing business and a scaling business
4. Di eren i e between organic and inorganic business growth, providing e amples of each.
5. u ine three strategies available to a business that would enable it to e pand. Illustrate your answer with appropriate e amples.
. us r e o nde standin o t e te cost benefit anal sis
. in the terms intangible costs and direct costs , giving an e ample of each.
. u ine t e steps in ol ed in a cost benefit anal sis
. u ine the steps involved in orter s ive orces model.
1 . u ine t o a eas t at in ence t e e te nal en i on ent o a b siness
11. e nd e in the ive orces of competitive pressure outlined by ichael orter, using e amples where appropriate.
12. u ine t e steps in ol ed in en ancin financial stabilit o a b siness
13. e d the following information.
Spotify Statistics 2024: User, Growth and Revenue Statistics (techreport.com)
edco.ie/crtp
Do you believe that Spotify has succeeded as a scalable business model repare a short report e amining the following areas
a nderstanding the importance of identifying competition in the market
b here Spotify has used orter s ive orces in its approach to business
c hether Spotify has established itself as a company with a scalable business model d hat strategies are employed to adapt or e pand the business e at odifications poti ade to t e b siness to adapt to t e e te nal en i on ent
Theme
Store t earn t
c uisition: One company purchases 1 or more of the shares in another company in either a hostile or a friendly manner.
ompetition: Rivalry between businesses in the same industry.
ompetitiveadvanta e: aving something that makes the business uni ue, something that adds value for its customers and gives it an advantage.
ompetitoranalysis: The process of identifying competitors in the market , analysing their strengths and weaknesses and comparing them to our own business.
Cost–benefitanalysis(CBA): A systematic e amination and evaluation of the pro ected financial and social costs and benefits o a pro ect.
irect competition: hen two businesses are selling the same product or service. The products and services are substitutes for each other and uite similar. The businesses are competing for the same customers and market share.
ranchisin : A franchisor an e isting business with a proven business model grants a contractual licence permission to a franchisee the person setting up the business to use its name, logo and business idea in return for a fee or a percentage of p ofits o sales
Indirect competition: ompetition with companies or sellers that offer different p od cts o se ices t at lfil t e sa e need or target the same customers.
ChapterChecklist
Competitioninthe market
Direct and indirect
Importance of identifying competition
orter s ive orces
ompetitive rivalry
Supplier power
uyer power
Threat of substitution
Threat of new entrants
pansion strategies
Organic icensing
ew product development
Increasing domestic sales
porting
Business and Financial Literacy
Inor anic ro th: A uick growth process for companies. They can e pand rapidly through mergers and takeovers.
Intan i le costs: urrent and future costs t at a e di fic lt to eas e and anti icensin : A contractual agreement where one fi allo s anot e fi to a e its product in return for a fee royalty .
er er: A friendly or voluntary amalgamation o oinin to et e o t o o o e fi s o t ei t al benefit t e ill t ade nde a common name.
pportunity costs: The costs that may arise when choosing one particular strategy over another
r anic ro th: A slow process of growth for businesses. The business increases in si e by selling in new markets or developing new products, for e ample.
Porter s ive orces model: A model that helps understand the competitive forces in business that drive how economic value is di ided bet een sta e olde s e fi e o ces are the threat of new entrants the bargaining power of suppliers the bargaining power of customers the threat of substitutes and competitive rivalry.
Strate icalliance: Two or more independent fi s a ee to co ope ate and s a e resources and e pertise with each other for t ei t al benefit
Inorganic e pansion erger
Ac uisition
Strategic alliance enefi n y i
Identify goals and ob ectives
o pile costs and benefits
anti costs and benefits
o pa e costs and benefits
ternalenvironment
ustomer demographics
ompetition
conomic factors
Adaptingthe marketingmi
ake recommendations and implement
earningoutcomes Strand 2
At the end of this chapter you should be able to: the challenges and risks associated with enterprise and entrepreneurship.
2 the importance of assessing and managing risks in business.
A A S a range of risk management strategies that can be used to respond to challenges and risks in business.
Case Study: D
D Insurance formally D oldings plc is one of Ireland s largest insurance companies. It was founded in 19 9 by a group of farmers who wanted to create a mutual insurance company tailored to the needs of the agricultural community Its head uarters are in Dublin and it trades on the Irish Stock change. The company provides a range of products and services, including motor insurance, home insurance and travel insurance. It caters to the general public and to businesses, offering a wide range of commercial insurance products tailored to s all and edi si ed ente p ises s , incl din p ope t , liabilit and oto eet insurance. True to its roots, looking after the rural farming community is a key priority and D offers comprehensive insurance solutions and risk management specificall o farmers, covering farm property, livestock and agricultural vehicles.
D prides itself on its customer-focused approach, offering personalised service and support tailored to meet the individual needs of both public and business consumers It has a strong local p esence t o o t eland, it a net o o b anc es and o fices ens in accessibility and personalised service. The insurance market in Ireland is competitive, with several other leading companies, so D faces competition from both local and international insurers. owever, its strong brand recognition and customer loyalty provide a competitive edge. In recent months D has acknowledged the additional risks businesses face and has adapted to the changing market , focusing on innovating its product offerings to cater to changing market demands, such as cyber insurance for businesses and advanced telematics solutions for motor insurance.
i ital Trans rmati n Theme
ntrepreneurship andrisk
is is defined as t e possibilit o something bad happening, the possibility of a loss or in ury. usinesses are faced with a number of risks and they can be categorised as follows
Stop Research
Think of a company, local, national or international. onsider the different categories of risk the company could be e posed to. rite a list of the different risks this company ill a e to ana e to be specific
perational
Operations/administration, e.g. shipping, sourcing materials, staffing
Strate ic
Industry-specific, e.g. competitors, staying ahead of trends, innovation and adability
ar et
External, e.g. global recessions, natural disasters. Is there a market (demand) for the firm’s product?
ypes of risk
inancial
Financial transactions, large capital investment
ompliance
Legislation, rules and regulations
is mana ement isaplannedapproach to handlingrisk.Itinvolvesidentifyingallpossiblerisks losses,e t e is o fi e,e plo e ne li ence,pe sonalin loss,le alliabilit , etc de elopin strategies to minimiseharmandmitigate threats calculatingthecostsofprotectionfromloss andmonitoringtheeffectivenessofriskmanagementmeasures.
A risk manager is employed by a business to manage the risk the company is e posed to Risk management involves
Identifyin all possible risks that the business could be e posed to, e.g. cybersecurity threats, financial is s o nat al disaste s
2 erforming a ris assessment to uantify the level of risk for each item on the list. This involves analysing the measures, processes and controls already in place to minimise risk.
Prioritisin the risk. ach risk is evaluated to compare the severity of each and to rank them according to severity The risks that would have the worst effect on the company are prioritised
4 onitorin risk. Risks can change, as can the risk level of different factors. ach risk should be closely monitored so preventive actions can be taken when the severity increases.
Implementin a risk mitigation plan. At this stage appropriate strategies and measures should be put in place to reduce the impact of each risk and avoid or prevent the risks.
ype of risk
echnological yber security ebsite
System failure ower outages
Risks can be e ternal outside the company s control or internal within the company s control . et s take a closer look at some of the main risks a business will have to manage.
Data security rotection of intellectual property
amples
roduction reakdown of machinery and e uipment
ffin mbe lement or fraud
igh staff turnover oss of key staff members remises ire
looding
Theft
inancial e ati e cas o ad debts
Compliance ailure to comply with rules, regulations, standards or legislation e.g. environmental laws and regulations
Strategic
Reduced sales due to competition, changing trends or customer needs ack of innovation
is matri
ach risk should be assessed as to the probability that it will occur the likelihood and its severity the impact . Often, the more severe a risk, the less likely it is to occur. usinesses can use a risk matrix to help assess their risk as part of their risk management process ighseverity ediumseverity
Stop Colla orate
Case Study: re nd s ion is ssess en
On arch 0 the T naiste and inister of Defence iche l artin published the ational Risk Assessment for Ireland 0 and its associated research pro ect, T R ROO -I . e was oined at an event in Dublin by ommissioner for umanitarian Aid and risis anagement , ane ena i , to la nc t e es lts o t e esea c , ic as nded b t e opean nion e ational is ssess ent identified pande ic, c be attac and dis ption to critical supply chain as our highest-rated risks. The T naiste said
The purpose of our ational Risk Assessment is to provide a basis on which key risks are identified, p io itised and ana ed
The ob ective is to establish a co-ordinated approach to national risk management at a central government level. This new assessment focuses on key risks with the potential to trigger a national-level emergency. y outlining the threats and risks we may face in the future, this work empowers us to be better prepared for future crises.
ane ena i co ented
I most strongly welcome the report presented today by Ireland. y revamping methods to assess emerging risks, integrate foresight and forecasting into it , Ireland is demonstrating concrete commitment to keeping its citi ens safe. hat is more, this innovative way of identifying emerging risks contributes to strengthening wider opean esilience, in line it one o t e s isaste esilience oals a confident that this methodology will also serve as an e cellent reference point for other ember States to better anticipate threats in today s rapidly changing risk landscape. ource Department of Defence press release, arch 0 i ital Trans rmati n
Take the list of risks that you compiled for the company of your choice in the research activity. orking with a partner, illustrate that list on a risk matri such as the one below.
Stop Colla orate
Read this article on managing risks in Irish businesses, then work with a classmate to answer the uestions below.
edco.ie/zs9g
ow many Irish businesses face a challenge with regards to a co-ordinated approach to risk management
hat are the top risks facing Irish businesses
hat risks are businesses becoming more aware of hat advice does the article give for dealing with risk hat does it say about a risk-reward usinesses need to be risk aware but not risk averse. ive your opinion on that statement , referencing the article where applicable.
hat advice on risk management does Richard Day, the writer of the article, give to businesses
Theimportance of ris mana ementin usiness
Protectstheor anisation sreputation: An effective risk management strategy will protect the business from incidents that could negatively affect its reputation and maintain trust between a business and its stakeholders.
or e ample, Aer Lingus and yanair have ris management strategies to ensure that their customers a e not affected i ht de a s o cance ations
inimiseslosses: is ana e ent ill ens e t at t e b siness can ini ise financial losses o e plo ee iscond ct, fines, penalties o le al settle ents
or e ample, cance in i hts inc s costs and ena ties fo ai ines
Encoura esinnovationand ro th:
A business analyses the e ternal and internal environment and puts strategies in place to minimise risks it is e posed to This may generate innovative strategies that will help the business grow
or e ample, et i as o i ina a ai o de enta se ice and facin intense co etition t int od ced a st ea in se ice to di e sif its siness chan in the a et and es tin in assi e o th fo the co an
Enhancesdecision ma in :
Risk management can provide a framework for effective decisionmaking. ontrol systems in place can be used to generate data that may be helpful for a business when analysing possible strategies and making decisions.
Risk management strategies
Once all the risks have been assessed the business should develop strategies to manage these risks. These strategies can be divided into three broad categories avoidance, prevention and transfer
is avoidance
is prevention
Risk avoidance is when the business chooses not to accept the risk and develops strategies to prevent or eliminate that risk.
or e ample, companies delivering broadband services or internet services ill not allo many o e s to c i onto a oof d in a c ient assessment.
Strategies include
Installin security systems: ala s, fi e doo s, T , etc.
Appointingahealthand safety officer to report on safety issues and conduct regular safety inspections.
Riskprevention strategiesare strategiesthattry to reducethechancesoftheriskhappeningor reducetheimpactofanyloss.
This is different from risk avoidance.
ample: he oad and co an is a a e that its en inee s i need to access a c sto e s oof d in oad and o inte net insta ation t i ens e that an staff e e doin so has een t ained and ses the co ect safet e i ent
Strategies include roviding training in safeprocedures and ensuring that procedures are followed. utting monitoring procedures in place, e.g. for managing cash. nnin fi e d ills and providing medical training for relevant staff members.
Developing a healthand safety statement , which all employees sign. utting regulations in place a o nd identified a a ds o idin safety e uipment and protective clothing, along with training on how to use them. onducting regular safety inspections audits. Investing in new, replacement or upgraded e uipment as necessary
is transfer(spreadin ris )
is trans er strategiesinvolvepassingtherisk to athirdparty to sharetherisk by diversifyingortakingout insurance fora premium.Thecompanywillmake goodanylosssuffered.
In a riskacceptance strategy, the business accepts the risk and decides that it is within risk tolerance limits. The possibility of reward is worth the risk.
nsurance
Stop Research
an o find e a ples o these risk management strategies in action an o find e a ples o ot e risk management strategies in se a e o findin s with your class.
As we have learned, insurance is one method of spreading risk or risk transfer A business transfers the risk of a loss occurring to the insurance company, which will compensate the business if a loss does occ ns ance is financial p otection a ainst a possible loss
Insurance is important in a business for the following reasons
Survival: t enables a b siness to deal it t e financial loss associated it ne pected o di fic lt sit ations ot a in ins ance can lead to pe anent clos e o a b siness
i uidity: It can help a business meet its cas o e i e ents
Safety: As part of their overall risk management , companies with insurance won t have the daily worry of risks occurring it allows them to focus on their core ob ectives.
e al o li ation: Some insurances are re uired by law, e.g. RSI pay related social insurance , motor insurance.
e allia ility: Some insurances are in place to help businesses comply with their legal responsibilities, for e ample when they may be liable for losses caused to others e.g. public liability insurance.
Cashflowimplications: A loss can have detrimental effects on the company, so having insurance in place will help reduce large une pected losses. A business can include premiums as part of its financial plannin t is a o e c allen in to plan o ne pected losses
ey insuranceterms
These are some of the terms you will come across when you are learning about insurance:
Actuary: A person employed by an insurance company to calculate the possibility of a loss occurring (i.e. they calculate the risk involved). The company uses this information to calculate the premium for the customer. The higher the risk, the higher the premium the insured will pay.
Premium: The fee charged for insurance. It is calculated based on information provided in the application form (this is called a proposal form).
Insurancepolicy: A document that sets out the details of the insurance contract between the insured and the insurance company.
Principles of insurance
ns ance is based on fi e e p inciples ll policies and clai s a e based on t ese
nsura leinterest
A person or business must have a financial inte est in t e ite t at is to be ins ed e st benefit o its e istence and s e financiall o its loss e ite st a e a oneta al e ample: o eone can
2
tmostgoodfaith e i fi e
ndemnity
The insurer will compensate the insured for any loss suffered but ill n t all the insured to make a profit from the l ss A risk should be insured for the cost of replacing the loss. A person is not entitled to e tra compensation for sentimental value . Insurance companies will only compensate for the actual financial loss s e ed
ample: f the da a e to a ho se o d cost to e ai the ins ed e son cannot c ai fo the cost of doin an additiona o on the house.
erinsur nce
The insured must make full disclosure of all material facts to the insurer A material fact is one that would affect the level of risk the insurer is being asked to cover. Insurance cover is based on information given in the proposal form. If an important fact has not been disclosed, the insurer can refuse a claim. ailure to declare the full truth can make the insurance cover worthless.
ample: n ins e a ef se to a a c ai fo a ho se fi e eca se it as not to d that the oof as thatched
u n e nie ill e e ul t en u e n fitee in occurs ro n cciden
There is no point in erinsurin an item as you will only be compensated for the actual value of the item and no more. If you over insure you are ust going to pay a higher premium.
ample: e son ins es a in and states the a e as itho t ettin it a ed f the in is sto en and a c ai is ade the ins ance co an i assess the a e of the in f the in is a ed as that is the a o nt that i e aid ased on the inci e of inde nit
nderinsur nce
Underinsurance means the person or business has inade uate insurance cover. The insured fails to insure for the full value in the policy. In the event of a claim for total loss or partial loss nde ins ance a es lt in financial loss to the policy holder, since the claim would e ceed the ma imum amount that can be paid out by the insurance policy The motivation for being underinsured is lower premiums, but the losses arising from a claim will far outweigh savings from paying a reduced insurance premium.
id ou now
The rule of average clause applies when a partial loss occurs and the risk is underinsured. This is because of the principle of indemnity. ompensation should restore the insured person to the position they were in before the loss occurred. If something is insured for only a proportion of its value, the insurer is only liable for the same proportion of the loss.
ample: a o ns a ho se hich as a tia dest o ed fi e he ho se as a ed at on the date of the fi e t as on ins ed fo he fi e ca sed o th of da a e a i ecei e in co ensation his is eca se he ins ed the ho se fo fo fifths of its a e so he i on ecei e fo fifths of the oss
4 Su rogation
If an insurer pays out full compensation for an item, they are entitled to Take possession of the item.
id ou now
ample: ca is itten off and the ins e a s to the ins ed as this is the f a e of the ca he insurer can no ta e the rec ed ca and se it fo sc a a e
ample: f s ho se is ned do n ecei es co ensation f o the ins e hich can then s e fo the da a e to s ho se
ro imate cause an event which causes a loss is called a peril. There are two types of pe il ins able e fi e and nins able e a en a clai is ade t e loss st be shown to have been caused by the insured peril.
Contri ution
If an item has been insured with two companies over-insurance , the principle of indemnity applies and the insured will only receive compensation once. ach insurer will pay compensation in proportion to the risk insured by them. If one company pays full compensation they are entitled to recover a proportion of the compensation from the other insurance company.
ample: oe s ca e a o th as sto en hi e he as on ho ida he ca e a is ins ed fo on oe s ho ida ins ance and a so on the ho se contents o ic oe can on c ai fo the oss f o one ins e he ins ance co anies i a an e et een the to a ha f of the c ai
Sue a third party.
Types of insurance
Buildingsand contents
The premises, stock and other contents of buildings should be protected against fire and the t.Other losses such as water damage, consequential l ss ic co e s t e cost o te po a clos e o t e b siness d e to fi e, etc , loss o p ofits and ot e na oidable costs co e ed and loss o p ofits d e to fi e s o ld also be co e ed
otor insurance All motorists, both business and private, must have motor insurance. The minimum they can have is third party motor insurance, which covers damage caused by a driver to other people and property Third party motor insurance is compulsory for all motor vehicles on public roads. ully comprehensive insurance is also available. leet motor insurance covers a number of vehicles and drivers.
mployer s lia ility over for compensation that may need to be paid out in the event of in ury to or death of an employee at work.
u liclia ility over for compensation that may need to be paid out in the event of a member of the public being in ured on the company s premises and which is conside ed to be t e a lt o t e b siness, e a all on a s op oo t ill co e t e b siness o an financial loss s e ed as a es lt o t e clai
roductlia ility over for compensation that may need to be paid out to customers in the event of damage or in ury caused by a product of the company.
Cash intransit
Goods intransit
idelity guarantee
Insurance against the risk of money being stolen while on its way to be lodged in the bank.
Insurance against the risk of goods being stolen while being transported.
Insurance against embe lement of revenue by an employee. rovides a business with cover against dishonesty or fraud by an employee. Important if employees have access to safes, bank accounts, etc.
lateglass Insurance against window breakage for shop owners.
Insurance fraud surveys show that of respondents in Ireland believe insurance fraud is unethical, and of Irish respondents do not know how to report a suspected case of insurance fraud. Source insuranceireland.eu
Qnsurance fraud
Here are some infamous examples of insurance fraud.
John Darwin faked his death in a canoeing accident , and turned up five years later. He’d been secretly living in his house, and the house next door, while his wife claimed the money on his life assurance. They were both sentenced to six years in prison, but released on probation. The BBC drama Canoe Man was about their story.
Would you steal your own art for money? Los Angeles ophthalmologist Steven Cooperman did. He arranged for a Picasso and a Monet to be stolen from his home in an attempt to collect $17.5 million in insurance money. He was convicted in July 1999.
Charles Ingram was first made famous as a fraud when he cheated on Who Wants to be a Millionaire?, using coded coughs to win. But his deception was further exposed when he was convicted of insurance fraud as well. He made a suspicious £30,000 burglary claim, and was found to be dishonest, ultimately leading to two guilty charges for fraud.
Research a local company of your choice. ou could use the company you researched earlier in the chapter. hat business activities are they engaged in hat types of insurance would you recommend they take out as part of their risk management strategy
Chapter uestions
Stop Check for nderstanding
1. Define risk management. hy is it essential for businesses
2. in the main components of a risk management framework.
3. us r e the different types of risks that businesses typically face.
4. u ine the most common risk assessment techni ues used in risk management.
5. in the role a risk manager plays in an organisation.
. u ine the potential conse uences of not having a robust risk management plan in place.
. Define the term insurance .
. us r e the difference between the insurance principles insurable interest and utmost good faith in relation to obtaining house insurance.
. us r e what it means to be underinsured.
1 . u ine two possible effects of being underinsured.
11. Discuss three types of risk that businesses face and suggest possible strategies to overcome these risks.
12. Dis in uis between employer s liability insurance and public liability insurance.
evelopin your no led e
1. Consider a business in your local area. Analyse the risks that this business is e posed to Suggest a suitable risk management strategy to manage these risks.
2. Discuss the importance of assessing and managing risks for businesses.
3. Define how risk management contributes to better decision-making within an organisation.
4. Outline the importance of risk management in a business.
5. Outline three risk management strategies a business can implement.
Store t earn t
omplianceris s: Risks associated with complying with legislations, rules and regulations.
ontri ution: If an item has been insured with two companies over-insurance , the principle of indemnity applies and the insured will only receive compensation once.
Insurance principle
inancialris s: is s associated it a fi s financial t ansactions and s ste s
Indemnity: The insurer will compensate the insured for any loss suffered but will not allow t e ins ed to a e a p ofit o t e loss
Insurance principle
Insura leinterest: A person business must a e a financial inte est in t e ite t at is to be ins ed e st benefit o its e istence and s e financiall o its loss
Insurance principle
Insurance: inancial protection against a possible loss a method of spreading risk, or risk transfer A business transfers the risk of a loss to the insurance company, which will compensate the business in the event of the loss happening.
ar etris s: ternal risks such as global recessions, changes in government legislation, natural disasters.
perationalris s: Risks associated with the operations and administrative procedures of the business, e.g. shipping or sourcing materials.
verinsurance: Insuring an item for more than its monetary value.
is : The possibility of something bad happening, e.g. a loss or in ury is acceptance: This strategy involves accepting a risk and deciding that the risk is within risk tolerance limits.
is avoidance: hoosing not to accept the risk developing strategies that will avoid or eliminate that risk.
is mana ement: A planned approach to handling risk putting in place procedures to prevent the risk happening.
is prevention: Strategies used to reduce the chances of a risk happening or to reduce the impact of any loss
is transfer: Transferring the risk to a third party
Strate icris s: Risks associated with operating in a particular industry, e.g. competitors.
Su ro ation: If an insurer pays out full compensation for an item they are entitled to either take possession of the item or sue a third party for damages suffered.
Insurance principle
Underinsurance: The person or business has inade uate insurance cover. The insured fails to insure for the full value of the policy
Utmost ood faith: The insured must make full disclosure of all material facts to the insurer
A material fact is one that would affect the level of risk the insurer is being asked to cover.
Insurance principle
ChapterChecklist
Concept of risk
efine is
ntrepreneurship and risk
Internal and e ternal risks
Risk manager
Risk management
rotect minimise encourage enhance
Risk management strategies
Avoidance
revention
Transfer spreading risk
Acceptance
Strategies and e amples for each nsurance
Importance of insurance
rinciples of insurance
tmost good faith
Insurable interest
Indemnity
Subrogation
ontribution
Over insurance underinsurance
Types of insurance
St ra nd
2
2 TheImportanceof ommunication
22 The Rationale for lanning 2 orce ieldAnalysisand Strategic lanning
Applying y earning Strand
Usetheactivities(Stop& Research! andStop&Collaborate!)outlined throughoutthe strand to help you apply yourlearning.
eadingand anaging an rganisation
earningoutcomes Strand
At the end of this chapter you should be able to: S G S between leadership and management in organisations.
2 A A S the significance of organisational culture and innovation in successful organisations. how leadership styles foster organisational culture and organisational innovation.
4 A R C A the range of reasons for conflict in the workplace and demonstrate an understanding of how conflict may impact on the workplace.
A A S how both employees and employers may deal with conflict internally different external approaches to conflict resolution.
Case Study: icroso
icrosoft was founded in 19 by ill ates and aul Allen in Albu uer ue, ew e ico. indows, bo , inecraft and inkedIn are now all part of the icrosoft family It has three operating centres in Dublin, Singapore and Reno, as well as subsidiaries in many other countries around the world. It employs a total of 1,000 people worldwide.
ates and Allen started icrosoft to create microprocessors and software. They licensed their S-DOS operating system to o its fi st pe sonal co p te , ic debuted in 19 1. Other computer companies soon followed suit. icrosoft minus Allen released a new operating system, indows, in 19 and went public in 19 The following year ates became the world s youngest billionai e te e al e as na ed p esident and ie ec ti e fice in and in 01 Satya adella became chairman and O
The change in O from almer to adella also changed the culture of icrosoft from a cut-throat, competitive culture to one that promotes competitiveness through continuous learning. Rather than proving themselves, employees were encouraged to improve themselves. icrosoft s work culture is focused on a growth mindset. It encourages its employees to dedicate time, skills and money to help make a difference in the world. icrosoft describes itself as having a commitment to diversity and inclusion, driven by a mission to empower every person and every organisation on the planet to achieve more. Today it is valued in the region of 1 trillion and is one of Apple s and Ama on s main competitors.
Stop Colla orate
ork with a partner to look at how icrosoft celebrates di e sit and incl sion an o find so e statistics about how diverse icrosoft is hat initiatives does it have to encourage inclusion
edco.ie/6kdg
eadershipand management
A good leader is visible, has personal charisma and leads by e ample. They have a clear vision and can communicate this to others. They are also able to direct and delegate.
eaders build relationships with others by engaging in active listening, communicating, planning, making decisions, motivating and inspi in ot e s e also ana e con icts and solve problems. ood leaders are results-driven and take the initiative to achieve those results.
Stop Research
earn more about icrosoft s company values here.
edco.ie/npx9
Theme
Entrepreneurial Thin in
Leadership isthemeans by whichindividualsorgroupsofpeopleare persuaded to work towards ac ie in a eedob ecti es tist eabilit to in encepeople to ollo a pa tic la pat o di ection
anagement involves planning and goal setting, budgeting, organising, communicating and delegating. anagers monitor and control business activities, co-ordinate with different departments within the organisation and make decisions.
Management ist ep ocesso ettin ob ecti esandacti itiesco pletede ficientl and effectivelyusing available resources fortheday-to-dayrunningofthebusiness.
eaders
ave followers who support them and are inspi ed b t ei ision and in ence e collaborate and work with people. ave long-term vision.
ocus on long-term goals for the organisation and have a clear focus on the direction the organisation should take and why. Are not restricted by boundaries and responsibilities.
a e t e eedo and e ibilit to decide their own route to achieving their vision. ring about change.
Set the vision that brings about change in an organisation.
anagers
se their authority and power over subordinates to make sure tasks are completed. reak up long-term goals into short-term tasks and ob ectives. They e ecute the vision. Assign tasks to teams, decide how each goal will be completed and ensure it is completed on time.
ave responsibilities that are assigned to them.
ake decisions with their assigned authority Oversee how change happens.
Adapt the business model, change team structures and put procedures and systems in place to help the organisation adapt to the change.
eaders and managers work together to grow and develop the organisation and ensure its future success. oth are essential in an organisation and complement each other oth leaders and managers re uire e cellent communication skills, good problem-solving skills and are effective at planning and decision-making.
Stop Research
Research the role of a manager in a local company of your choice. Try to arrange an interview with a manager in that company perhaps your class might arrange for a guest speaker . ind out how the organisation is organised, the various departments in the business and how many employees it has. Investigate the day-today role of a manager in this company. hat are t e benefits o t is ole hat are the challenges
eadership s ills
otivation
ctivelistenin
or ard thin in
Influence
Empathy
Emotionalintelli ence
Inte rity
Self a areness riticalthin in
rganisationalculture
Organisationalculture or corporate culture isthe shared values,beliefs, attitudes, systemsandpracticesthat dete ineandin ence theactionsofallemployees and teammembersinan organisation.
It is often described as h e d thin s ar und here and it e ects o stakeholders such as employees and customers e perience the company and its brand. ulture is the framework within a company that guides the behaviour of the employees and management. It includes the things that create a common identity within the organisation, for e ample the symbols, structures, processes and rituals that bind team members together It is the espoused values of a company, both formal statements such as mission statements , principles, core values and managerial behaviours and actions and underlying assumptions the unwritten but widely observed values and rules.
ana ement s ills
rive to achieve
Interpersonal s ills
ommunication s ills
ecision ma in Pro lem solvin dapta ility ccounta ility
r anisationals ills
Goalsettin
ttention to detail
Supervisory s ills
Strate icthin in
Trust orthiness
Pro ect mana ement
Conflictresolution
Time mana ement
T EI E E G
that sin s or anisationalchan
e
isi le rganisational Culture
The
e e
nvisi le rganisational Culture
ource or en ic or enric eu
The iceberg is an image often associated with organisational culture. It conveys the idea that a culture has both visible and invisible elements. eaders and managers must be aware of both in order to successfully manage an organisation.
or e ample, t e c lt e at et i p io itises people o e p ocess ll e plo ees cont ib te to decision a in and t e e is open co nication et i p io ities inte it , tea o , passion and humility when recruiting employees.
Outdoor clothing company atagonia is committed to environmental sustainability and social responsibility Its culture aligns with these values and it encourages and supports its employees to participate in initiatives that support these values.
Theimportance of or anisationalcultureandinnovation
st on c lt e can b in si nificant ad anta es o t e o anisation randidentity: The culture of a company can shape how customers, partners and other stakeholders perceive it. It affects a company s reputation. It can be a good marketing strategy as customers are more likely to purchase products and services from companies they feel have strong values that are similar to their own and that have a positive culture.
Employeeretention: ulture plays an important role in an organisation s ability to attract and retain good employees. eople want to work for a company whose values and culture align with their own and a strong and positive culture can help attract the best employees. These companies value and empower their employees, which increases employee satisfaction and reduces labour turnover.
Productivityandinnovation: A strong, positive culture creates a sense of belonging and increases employee satisfaction, which in turn leads to increased productivity because employees are motivated. A culture that is built on trust and develops resilience will encourage creativity and innovation. ew ideas, processes and products will be developed if employees are given time and resources to innovate, have the freedom to speak their mind and share their ideas.
ustomer satisfaction: otivated employees are customer-focused and prioritise uality. An increased focus on customers will lead to more innovative practices within the company. This in t n leads to appie , o e satisfied c sto e s, increasing customer loyalty and thereby increasing sales.
Ethical ehaviour: A strong culture encourages et ical be a io n et ical fi p io itises values such as honesty, openness and integrity This will ensure trust is developed with all key stakeholders.
Stop Research
ork with a partner to research the culture of a company of your choice. Is its workplace culture positive or negative hat has contributed to this culture e e be to find e idence to s ppo t your answer.
Less workplace conflict: Teamwork and collaboration are valued, creating a positive atmosphere where all opinions are valued. Differences of opinions are discussed and there are clear grievance procedures in place to reduce the impact of workplace disputes and minimise dis ption o con ict
Factors influencingorganisationalculture
et s e amine the factors that contribute to a good organisational culture. pen communication is essential in creating a healthy work culture. mployees voices should be heard and acknowledged and they should be encouraged to engage in decision-making. eedback should be valued and open conversations should be encouraged. This leads to increased e plo ee en a e ent and eate p ofitabilit
2 reativity andinnovation: Risk taking, creativity and innovation should be encouraged and promoted. roviding time and resources to employees to enable this is key. Supporting employees and creating a culture where it is okay to make mistakes can encourage resilience and ensure growth.
olla orationandteam or : Diversity and inclusion, teamwork and collaboration should be encouraged. Teambuilding activities and collaborative work practices promote communication and develop empathy and inclusivity. This can elp to ed ce con ict
4 eco niseandre ardculture ali ned ehaviour: hen employees are recognised and rewarded either monetarily or otherwise , they feel appreciated and valued. This leads to increased employee engagement and retention and improves productivity. hen the leadership team recognises and encourages positive behaviours this creates a positive culture in the organisation.
Investinemployeedevelopment: ontinuing professional development D is central to a strong organisational culture. Training and development creates a culture where employees are constantly seeking to improve and provides opportunities for them to learn new skills and grow, creating a foundation and pathway to future promotion and success. entoring programmes can be e ecti e as t e allo ne e plo ees to benefit o t e e pe ience and isdo o o e senior employees.
Leadershipshouldreflect companyculture: The practices and behaviours of a strong organisational culture should be modelled by leaders and those in leadership positions.
steps to creating a strongorganisationalculture
id ou now
Richard ranson, founder of irgin Airlines, has been uoted as saying lients don t co e fi st e plo ees co e fi st o ta e care of your employees, they will take care of the clients. hat do you think this says about the culture at irgin
Stop Research
Ama on is among some of the corporations who have faced issues around corporate culture in the past. Read the article at the link below to learn more about this. hat has Ama on done since then to change its culture as this been e ecti e isc ss o findin s as a class
edco.ie/trq8
eadership styles
eaders play a vital role in shaping organisational culture. They communicate the vision and core values of the company and odel be a io s t at e ect t at e are responsible for hiring new employees with values that align with the company s, and preparing employees for future success. They cultivate a supportive culture built on trust and open communication. They empower and raise new leaders. mpowerment is covered in hapter 19.
Theme
Business and Financial Literacy
et s look at the different leadership styles you may observe in an organisation.
Types of leadership
Characteristics
Autocratic
ittle or no discussion or consultation with employees. pects orders to be carried out immediately.
One-way communication, little delegation. ear of conse uences used as a motivator. Subordinates get little e perience of management. romotions tend to be internal.
amples
mplications
enry ord, founder of the ord otor ompany
artha Stewart , founder of artha Stewart iving Omnimedia lon usk, founder of Tesla and Space
Successful in the short term if the leader is an e pert in a specialised area. ork is done more uickly so decisions are made and implemented faster.
mployees do not like a dictator type of boss so in time their support will diminish.
The boss cannot always be right , so important opinions are not considered in decision-making. orale will decline and key employees may leave anager can be overloaded.
Appropriate for: In a crisis or emergency situation where tough decisions may be needed uickly, e.g. turning around a business that is facing insolvency.
emocratic
Characteristics ncourages workers to give their opinions and to contribute to decisionmaking process.
An inclusive form of leadership. sually a positive atmosphere and employee motivation is high. Two way communication. ncourages intrapreneurship.
A democratic manager delegates, believing that employees can complete the obs effectively
amples
mplications
arry age, co-founder of oogle Indra ooyi, former O of epsi o
The best information and ideas will be heard, leading to better decisions. ood staff morale. roductivity and employee motivation is high. onsulting is time-consuming. The business may lose out on opportunities due to late decisions and longer decision-making processes. cco odatin all ie points can lead to a poo final decision
Appropriate for: usinesses that promote teamwork e.g. oogle . orks well in an environment where staff can handle responsibility.
aisse faire
Characteristics A non-interfering, non-involvement free rein or hands off style of leadership.
ain ob ectives are known by all management and staff.
Staff are free to organise their own work to ensure they meet the organisation s goals. They are free to make decisions without checking constantly with management.
anager acts as a facilitator.
amples
mplications
Appropriate for:
arren uffet , O of erkshire athaway Richard ranson, founder of irgin
ighly motivated staff who use their initiative. This results in intrapreneurship.
anagers are free to deal with strategy and policy-making. iving freedom to ine perienced staff can lead to bad decisions.
Serious problems can go unnoticed without ade uate supervision. o nication can be di fic lt i e plo ees eel t e ana e is not available.
an es lt in inconsistenc and ine ficienc
illed o e s o a e e pe ts in t ei field, do not need s pe ision and prefer to make decisions for themselves, knowing they are trusted to do so, e.g. R D departments in large ultinational orporations s .
ransformational
Characteristics Inspires and motivates employees to achieve results which are greater than originally planned.
orkers look beyond their own self-interest and to the greater good. Transformational leaders re uire e cellent communication skills. They are willing to take risks and are always focusing on improving the future.
e act as a ole odel, p t ot e s needs fi st and a e ided b t e company s values.
amples
mplications
Appropriate for:
eed astin s, co o nde and o et i
alala ousaf ai, founder of the alala und
mployee motivation is high as staff feel empowered and valued. It provides room for innovation and growth, leading to high levels of intrapreneurship.
Staff are better prepared for promotion as their personal development oals a e identified and t e a e inspi ed and enco a ed to ac ie e t e
It can lead to a strong, positive workplace culture. eaders can be adept at communicating and striving for the bigger picture but less skilled at focusing on detail and processes. They will re uire strong team members with these skills.
This type of leader is usually e trovert and charismatic, which can often lead to one-sided motivation.
ast-paced organisations, small or large, where there is a lot of creativity and where innovation is important to the business.
ransactional
Characteristics Also known as managerial leadership.
ocus is on supervising, organising and group performance. A results-driven approach. is leade identifies at e plo ees ant and elps t e to ac ie e it. If employees reach their targets they are rewarded if they fail to meet them they will be held accountable.
Involves setting short- and long-term performance goals and targets, delegating tasks, monitoring performance and progress and appraising staff
Transactional leaders tend to be task- and action-oriented.
amples ill ates, co-founder of icrosoft
oward Schult , former O of Starbucks mplications lea eas es o s ccess and ail e a e identified mployee performance is monitored, so productivity remains high. It can enhance motivation levels as staff are rewarded for meeting goals.
ighly structured workplaces allow no room for mistakes or creativity, which can impact innovation.
mployee wellbeing may suffer as measurable success is the only focus. ittle room for growth and development.
mployees should be included in goal-setting so they feel empowered rather than controlled.
Appropriate for: An emergency or crisis situation where there is only one decision-maker and where everyone needs to band together uickly and not mull over other possible outcomes.
eadership is also a dynamic process different leadership styles will be appropriate in different situations. A good leader should be able to adapt their style to suit the situation at hand.
Stop Colla orate
atch the short video at the link below of differing leadership moments from the movies and complete the worksheet on pages 10 -10 of your Student Activity ook in pairs. en o a e finis ed, s a e o es lts as a class. Did you all agree
edco.ie/zjtr
Stop Research
Research a leader of your choice. ook at their career and leadership ourney. hat style of leader are they an you support your choice with evidence hat characteristics do they display ow did their leadership style impact the culture of the organisation they worked for
n ic in e ce
Workplaceconflict refers to any formofdisagreementordisputethat arisesbetweenemployees, teamsormanagement.
ese con icts can an e o ino disa ee ents to si nificant con ontations t at not onl i pact p od cti it b t also ca se ei tened le els o st ess, absenteeis and poo o ale ile con ict is seen as being negative it can spark heightened levels of creativity from some people and even increased levels of innovation.
Reasons for workplace conflict
Communicationissues
on ict can be ca sed b b ea do ns in co nication, s c as nclea inst ctions, lac o information or misinterpretation. ommunication is e amined further in hapter 1. It is imperative to a e e ficient et ods o co nication in place o an o anisation to n s oot l ns ficient feedback on obs or tasks completed or even lack of recognition of a ob well done can also create friction or tension among employees.
ersonalityandvalueclashes
o two people are e actly alike. e are all built differently and all have different characteristics, backgrounds and outlooks Differences in personality, values and attitudes can often lead to con ict, especiall i e plo ees a e di e ent approaches to work or interpersonal interactions. eople can find it di fic lt to ad st to t ei colleagues personalities and viewpoints. It is, however, good to have different personalities in the workforce as it can bring the best out of people and allows for different perspectives to be voiced.
eadershipstyle
A leader typically has a dominant leadership style, which will guide and determine their actions. on ict can a ise bet een leade s it di e ent st les o e a ple, a de oc atic leade see s employees input while an autocratic leader does not consult with employees and has complete authority. A clash of cultures will arise if these two leaders need to work together on a pro ect. It is important that the recruitment team is aware of the leadership style of each potential new employee and how this will complement the e isting teams. aving a strong culture founded on respect is key to ensuring that all team members and leaders work together imitedresources
orking in an organisation that has limited resources, e.g. e ip ent , b d ets, tools and e en ti e, can lead to con ict mployees may end up competing to use the e uipment they need. igh levels of stress and e cessive workloads can lead to frustration and irritability, which will increase the likelihood of con ict in t e o place o elated st ess is e co on and can be a ca se o con ict in an o anisations t ess can bring out a negative side of people s personality, such as an e o ea , ic in t n can lead to con ict a on tea members. It can also lead to absenteeism and potentially a heavier workload on the remaining employees.
c fc i y
e e plo ee s o ld a e clea oles and esponsibilities n nclea ob ole and nspecified responsibilities will lead to confusion and arguments among employees about who is responsible for a i en tas la it ill be needed as to o is in c a e, o a es t e decisions and at specific ole each employee will take on in a particular task. ithout clarity, work can be uncompleted or error-ridden.
id ou now
The average Irish employee spends more than . hours a week dealing it o place con ict
Irish imes, 1 uly 019
Impact of workplace conflict
Stop Colla orate
Read the article at the link below and prepare a s o t epo t on o to an e con ict in t e workplace. e sure to evaluate your work.
edco.ie/c9g7
con ict is not add essed it can ne ati el i pact e plo ee o ale and inde pe o ance and p od cti it t e pe sist, con icts can a ect a co pan s ep tation a on its c sto e s and also its financial pe o ance, lti atel leadin to a loss o e en e and a lo e p ofit a in t is c cial o b siness o ne s and ana e s to eco nise t e si nificance o o place con ict and p oacti el address it before it escalates. et s take a look at some of these impacts in greater detail.
ecreasedproductivity: e ti e spent in con ict ill have a negative impact on the level of productivity in a business. If employees are in dispute with one another or management , less time is focused on work, employees are distracted and time is wasted.
inancial costs: e io s con icts in t e o place can lead to le al p oceedin s, ic ill es lt in si nificant financial costs e lac o p od cti it can also lead to a fall in sales and a loss of revenue.
Increaseda senteeismandhi h staff turnover: mployees or managers may feel they have no choice but to leave the company.
ustomerdissatisfaction: on icts in a co pan t at lead to poo o ill lti atel a ect t e customer The reputation of the company will be in eopardy, which can affect loyalty, sales and customer satisfaction.
or environment: mployees will grow tired and frustrated with all the disputes, leading to a decline in workplace morale. Stress and an iety among employees will become more prevalent , which could lead to absenteeism.
e e a e also so e positi e i pacts o con ict in t e o place, o e a ple
elationships: If both sides air their feelings and concerns it can lead to better communication among team members. mployees and managers will have an opportunity to improve their co nication s ills, ic ill lead to a bette nde standin o bot sides o t e con ict plo ees ill be able to o t o t ei di fic lties and c eate st on e tea s
Innovation: istenin to bot sides o t e con ict can b in abo t di e ent pe specti es on issues, which could lead to creative solutions to problems and even innovative ways to improve certain aspects of the business. It can also lead to improvement in business processes.
e i pact o o place con ict la el in es on o it is andled en con ict is poo l handled, it can create a to ic work environment , ed ce p od cti it and es lt in financial losses n t e ot e and, e ecti e con ict management can foster personal growth, enhance communication skills and even inspire innovation in the organisation.
n o anisation st install e ficient con ict resolution strategies that reduce the negative effects and capitalise on the positive aspects of workplace disagreements. e ll now e amine o con ict can be dealt it , bot inte nall and e ternally
Conflictresolution
Activelistening
onversations and active listening improve communication and help to promote a positive workplace c lt e he uality of the culture of any organisation depends on the uality of the relationships ithin the organisation and the uality of the relationships is determined by the uality of the conversations udith laser . These conversations can demonstrate the values of the company. eaders who use active listening will engage in dialogue with a colleague to reach a mutual understanding rather than having a predetermined end in mind. e non er cues
A culture that values feedback will ensure continued growth and development because the workforce will be more engaged and productive. mployees and leaders should be open to receiving and delivering feedback in a kind and consistent manner. If feedback is deli e ed inco ectl it can lead to con ict ffective and meaningful feedback can ensure that necessary change will happen to improve a company or employee performance. or e ample, suggestions for improvement should be balanced with positi e co ents pecific odels o feedback, such as 0o feedback, are covered in hapter 19. hen leaders are not clear or are afraid to a tic late an i po tant point , con ict can occ e essa e can et lost en leade s a e o e l sensitive. eing kind, sensitive, direct and clear is key.
n e n c n ic e i n e
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atch ulian Treasure s Ted Talk at the link below on ow to speak so that people want to listen . hy not watch this Ted Talk at home and summarise for your ne t class Share your thoughts with your class. Do others listen when you speak
edco.ie/mwg9
en aced it con ict t e ideal o tco e is for an organisation to be able to deal with it internally. There are many ways o doin t is, o e a ple t in to find common ground between both parties, communicating either individually or collecti el , o e en sel e ectin on t e con ict to see at o pe sonall can do A combination of approaches might be needed to address the immediate issues, but the aim should be to create an environment in ic t e e ill be e e con icts e e a e so e possible sol tions
c no led etheissue: on t let t e p oble escalate nce it as been ac no led ed, find t e root cause of the dispute so that it can be dealt with.
ommunicate: It is imperative that management foster an environment where employees feel comfortable in e pressing their opinions and frustrations without being ridiculed or fearing retaliation from management. nable opportunities for conversations, either one to one or in group settings. nsure that all parties have a chance to speak and to be heard.
See support: t i t be se l to find an i pa tial ediato , a ne t al t i d pa t e ediato could be someone from a different department , someone from human resources R , someone both parties are comfortable with or even an e ternal mediator if necessary A mediator will ensure a balanced and fair discussion between aggrieved parties and suggest proposals to move things on .
Grievancepoliciesandprocedures: Organisations should have grievance policies which clearly outline how disp tes and con ict ill be esol ed e s o ld incl de the support available for employees, the steps that a party s o ld ta e to i li t an iss e and o con icts ill be resolved.
Trainin andprofessionaldevelopment: Training on con ict esol tion s o ld be o e ed to ana e ent and employees to ensure that both parties have the necessary skills to resolve issues before they become large disputes.
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an o find an ot e internal methods of resolving con ict a e a note o them in your notes copy
E e n c n ic e i n e
ot all con icts can be dealt it inte nall and t e o anisation a e i e e te nal s ppo t e t o most common methods of e ternal support are arbitration and conciliation. The orkplace Relations ommission R or the abour ourt might also be involved.
r i r ion
Arbitration is a formal process of resolving disputes. The dispute or disagreement is sent before one or a group of independent , third-party, impartial people known as arbitrators. Arbitration takes place outside the legal system. The parties to the dispute agree in advance that the decision made by the arbitrator will or will not be binding. The arbitrator listens to both sides and makes a decision based on what they have heard. The main types of dispute dealt with by arbitration concern industrial relations agreements between employees and employers, and business disputes, the aim being to avoid court proceedings.
Aspect
eci i n in
ormality
Ar itration
Conci i ion
n conciliation, t e oal is to find co on ground and resolve a dispute amicably without the need for formal legal proceedings. The two sides in a disagreement usually employers and employees discuss their differences, listen to each other s points of view, talk about the issues and try to negotiate an agreed settlement. The agreement is not legally binding but aims to resolve the dispute before it escalates as far as strike action. It is like a bridge-building conversation whose main aim is to end the dispute through mutual understanding and compromise.
Conciliation
Arbitrator makes a binding decision. arties reach a voluntary agreement with the help of a conciliator.
ormal, similar to a court process. n o al, it e ible disc ssions
utcome egally binding and enforceable. on-binding unless formalised in a contract.
Role of hird arty
Arbitrator imposes a decision. onciliator guides parties to an agreement.
Cost enerally more e pensive due to formality ess e pensive due to informality
or ce e ionsCo ission C
This is a state agency set up to help resolve industrial disputes and to reduce the number of cases coming before the abour ourt. It offers free support. ts nctions a e
A mediationservice to help resolve internal o place con icts, disp tes and disa ee ents
2 A conciliationservice, e cept in no ficial disputes.
nd st ial elations o fice s s o conciliation o fice s c ai conciliation conferences , which are an e tension of the process of direct negotiations. The chairperson steers the discussions and e plores possible avenues of settlement.
IROs are neutral and impartial and have no power to tell the parties what to do. articipation in the conciliation process is voluntary, and so are the outcomes. Solutions are reached only by consensus, whether by negotiation and agreements facilitated between the parties themselves, or by the parties agreeing to settlement terms p oposed b t e conciliation o fice
A researchandadvisoryservice to highlight workplace problems and try to resolve them. The R works with individual employers and employees in non-dispute situations to develop good industrial relations practices tailored to suit their needs. This could include reviewing or developing effective workplace procedures in areas such as grievance, discipline, communications and consultation.
4 It draws up codes of practice to be used by employers and employees in certain industrial relations situations. They are generally accepted rules designed to minimise problems that might occur in employment.
An ad udicationservice The director general of the R can refer a complaint from an e plo ee to an ad dication o fice to sol e e can onl deal it ce tain disp tes, incl din n ai dis issal, ate nit lea e and disc i ination e ad dication o fice will invite the employee in for a private hearing of the case, they will ask uestions of both sides and both sides can bring witnesses if they wish. They will give their udgement on how the argument is to be resolved and they have the power to order the employer to pay compensation.
The R s recommendations can be appealed to the abour ourt by either party.
Take note of these agencies R and the abour ourt . ou can see them in hapter when we learn about employment rights.
id ou now
disp te st fi st be ea d b t e R before it is referred to the abour ourt.
ourCour
hen a case cannot be solved through mediation, conciliation or arbitration, the parties involved will file a co plaint to t e abo o t
The abour ourt was set up to provide a free service to resolve industrial disputes and issues
It is not a court of law but an industrial relations tribunal that hears both sides of a dispute and issues a recommendation. It regularly deals with issues about e uality, the national minimum wage, pa t ti e o , etc t as o nctions
Investi atestradedisputes between employers and employees and makes recommendations to resolve them. If either party is unhappy with the decision they can appeal it to the igh ourt. It will hear what both sides have to say and then gives a recommendation that both parties are e pected to seriously consider. owever, the recommendations are not legally binding. The abour ourt hears appeals from an employer o e plo ee a ainst decisions p e io sl ade b t e ad dication o fice in disc i ination cases under the mployment uality Act or sacking under the nfair Dismissals Act. These pieces of legislation are e amined in hapter
The abour ourt will listen to all the evidence again and make a legally binding udgment on the matter If an agreement is reached it is signed by all parties and registered with the abour ourt. This will make it legally binding on both sides
2 Interprets codes of practice from the R . This means that it gives its opinion on them and investigates any breaches of the R codes of practice by either employers or employees. ases should only be referred to the court when all other efforts to resolve the dispute have failed.
Esta lishes ointla our committees These consist of representatives of employers and workers in a particular sector catering, hotels, etc. . They meet from time to time to discuss and a ee te s and conditions to appl to specified o e s in t at secto
4 earsappeals o decisions ade b t e ad dication o fice at t e
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sing one of these three articles on the R , e amine the role that the R played in each case and s a e o findin s it o class ates
orkplace Relations ommission recovered nearly 1 million in unpaid wages last year
ealthcare assistant asked to follow and watch rival union members, R told S admin worker wins R case on claim to ovid pandemic payment for frontline workers
edco.ie/knnx edco.ie/2q6e
Q5. Dis in uis between leadership and management.
6. De ons r e your understanding of organisational culture.
7. in t e te o place con ict
8. u ine t o easons o place con ict can co e abo t
9. in the term mediation and utline how the process works.
10. Discuss the services provided by the orkplace Relations ommission R .
evelopin your no led e
1. De ons r e your understanding of leadership. Illustrate your answer with an appropriate e ample.
2. Co re t e leade p ofile and ana e p ofile o co pleted ile o in on t is c apte n se t e t o p ofiles and disc ss t e si ila ities and di e ences bet een t e t o positions
3. u ine the ualities you would e pect to see in the cultures of highly effective organisations.
4. n se t e si nificance o o anisational c lt e and inno ation in s ccess l o anisations
5. e nd e in fi e acto s t at cont ib te to oste in an o anisational c lt e and organisational innovation.
6. Discuss how leadership styles may foster organisational culture and innovation.
7. Co re nd con r s three different leadership styles.
8. Di eren i e between the terms arbitration and conciliation .
9. us r e your understanding of the term mediation .
10. u e ne otiation, a bit ation and conciliation as et ods o esol in con ict in t e o place
11. Descri e the role of the R in dealing with industrial relations disputes.
12. u e the role of the abour ourt in dealing with industrial disputes.
13.
ini Case Study:
I A s digital transformation has had a profound impact on the company s day-to-day operations in recent years.
Theme
i ital Transformation
In ust three years, the company has tripled its e-commerce levels and transformed its stores into lfil ent cent es is e i ed a co plete o e a l o t e o o oods, s ppl ec anis s, and sto e oo plans ast ne, anno nced that it would be phasing out call centre work and using an AI bot called illie to answer ueries. owever, it planned to upskill affected employees and has already begun training thousands of call centre workers to become interior design advisers. Instead of using AI to the detriment of workers, lrika iesert , global people manager at Ingka roup, believes its use will actually lead to the creation of new obs at I A, while opening up development opportunities for e isting workers. I A has been e perimenting with augmented reality AR and virtual reality R technologies to enhance customer e periences. The company has tested R in stores to help c sto e s is alise o nit e fits in t ei o es is tool ai s to de oc atise home design, making it accessible to everyone through smartphone devices. ource ane arper, I A s digital transformation , R Digest, une 0
a Read the case study above ist the ways I A has embraced technology b ow has this impacted the senior leadership team at I A c hat other stakeholders has this impacted and how
Store t earn t
r itration: disp te con ict is sent be o e one or a group of independent impartial persons for ad udication.
utocraticleadership: An autocratic leader e pects orders to be carried out immediately. There is one-way communication and little delegation.
onciliation: The process of helping two sides in a disagreement , e.g. employers and employees. They meet and discuss their differences.
Business and Financial Literacy
ana ement: The process of getting ob ecti es and acti ities co pleted e ficientl and effectively using available resources.
ediation: The process of talking to two separate groups or people involved in a disa ee ent and elpin t e find a sol tion to their problem
r anisationalculture: The set of shared values, beliefs, attitudes, systems and practices t at dete ine and in ence t e actions o all employees and team members in an organisation.
emocraticleadership: A democratic leader encourages workers to give their opinions and to contribute to the decision-making process. It is an inclusive form of leadership shared or distributed power .
Inclusion: The process of ensuring that everyone is included and accommodated in the workplace.
a our ourt: co t specificall desi ned to provide resolutions to work-related disputes. Also known as a court of last resort.
aisse faireleadership: A non-interfering, non-involvement , free rein style of leadership.
eadership: The means by which individuals or groups of people are persuaded to work towards achieving agreed ob ectives.
eadership vs management distinguish etweenthe two rganisationalculture
i nificance o o anisational c lt e and innovation in successful organisations
eadership styles how they foster organisational culture and innovation
Autocratic
Democratic aisse -faire
Transactional
Transitional
Transactionalleadership: Also known as managerial leadership. The leader focuses on supervising, organising and group performance.
Transformationalleadership: This type of leader inspires and motivates employees to achieve results which are greater than originally planned. e in ence t e o o ce to loo be ond their own self-interest to the greater good.
Workplace conflict: Any form of disagreement or dispute that arises between employees, teams, or management within an organisation. or place elations ommission( ): An agency that helps resolve industrial disputes and reduces the number of cases coming before the abour ourt. It offers free support provided by the state
2 SC SS the internal and external factors that impact on workforce planning.
2 2 the key stages in the recruitment process and suggest how organisations might adopt ethical approaches to recruitment.
2 A A how digital technologies influence the process of recruitment and selection.
2 4 S GA the factors that impact on employee motivation.
2 SCR B what is meant by effective employee appraisal.
2 a number of approaches to appraisal and analyse how these approaches might contribute to employee motivation.
Case Study: n e
n e n in ei i Co i d re
Since 19 9, Intel has invested more than 0bn in Ireland, creating the most advanced ind st ial ca p ses in ope ntel as t o state o t e a t acilities in eland ei lip, ounty ildare and Shannon, ounty imerick. It currently employs more than ,900 people in Ireland. Intel Ireland s ei lip campus has been operating for over years and has transformed the area into one of the most technologically advanced manufacturing locations in urope. Intel has a long-standing history of leading the inno ation field, t an s to t e top talent employed by the company. The human resources department s approach to recruitment includes both traditional and technology-based methods. They run multiple screening steps before making a ob offer. Interviews are conducted over the phone, via the internet or in person. Intel offers several training and educational opportunities for its technology partners, students, and even members of the public. Through its internal learning portal, e po earn, Intel offers courses and learning plans from both Intel and other e pert sources. These courses support employees career growth and s ill de elop ent e e a e also on t e ob t ainin oppo t nities e plo ees can schedule time to meet with an e pert adviser, mentor or coach who can advise on career e ploration and progression, writing, networking, skill-building and more.
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o to t e ebsite and find t e ost ecent abo o ce e fi es ic e ion as t e i est ne plo ent fi e isc ss it o class o t ese statistics i t be se l to a ana e o a b siness at ot e fi es i t t e loo o
f ce nnin
t in ol es a n be o steps
Workforceplanning meansensuringa businesshastherightnumberoftheright peoplewiththerightskills at alltimes.
ssess futureneeds: orecast future re uirements. The business should analyse both tactical and strategic plans. hapter 1 looks at planning. They should predict the future demand for labour and include sales targets and costs in their analysis.
2 uditpresent staff resources: ow many people a e c entl e plo ed b t e fi e e a e they located A skills audit should be conducted and performance levels of employees should be analysed. This will also re uire updating employee files, eepin p to date it e plo ent legislation and trends and developing a company polic on fillin acancies
Theme
Business and Financial Literacy
Identifyadditionalresources by comparing present resources with future needs. uture growth, development and e pansion plans should be e amined in relation to current resources to determine whether new employees need to be recruited or whether redundancies or lay-offs need to take place. The use of technology and the impact this may have on the workforce should be considered here we will look at this later in the chapter as well as the economic, social and political environment.
4 Plan forincreaseordecrease: The gap between current resources and future needs should be e amined and a strategy developed to close that gap. This may involve redundancies, training, promotion, redeployment , recruitment
Redundancy meansthat workersarelet go from their obsbecausethere isn tenough work for t e int efi andt e fi ants to c tcosts
am ip
In an e am you may be asked to discuss the factors that affect workforce planning. o to the Action erbs section on page viii to see e actly what this verb means. our answer should be detailed, you should use full sentences and support your points with evidence or e amples
ecti es ese ill in ence the number of staff needed in different areas, e.g. marketing, finance, ope ations, etc
demand
arket trends a growing or declining demand for a p od ct o se ice in ence a business s labour supply. Trends in consumer behaviour may also impact workforce planning.
nternal ternal
roduction o ectives roduction capacity impacts on a fi s de and o labo Other factors, e.g. uality of the product, customer e pectations, ill also dete ine t e fi s labour supply
inancial o ectives
e fi st e a ine depa t ent and cas o forecasts to determine the financial position o t e fi and whether it is in a position to increase its labour supply
a our e e s ppl o labo e fi must pay close attention to the supply of labour becoming available and the skills that are available in the labour force.
conomic conditions n an econo ic boo fi s a e perience labour shortages as the demand for a particular skill or type of worker will outweigh the supply of that skill. irms should plan accordingly onversely, in times of economic recession, labour supply may be greater than demand, which may lower wage rates and make recruitment easier. overnment policies minimum wage, health and safety, for e ample will impact a business s plans for hiring and training.
Current la our supply
e fi ill e a ine t e number of e isting staff along with their skills and strengths to determine whether this is s ficient to eet c ent and future demands. They will also e amine other resources, such as technology
rganisational structure ow production is organised as well as the structure of the organisation. oes t e fi operate a matri team-based structure ow would this impact workforce planning
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Socialand political factors irms will need to consider how population changes, demographics and employment legislation may impact their labour supply
ocal community Areas and communities may e perience changes that are specific to t at local a ea t at will impact workforce planning, e.g. future development plans for the town county, a new ultinational orporation setting up in the area, new transport links.
o to the link and research the latest census data in your local area. hat is the prevalent age group in your area hat demographic changes have been noted hat other data would be relevant to the businesses in the area ompile your results in a report to present to your class.
edco.ie/mkpf i ital Transformation
Recap e look at organisational culture in hapter 1 . ow would culture impact workforce planning
Theme ec no o ic d nces suc s nd u o ion n l in uen e e l nnin
fi s ec it ent p ocess s apes t e ind o e plo ees it att acts t also o e s an oppo t nit to engage and impress the best available talent before they even oin the organisation by creating a good candidate e perience. iring and retaining the right employees is essential, since staff represent the company on the frontline. An effective recruitment process ma imises the chance that a company will find t e ost s itable candidates ob acancies can be filled inte nall o e te nall
The recruitment and selection process involves seven steps, outlined below by climbing the ladder.
Preparation
The human resources R manager draws up a ob specification and a pe son specification detailin t e skills, ualities and type of person needed for the ob being advertised.
Jobspecification/description: Sets out the p pose o t e ob, o t e ob fits into t e organisational structure, who reports to whom, the main accountabilities and responsibilities and the key tasks. It provides essential information to potential recruits.
Personspecification: ists t e alifications, s ills, e perience and personal attributes a successful candidate should have It relates to the person rather than the post and is useful in comparing and assessing the suitability of ob applicants.
indthe candidates
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hat career would you like to do when you leave school further education ook for a ob you d en oy that is currently being advertised. ind the ob description and t e pe son specification at kind of person is this company loo in to i e a e o findin s with your class. ould you be a suitable candidate for this ob hat areas do you need to work on to ensure you are hired
e b siness st find s itable potential e plo ees e can do t is b oin t o local ob centres, employment agencies, websites such as www. obs.ie or advertising on social media.
All ob advertisements must adhere to the mployment uality Act 199 they must not specify ende , a e, eli ion, ace, etc , and t e st set o t t e ob specification, pa and conditions, o to appl , alifications s ills e i ed and a contact n be add ess
Screentheapplications
This is the process of deciding which of the potential candidates best suit the criteria listed in the ob specification and pe son specification t t is sta e a s o tlist a be d a n p ns ccess l candidates ill be notified b e ail o lette
Selection
The selection process is usually done by interview, when employers get a chance to meet potential candidates and ask them uestions to assess their skills and abilities. uestions of a discriminatory nature cannot be asked. Interviews also allow candidates to ask any uestions they may have
In a panel interview the candidate is interviewed by a group of interviewers. This reduces the risk that a single interviewer may have a personal bias it avoids gender imbalance uestions are shared across the panel. The aim is to dete ine ic candidate fits it the corporate culture.
The selection process may also include I tests, aptitude tests or personality tests. There may be more than one round of interviews and shortlisting will be made after each round of the selection process. At the end of the selection process a successful candidate will be chosen.
hec references
Once the successful candidate has been chosen the company ill contact t e e e ees listed on t ei application to confi t e candidate s skills and previous e perience as shown in their A reference can be either written or oral.
ontract of employment
Once the ob has been offered and accepted a contract e ists. The employee is entitled to have a written copy of this contract, which specifies all t e te s and conditions o e plo ent
Informunsuccessful candidates
andidates who have been unsuccessful should be contacted in writing to inform them they were not successful at this time.
id ou now
ote andidates who have been unsuccessful at interview are entitled, by law, to any notes taken during the interview process. mployers are re uired to take detailed notes during the interview process which they must keep for 1 months.
thics inrecruitment
Stop Colla orate
ork with a partner to review your learning on recruitment stages. sing mini whiteboards, take it in turns to name and e plain each stage in order . an you ecall t e definitions o t e e o ds at each stage
Ethical recruitment is an approach to hiring that emphasises fairness, transparency and inclusivity. It s about creating a respectful and e uitable environment i t o t e fi st enco nte it a p ospecti e e plo ee
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o in pai s to find e a ples o co panies t at p actise ethical recruitment. rovide e amples and evidence to support your choice.
An employer s hiring decisions impact the lives of both successful and unsuccessful candidates. The key goal for all employers should be that every candidate has a fair chance, whatever their age, background, se , status or beliefs. Although very few employers would ever actively discriminate against candidates, there is always the possibility of unconscious bias. egislation is in place to prevent this, but it is not always effective.
Theme
Ethics and Sustainability
e e a e so e essential steps an o anisation can ollo in its ec it ent p ocess
o advertisements must be 100 honest about all aspects of the ob, e.g. working conditions, the culture of the organisation.
Intervie s: Interviewers must treat all candidates e ually. The uestions asked should be structured clearly for everyone to understand. Avoiding discriminatory uestions must be at the forefront of the interviewer s mind at all times.
E uality: The interviewer must not ask any uestions that reveal gender or other bias. R departments and senior management should evaluate all candidates based only on their alifications and s ills
ac roundchec s: Any background checks must be done with care and diligence. Information asked for and received from a referee should be handled with care.
Confidentiality: Any information gathered should only be used for the purpose intended. Information which is retained should be stored appropriately and a manager should obtain consent before sharing any personal information. All data should be collected, used and stored in line with data protection legislation.
iverse or force: n o anisation s o ld t to ec it a di e se o o ce t at e ects a wide range of different cultures, abilities and perspectives. This will ensure that the workplace is inclusive, valuing and respecting everyone.
E uality, diversity andinclusion
uality, diversity and inclusion are all key aspects of recruitment for any business and should be a priority in workforce planning, recruitment and selection. They should be integral at every level in an organisation, consistently guiding the organisation s decision-making. hy are e uality, inclusion and diversity so important in the workplace
nsuresfairnessinrecruitment
A clear, objective, well-structured and transparent recruitment process ensures fairness for all applicants. ot only will it promote a fairer outcome, it will also help employers attract a wider range of prospective talent anagement will need to constantly review recruitment processes to make sure t e a e ai to all p ospecti e applicants e o anisation ants to find e plo ees it t e i t skillset and who will suit the culture of the company, but they should also try to ensure that they come from a range of diverse backgrounds. This will broaden the knowledge and skillset in the firm and enable more informed decision-making.
2 Allowsforprogression
Embracing equality, diversity and inclusion ensures that all employees have the same opportunities to progress within the company. Retention levels will be higher as employees know that they will have the chance to undertake training and be fairly rewarded. romotion opportunities should be made available to all employees, and employees should be paid fairly and e ually, without gender bias. ore and more businesses are conducting e ual pay reviews in an effort to ensure that male and female employees receive e ual pay for their work and that there are no pay discrepancies between ethnic groups. hen leaders tackle these problems head on it shows a clear commitment to inclusion, diversity and e uality in an organisation.
Reputation
Employers that embrace equality, diversity and inclusion can advertise this information on their company website. This will enhance their reputation, making them more attractive to prospective employees and customers. Organisations without e uality measures in place will struggle to recruit and retain staff
All leaders and managers should have had ade uate training training is looked at in hapter 0 in diversity issues and be fully e uipped to deal with any problems. A company s reputation gives the fi a co petiti e ad anta e onside o local oce o b tc e , a la e etaile o a lobal tec giant. If customers or employees feel they have been treated unfairly, word can spread uickly, which can damage a business in the short and long term.
id ou now
In August 0 , the orkplace Relations ommission R awarded a former employee 0,000 compensation, a record amount, in an unfair dismissal case. Read this article about the case here, then have a class discussion. as lon usk correct or would you side with the R
edco.ie/5d2d
Business and Financial Literacy Theme
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orking in small groups, research the recruitment process for companies of your choice. ach person in the group should research a different company. ake sure you have chosen local, national and international companies. ow does this company ensure e uality, diversity and inclusion for employees
igitaltechnologiesandrecruitment
e t e last n be o ea s, t e in ence o di ital tec nolo on recruitment and selection has been transformative. Traditional hiring methods have evolved, and technology is reshaping how businesses attract, assess and recruit candidates ec nolo is a in ec it ent o e e ficient and acc ate it as elped to st ea line processes and has even enhanced the recruitment process for candidates.
Stop Colla orate
Read this article about era, the robot interviewer for I A that can sift through more than 1, 00 candidates a day, at the link below. Share your thoughts with a classmate.
edco.ie/ybtp
If you are asked a uestion on how digital technologies in ence t e p ocess o ec it ent and selection, don t o et to ention ideo con e encin , social edia, obotics and tificial ntelli ence ic a e loo ed at in apte
e e a e, o co se, bot ad anta es and disad anta es elatin to di ital tec nolo ies and ec it ent
Advantages isadvantages
ider reach an eac a e n be o p ospecti e candidates, e ia social edia and plat o s s c as in ed n
Efficiency atbots can co nicate it candidates, at e in ans e s to basic estions, sa in ti e o e plo ees to oc s on ot e a eas
AI can be used to screen s, atc candidates it ob desc iptions, sc ed le inte ie ti es, etc
Candidate e perience
eople can appl o obs ia t ei s a tp ones, ic is con enient and accessible e can also be ept p to date it t ei application p o ess ia e ail
irtual recruitment nte ie s can be cond cted on oo , ea s o pe, ic sa es ti e and t a el costs n i t al ca ee s ai s co panies can inte act it a la e n be o potential candidates o di e ent locations around the world at t e sa e ti e
rivacy ollecting and storing candidates pe sonal data can aise conce ns abo t p i ac and data p otection o panies st a e st in ent and ob st sec it eas es in place
raining and skills o panies need to in est in t ainin and a e s e ana e ent a e t e necessa s ills to appl t e ne ec it ent tec nolo ies to t ei o n co panies rocesses such as AI or chatbots could alienate candidates who p e e a o e pe sonal app oac
mpersonal ns ccess l candidates ecei e a to ated e ection e ails, ic a e i pe sonal and don t p o ide const cti e eedbac that would assist candidates in t e applications
mployer employee relationships
sing technology can lead to a t ansactional elations ip bet een e plo e s and potential e plo ees t can nde ine t e p ocess o b ildin a st on elations ip bet een t e t o pa ties i t o t e sta t ithout face-to-face interaction o t e be innin an e plo e ill find it di fic lt to assess a candidate s inte pe sonal s ills
Evaluation
id ou now
of recruiters who have adopted automation report inc eased e ficiencies, it common tasks automated including screening application documents and scheduling interviews.
Irish ech e s, anuary 0
e in ence o di ital tec nolo on ec it ent and selection is undeniable. It has revolutionised recruitment , es apin it , a in it o e e ficient , data d i en and candidate-friendly. AI and other technologies enable co panies to sea c t e afield and a e o e informed hiring decisions, while providing a better e perience for candidates. mbracing technology allows businesses and recruitment agencies to attract top talent and deliver the best results for their clients. e e is no escapin tec nolo and its in ence in ec it ent o e e , it also p esents c allen es, such as the need to manage biases in AI and ensure candidates personal data is secure at all times. If companies manage both of these areas digital recruitment should become a seamless part of their recruitment process.
mployee motivation
Motivation isthesetof forcesthatcause people to behave incertain ways
eople s be a io can be in enced b t e oti ation to eet t ei nsatisfied needs o e s st be oti ated in o de to find o inte estin , to ens e e ficienc and to de elop ood o ale en o e s a e oti ated t e a e satisfied, ta e pride in their work, co-operate with and respect their collea es and eel t e a e pa t o t e fi
Stop Colla orate
efore we start , watch this short video at the link below and have a class discussion on what you think motivates people. hat inspires people to do better, work harder and achieve more hat hinders that
edco.ie/xxxx
Activity
se a lacemat activity sheet to note your thoughts as you are watching the video. Share your notes it a s all o p en o a e finis ed is ill elp to st ct e o ide class disc ssion
emuneration
It is the responsibility of the R manager to negotiate remuneration packages for each employee and keep it under review. In terms of welfare it is essential that companies follow the strict health and safety guidelines that are in place legislation . The working conditions in a business will have a serious impact on the morale, dedication and motivation of all employees.
e ost co on e a ds a e a es and sala ies sala is an a eed ann al pa ent o a specific ob and is s all lin ed to alifications and e pe ience in a pa tic la field
ypes of monetary reward
ype planation
lat rate asic pay
i ed amount of pay for a set number of hours e.g. hiring a painter for a day .
ime rate fi ed a o nt pe o o a fi ed n be o o s pe ee t e e plo ee o s o e t an t e fi ed n be o o s, o e ti e is paid at di e ent ates above the minimum, e.g. time and a half or double time.
iece rate ayment per piece of work done, e.g. 0c per shirt sewn in a clothing factory The more the worker produces, the more they earn.
Commission A payment linked to the value of the amount sold, e.g. a salesperson is paid 10 of total sales achieved. This encourages the salesperson to make sales.
Bonus An e tra payment in recognition of e tra achievement or reaching e ceeding a target, e.g. producing more units than agreed.
Salary fi ed s o one e a dless o t e n be o o s o ed o e t e ea
fi in schemes t e fi ea ns abo e a ce tain le el o p ofit t e e plo ees ill be paid a s a e o t e p ofits is enco a es e plo ees to be o e p od cti e
mployee share ownership scheme
iving workers shares in the company at a discounted price as part o t ei e ne ation t e co pan ea ns ood p ofits t e e plo ees ecei e a di idend a s a e o t e p ofit is i es e plo ees a sa in t e ma or decisions of the business, e.g. ircom employees who held 1 of the company s shares were able to effectively decide who could buy the company by voting en bloc in favour of one bidder aintains employees interest in the ob.
Shareoptions plo ees a e t e i t to b s a es in t e co pan at a specified p ice If the company performs well, the stock market price of the shares may rise, and employees could sell their shares at the higher price.
Stop Colla orate
sing mini whiteboards, work with a classmate to suggest one advantage and one disadvantage of each of these monetary rewards.
on monetaryrewards enefit in in
Benefits in kind are rewards that are not paid in money but have a monetary value, for e ample a car house provided by the company, holidays, reduced prices for the co pan s p od cts, ee e be s ip lso no n as pe s o in e benefits
I can be more valuable to employees than an e uivalent amount of pay as pay is ta ed. e a e o ten sed to aise t e stat s o a position in a fi and to boost o ale
o s is c ion enric en
This is a very important reward for some employees. Satisfaction may arise from the nature of the work, the opportunities and challenges the ob presents. mployees a e e a ded beca se t e ob satisfies t ei social needs e teamwork and self-actualisation needs e.g. opportunity to do further study . They may also be rewarded by the nature of the work e.g. it is a vocation or by the opportunities it presents e.g. travel , for e ample a volunteer with a relief agency or charity working in the developing world.
ro o ion
eing promoted to a more responsible, more senior level in the organisation will carry a higher wage, b t it is o ten t e ob title, a bi e o fice o a in a pe sonal assistant t at is t e eal e a d see aslow s self-esteem needs on page 0 .
e i i e
This allows employees the freedom to choose their own working hours within an agreed time frame, e.g. workers may have to be in the workplace between 10 a.m. and 1 p.m. and can choose when they work the rest of their contracted hours. This allows employees to work from home and, for e ample, o anise c ildca e a an e ents o e e ficientl
Stop Research
ind some obs that are currently being advertised. hat is the remuneration package on offer for each Share your research with your class and note the key terms used in the advertisement ob description. an you e plain each of these terms ould you like to do any of these obs at o ld o sta tin sala be at ot e benefits a e on o e
Benefits of rewards
Employee motivation: Staff are motivated to provide high- uality products services, which in the lon te can lead to bette sales p ofits
uality of employees: ood financial and non financial e a ds can elp t e fi to ec it and retain high- uality staff
o satisfaction: Rewarding employees for high- uality work leads to greater ob satisfaction, which in turn will make them more loyal to the company.
essa senteeism: mployees are less likely to call in sick. Reduced absenteeism improves p od cti it and ed ces costs o t e fi
am ip
e have outlined some theories of motivation for you on the following pages. It is important that you can apply each theory to a business scenario. As you learn about each theory remember to t in abo t e e o can find a eal li e e a ple in o a co pan t at ses t is and find out how they use it.
otivationaltheories
aslo s hierarchy of needs
Ethics and Sustainability
Abraham aslow 190 19 0 was an American psychologist whose theory of human motivation 19 claimed that human needs are hierarchical. aslow believed that humans strive to reach the highest levels of their capabilities, to be the best they can be. e said that every person has needs, which st be satisfied and t ese needs fit into a ie a c , ic eans t at onl en one need as been satisfied will a person attempt to satisfy the ne t need. Once a need as been satisfied it is no lon e do inant and another need becomes a motivator. These needs can be satisfied t o a pe son s e plo ent
A business should offer different incentives to workers to help them satisfy each need in turn.
et s e a ine eac le el eed
hysiological ood, shelter, warmth and clothing
Security Safety and security
A safe working environment and ob security onsistency in our lives
Social eeling part of something eing part of a team
Acceptance in a team is crucial for a lot of employees
steem Status and self-respect Recognition for work done
Self actualisation lfillin one s t e potential eeting intellectual needs
A person seeking selfactualisation will be ambitious and seek more responsibility
Stop Colla orate
hoose a Disney movie and find e a ples o eac sta e o aslow s hierarchy of needs in the movie. hy not put together a short clip or presentation to show your classmates
Self actualisation steemneeds
Socialneeds
Safetyneeds
hysiologicalneeds
roviding ade uate pay and working conditions
roviding ob security
Offering a contract and pension roviding a clear ob description ollowing health and safety guidelines
roviding opportunities for teamwork and offering social facilities
Offering mentoring and coaching as part of training and development
An effective appraisal programme
roviding status through the organisational hierarchy
Setting ob titles, giving authority and placing trust in employees
Recognising achievements
nabling people to stretch themselves and lfil t ei potential
Offering internal promotion opportunities ob enrichment making the ob more challenging and comple
Stop Research
Research a company of your choice. ow does this organisation motivate its workforce an you identify motivators that would link with each level of aslow s hierarchy
Taylor’s scientific management
rederick Taylor 1 191 was an American engineer and management consultant who focused on e ficienc and p od cti it in an act in e anted to nde stand o e ficienc co ld be ma imised to lower the unit cost of production. is approach to management was based on measuring things that could be done better and understanding how they could be improved, monitoring productivity to ensure that targets are met, and control t o anal sis is scientific management theory is also known as Taylorism.
a lo s t eo is based on t e concept t at o e s a e oti ated b pa and financial e a ds e belie ed t at t is is t e ain, o onl , acto t at in ences o p od cti e o e s a e and t at companies should set targets, reward those who meet those targets and let go of those who don t. This led to the development of the concept of piece rate pay per item of output produced .
ey oints:
Science can be used to simplify ob roles in order to increase efficiency and productivity. orkers should be given one task and learn to master that task.
The organisation s focus should be on developing the ‘one best way’ to produce something. A standardised approach o ld opti ise and si pli o , a in o a o e e ficient o o ce
Time and motion studies were used to analyse tasks, breaking a larger task into smaller individual tasks and then timing how long eac s alle tas o ld ta e is elped to find t e ic est a to complete a task.
anagers could break down each employee s ob into more manageable tasks. mployees need to be motivated to continue to work in this way and this can be done by pay. ficient and p od cti e o e s o ld be e a ded financiall ine ficient o e s o ld be let o
ample: In car manufacturing, rather than one employee producing the entire car, which would re uire a highly skilled mechanic, one employee would put on the wheels, another would put in the seats, etc. ach employee would only need to be skilled at one particular area.
y i in e e n f ce
Ama on s warehouse distribution service is one e ample of Taylorism, as is the production of fast fashion items and other consumer goods in Asia. cDonald s has also adopted this approach. very c onald s itc en is desi ned to a i ise e ficienc e e a e di e ent stations o sections and each worker focuses on producing one item or completing one task. or e ample, one employee coo s t e ies ile anot e a es il s a es is allo s o eate e ficienc , a standa dised approach across all cDonald s stores and consistent uality.
Stop Research
atc t e et i fil he ounder to see how the c eato s o c onald s adopted a lo s scientific management approach. Discuss as a class the advantages of this approach. hat are the criticisms of Taylorism i ital Transformation Theme
er er s t o factor theory
rederick er berg 19 000 was an American clinical psychologist who is most famous for introducing the concept of job enrichment and the dual factor theory or motivation–hy iene the ry.
During the 19 0s and 19 0s, er berg researched what motivates employees and discovered that the things that oti ate people and at a es t e satisfied a e not si pl t e absence o t in s t at a e t e dissatisfied
or e ample, at o people can beco e dissatisfied with an annoying boss, a low salary, an uncomfortable work environment or certain rules. ut , even if all of these t in s e e ectified and ana ed eall ell, it o ld not motivate people to work harder.
hat does motivate people to work harder are things like interesting, challenging work, recognition and achievement. These are intrinsic motivators that nurture a person s inbuilt desi e o o t and sel lfil ent
ased on his research, er berg developed a two-factor theory.
ygiene factors
actors that causedissatisfactionor e i e e if ey e n present hemerepresence of these f c i n en i e e
nie ee e efi ef e movingon to motivator factors
Job security mployees who do not feel secure in their ob will become dissatisfied, e o e s on ero hour contracts
tatus aving meaningful work
Relationships at r orking in a team vs working in a cubicle on your own
alary air pay that provides a decent standard of living
r in conditions
A safe, clean workspace with safe e uipment
Fair policies lear company policies that do not hinder employees in doing their ob
Jobenlargement meansgivingthe employeemore work,withoutadvancing theiropportunity forgrowth. or e ample, increasingproductiontargets forthe employee,addingan e traadministrative task to the ob, rotatingthe ob to another similartask.
Jobenrichment meansthatthe rolehas awider varietyoftasksthataremore comple andchallenging. mployeescan managetheir own workload,seekapproval o ana e entlesso tenandfinda greatersenseofachievement.
Empowerment followsonfrom ob enrichment.Itinvolvesgivingemployees more responsibilityandmoreautonomy inorder to motivate them. mployeesare allowed to makedecisionsindependently, it o tc ec in it ana e entfi st Therewillbelesssupervision,which demonstratestrustintheemployee.
otivators
actors that directly motivate e yee e
r th opportunities Opportunities to learn and develop skills
Advancement The possibility of promotion, giving employees a path forward in their career
aried and challenging r mployees should feel they are doing valuable work with real meaning, i po tance, lfil ent
Recognition raise and recognition from supervisors and peers motivates workers to do better
Responsibility ob enrichment and empowerment are both e amples of this motivator
Case Study: o i ion oo e
oogle is renowned as a great place to work. The company employs over 1 , 00 people in o fices all o e t e o ld t o e s a ide an e o benefits, incl din ealt and ellness benefits s c as ee ealt ins ance and onsite ellness cent es in its o fices t p o ides a an e o financial s ppo ts incl din comprehensive compensation packages, regular bonuses, student loan reimbursement and one on one financial coac in o employees. It offers paid time off for a variety of leave types, four work from anywhere weeks each year and a hybrid work model employees can o o o e and t e o fice e e a e also some well-known perks such as nap pods and free meals oogle s 0 Time policy provides opportunities for growth and advancement in the workplace.
Stop Colla orate
ork in small groups to analyse how a company of your choice has applied er berg s twofactor theory. Illustrate how the company addresses the hygiene factors and encourages the oti ato s a e o findin s it o class
cGre or s theory andtheory
Douglas c regor 190 19 was a professor at assachusetts Institute of Technology IT and a supporter of the human relations approach to motivation. In his 19 0 book he uman ide of nterprise e o tlined t o cont astin st les o leade s ip t eo an a t o ita ian st le and t eo a participative style .
According to c regor, the ry ana e s ass e
The average human being has an inbuilt dislike of work.
eople have to be forced, controlled and threatened with punishment.
mployees are la y and won t work hard unless closely supervised.
anagement must offer incentives to motivate workers.
mployees re uire safety and security as a priority mployees lack ambition and will avoid responsibility. They resist change.
The ry ana e s ass e
mployees en oy working and are willing to work.
A theory manager would believe that human beings can be taught to accept and seek responsibility.
mployees are self-motivated no supervision is re uired as people are committed to shared ob ectives.
plo ees a e satisfied
Satisfying self-actualisation needs is the best way to get effort from people. mployees should receive suitable training to use knowledge and initiative.
e abilities o an e plo ees a e not ll sed to t e benefit o t e fi s ills a e not ma imised.
All members of the organisation can help solve problems. One criticism of c regor s theory is that it isn t realistic to imagine that a manager would solely adopt a theory or theory approach to management. ost managers will apply aspects of both theories.
Stop Colla orate
Take the Theory and Theory Test to see if you d prefer to be managed by a theory manager or a theory manager
Activity
Dan ink, a modern author on motivation, wrote a book called Drive he urprising ruth About hat otivates s. atch the 1 -minute ouTube clip at the link below of a Ted Talk he delivered on The u le of otivation . Answer the uestions on the worksheet on pages 11 11 of your Student Activity ook. Discuss your answers in class.
The manager and the employee will meet regularly to discuss the employee s performance in relation to agreed ob ectives. It is an essential part of uman Resources anagement R . mployees are treated as a resource and encouraged to reach their full potential. mployee appraisal encourages employees to take responsibility for their own growth and development as workers.
t an app aisal eetin e plo e s and e plo ees ill disc ss t e ollo in Pro ress: The progress the employee has made towards agreed goals the factors that have helped or hindered them in achieving those goals.
areerplan: It is an opportunity to identify what areas the employee would like to develop towards. Trainin needs: Are there any additional training needs If so, what are they ontract: An appraisal will be carried out before a business decides on the type of contract to offer an employee.
Benefits
plo ee app aisal o e s se e al benefits o bot e plo e and t e e plo ee e ards(monetaryandnon monetary): It can be used to determine pay increases and other rewards such as share option sc e es, benefits in ind, etc
Motivation/job satisfaction: It is important for staff motivation, communication and fostering a positive relationship between management and staff. It ensures high performance standards, and makes sure the employee is working to their full potential and is happy in the ob.
Industrialrelations: otential con icts in t e o place can be raised. roblems can be addressed and solved before they become intractable.
Trainin anddevelopment: Training and career de elop ent needs can be identified and t e e ecti eness of e isting training programmes evaluated.
eed ac : It is an opportunity for employees to give and receive feedback, which may improve their ob satisfaction motivation.
Promotionalpath/recognition: t identifies idden st en t s in e plo ees ic can be sed and recognised and it helps make promotion decisions.
ust for un
Watch this short clip from The Office, which highlights some interesting challenges in performance appraisal!
edco.ie/bdw3
pproaches to employeeappraisal
There are several different approaches to performance appraisal. An organisation will choose a method t at ali ns it its al es and c lt e ac app oac as a specific a ea o oc s
Self appraisal
Self-appraisal: mployees evaluate their ownperformance.Thisapproachactivelyinvolves employees,allowingthem to highlightboththeiraccomplishmentsandtheirshortcomings. Self-evaluationsoccurshortlybeforetheannualperformance review, givingemployeesan opportunity to assesstheir strengthsand weaknessesbeforetheymeettheiremployer to getamorein-depth review.
The purpose of self-appraisal is to make sure that your own personal goals are in line with the goals of your employer. It is crucially important that an individual is honest when they complete their selfapp aisal as it ill benefit t ei ca ee pat plo ees doc ent all t ei ac ie e ents since t ei last appraisal their successes how they overcame challenges and areas where they feel the employer could support their career development , e.g. training, collaborating with fellow employees.
Advantages isadvantages
Constructive fee c mployees can provide feedback to the company by suggesting how the company can better facilitate them in developing their skillset, lti atel benefitin t e organisation. They may recommend resources that would support their daily work, offer suggestions to improve their role or suggest ways to improve productivity
isappointment mployees often have certain e pectations about their roles, their performance and their development in the organisation, but these e pectations may not be in line with what the company needs. A manager may disagree with an employee s self-assessment , which can lead to feelings of frustration and vulnerability, negatively impacting self-esteem. Regular feedback and constant open communication from management can help bridge the gap.
Relationships anagers will gain deeper insights into their team members strengths, weaknesses and e pectations in their role. mployees can freely e press their thoughts on how they feel they are performing, which might be di fic lt in o e t aditional performance appraisal methods. This fosters more effective communication and stronger relationships between managers and employees.
ess critical It can be uite daunting to be completely honest about your own performance. Some employees will be honest with themselves and give an accurate review of their performance. Others will struggle with this, so when they do meet the R manager it a be di fic lt to ea some home truths. If an employee performs poorly during a pro ect it can be di fic lt o t e to ealise the impact this can have on others.
anagement yo ectives B
Management by objectives involvestheemployeeand manageragreeing to asetof attainableperformance goalsthat theemployeewill strive to achieveoveragivenperiodoftime agreed by bothparties.
This type of performance appraisal techni ue is a newer method that is gaining in popularity The targets set are planned by both the manager and the employee and they will take time to ointly plan, organise and communicate agreed ob ectives. erformance will be measured by the goals they set together.
The main aim of this method is to assess individual employees progress and achievements. It allows management to identify areas that need development or improvement , but also to make sure they a e settin attainable oals o t ei e plo ees specific, eas able, ac ie able, ele ant , and time-bound goals can be used for this. hen the employer and the employee meet again the ob ectives set will be discussed and new ones created.
Advantages
Communication This method develops communication between employer and employee. It can be empowering for the employee. Since they have been part of the planning process they feel a strong sense of self-worth and of being valued in the workplace.
Career progression ffective management and leadership in a company will take an interest in improving and enriching the skills of employees and therefore will provide as many opportunities as possible for this to happen. The more an employee upskills, the more likely they are to be promoted.
approach
isadvantages
ime consuming It takes time to meet, sit and agree plans and ob ectives. The time needed to evaluate oals and define ne ones should be taken into account before choosing this method. It may cut into the daily work re uirements of both parties, which means that other aspects of their ob will suffer.
mployee pressure
The strain employees may put on themselves to reach the ob ectives set with management can lead to stress and an iety This can affect their wellbeing and their work life balance.
The constant worry of not reaching the goals or disappointing a manager can be too much for some employees to cope with.
Inthe 3 feedback approachamanagercollatesinformation fromanemployee ssupervisors,peers,subordinates,managers and even e ternal stakeholderssuchascustomersorsuppliers.
The employee themselves will be asked some of the same uestions as their colleagues. The information is gathered through a uestionnaire which will have uestions based on, for e ample, communication skills, leadership capabilities, teamwork, interpersonal skills and creative abilities.
This information will provide a comprehensive view of the employee s performance. mployees will gain valuable input about their work from a
broad range of people, rather than a single manager, ensuring a broader and more balanced viewpoint of their performance. mployees learn how others see them, and if it s not how they wish to be viewed it can inspire them to do better, to work harder or improve their interpersonal skills. This approach is becoming increasingly popular in organisations as it is more holistic and focuses on strengthening an employee s skillset.
Advantages isadvantages
e eing accountable for your work and knowing that your colleagues will be reviewing you encourages employees to work better, to collaborate better and to communicate better This leads to better performance and higher productivity.
mproved customer service
Receiving feedback from different stakeholders, both internal and e ternal, enables employees to make c an es t at ill benefit all parties. The more positive the relationships that customers or other stakeholders have with employees, the stronger the relationship will become.
ormativeandsummativeappraisal
n ic
Cost
Groviding feedback on a fellow employee can be ite di fic lt and a lead to so e con ict a on employees. Some uestions on the uestionnaire may be too broad, which could lead to inaccurate feedback and unconstructive criticism. This is often the case where little or no training has been provided to the other team members.
athering feedback from perhaps as many as eight people for each employee re uires time and training so that stakeholders know how to accurately answer the uestions put to them . oth of these will come at the e pense of the organisation.
oth formative and summative appraisals are approaches management can take to assess an employee s contribution to work over a given period of time. hilst they are banded together they must be looked at separately in terms of their purpose and outcome. or i e r is
Formativeappraisals areongoing. They strive to providecontinuous feedback to employeesbothorally andinwriting.Thisisdonesothat employeeshave anopportunity to improve theirperformance overtime.
The main purpose of formative evaluations is to allow management to identify areas for improvement and implement them as soon as possible. a acte istics
re uency: Appraisals are conducted regularly, e.g. weekly, fortnightly ocus: anagement may place an emphasis on identifying strengths, weaknesses and areas for development that the employee can take on board immediately eed ac : Aims to be constructive and aimed at helping employees develop their skills and i p o e t ei pe o ance o t e benefit o bot e plo e and e plo ee
pproach: sually informal may involve discussions, coaching sessions or regular check-ins.
utcome: The main aim is to put development plans in place, and identify potential training opportunities and performance improvement strategies so that both management and the employee will be happier
ample: A manager meets with an employee every fortnight to review their progress on assigned tasks and provide feedback on their performance. They will discuss any challenges the employee faced and set a target for the ne t period.
u i e r is
Summativeappraisals generallysummarise t ee plo ee spe o ance o e aspecified periodoftime,usuallya yearorsi months.
This type of appraisal is used to provide feedback on the overall success of a pro ect or task and often to make decisions about potential promotions or changes to an employee s remuneration package. a acte istics
re uency: Often annual or biannual.
ocus: anagement will usually summarise the overall performance of the employee over the time period. They will also look at any achievements the employee may have had and the overall contribution of the employee since the last appraisal period.
eed ac : As this is a more formal approach to feedback it will have a more formal framework, with a comprehensive review of all work carried out thus far. anagement could incorporate ratings, results of tests and even scores from work carried out.
pproach: The approach will be very structured and follow whatever system the organisation has in place. It often involves producing formal documentation and perhaps even uestionnaires for employees to complete
utcome: otential promotions ad ustments to the employee s remuneration package. If the appraisal isn t positive in its outcome it could result in employment being terminated.
ample: An annual or biannual performance review where a manager assesses and evaluates an employee s performance based on pre-agreed criteria and goals. They discuss with the employee their overall performance and then give them a performance rating. inally, management will make a decision on any salary increases or bonuses.
Stop Research
In this chapter you ve looked at several different appraisal methods and you ve learned about oogle. ow research which of the above methods oogle uses. hy do they use it e prepared to p esent o findin s to o pee s
Qis is a s a o pe o ance app aisal et ods
erformance appraisalmethod i ample
Rating scales traditionalmethod
Self Appraisal
fee c
anagement y o ectives B
Criticalincident method
Behaviourally anchored rating scales BARS
eerreview
Assessmentcentres
mployees are rated on a scale e.g. 1 to based on skills like communication or teamwork.
mployees assess their own performance before discussing it with their manager.
eedback is collected from various people, including managers, co-workers and sometimes customers.
mployees and managers set specific oals, and t e app aisal is based on achieving those goals.
anagers record important events, both positive and negative, during the year
mployees are rated based on specific be a io s elated to their ob performance.
o-workers review each other s performance to give different perspectives.
mployees are assessed through activities like role-playing or presentations to show how they handle real work scenarios.
Chapter uestions
ec f n e n in
1. in the term workforce planning .
2. is o acto s t at can in ence o o ce plannin
3. in the recruitment process.
4. us r e your understanding of a diverse workplace.
A manager rates an employee for teamwork.
n e plo ee e ects on bein good at customer service and sets goals to improve time management.
A retail worker gets feedback from their boss, co-workers and regular customers.
A goal might be increase sales by 10 in si months .
An employee solves a big customer issue, and this event is noted for review.
A could be always solves customer issues uickly , while a 1 might be struggles to help customers .
Team members give feedback on each other s contributions during a group pro ect.
A potential team leader participates in e ercises to demonstrate leadership abilities.
5. Di eren i e bet een a ob desc iption and a pe son specification
6. Discuss the term ethical recruitment .
7. u ine two advantages and two disadvantages of digital technology in recruitment.
8. in t e di e ence bet een financial and non financial e a ds
9. u e how aslow s hierarchy of needs may be used in an organisation to motivate employees.
10. u ine t e ollo in oti ational t eo ists and t e cont ib tions t e ade a rederick Taylor b Douglas c regor c rederick er berg.
11. in what is meant by empowerment.
12. us r e your understanding of the term employee appraisal .
13. in the term self-appraisal .
14. n se the implications of using a 0 feedback approach.
15. Con r s formative and summative appraisal.
Qevelopin your no led e
1. u ine your understanding of the term workforce planning with two developed points.
2. u ine t o inte nal and t o e te nal acto s t at can in ence o o ce plannin
3. us r e your understanding of the recruitment process.
4. Dis in uis bet een a pe son specification and a ob specification in t e ec it ent p ocess
5. us r e the methods a business can take to be ethical in their recruitment policies.
6. in why a business would choose to be ethical in their approach to recruitment.
7. u e o di ital tec nolo ies in ence t e p ocess o ec it ent and selection
8. u ine t o financial and t o non financial e a ds o e plo ees
9. n se o a lo s scientific ana e ent app oac can be applied in a ode n o o ce Support your answer with a suitable e ample.
10. Dis in uis between hygiene factors and motivators as outlined by rederick er berg. ow could this knowledge be applied by an organisation today
11. us r e your understanding of ob enrichment and ob enlargement.
12. De ons r e your understanding of employee appraisal and ou ine t e benefits to bot employees and employers.
13. Co re nd con r s two approaches to employee appraisal.
re nd
Store t earn t
feed ac : A manager collates information from an employee s supervisors, peers, subordinates and managers, and even e ternal stakeholders such as customers or suppliers.
Benefits inkind: Rewards that are not paid in money but have a monetary value, e.g. a company car.
Employeeappraisal: The process of reviewing an employee s performance.
Empo erment: iving employees more responsibility and more autonomy in order to motivate them.
Ethicalrecruitment: An approach to hiring staff that emphasises fairness, transparency and inclusivity
ormativeappraisal: rovides continuous feedback to employees.
Gender ias: A preference for people of a particular se in hiring, promotion, etc.
o enrichment: Adding more comple and challenging tasks to an employee s role.
Theme
Business and Financial Literacy
o enlar ement: iving the employee more work to do. It does not advance the employee s opportunity for growth.
ana ement y o ectives: A type of performance appraisal techni ue. mployee and manager agree to a set of attainable performance goals that the employee will strive to achieve over a given period of time.
otivation: The forces that cause people to behave in certain ways
Person specification: Sets out the kind of alifications, s ills, e pe ience and pe sonal attributes a successful candidate should possess. It refers to the person rather than the post and is useful in comparing and assessing the suitability of ob applicants.
Panelintervie : Interview by a group of people. Aims to choose the candidate who most closely matches the criteria set out in t e pe son specification
ecruitmentprocess: The steps organisations follow when hiring new candidates.
emuneration: All rewards received by workers, both monetary and non-monetary edundancy: orkers are let go from their obs because there isn t enough work for t e in t e fi
Self appraisal: mployees evaluate their own performance, highlighting their accomplishments and shortcomings.
Summativeappraisal: A summary of an e plo ee s pe o ance o e a specified ti e period, usually a year or si months.
or forceplannin : nsuring a business will have the right number of the right people with the right skills at all times.
e ec i
c i c n f ce planninginanorganisation
efinition o o o ce plannin
Steps involved
Internal and e ternal factors
Recruitment
Outline key stages i nificance o et ics in workforce planning n ence o di ital de elop ents mployee motivation
efinition o oti ation
acto s t at in ence e plo ee motivation onetary rewards on-monetary rewards
otivational theories be able to e plain each and apply it to a modern workforce
aslow s hierarchy of needs
c regor s theory and theory
a lo s scientific ana e ent er berg s two-factor theory
mployeeappraisal plain
Describe effective employee appraisal Approaches to appraisal be able to e plain each and the advantages and disadvantages of each 0
ormative and summative Self-appraisal anagement by ob ectives
2 uman Capital anagement
earningoutcomes Strand
At the end of this chapter you should be able to:
2 A what is meant by human capital management and outline how the organisational environment is a factor in its development.
2 S GA the different types of training and professional development that may be offered to employees and outline why ongoing training and professional development is an important aspect of human capital management.
2 9 A R C A the opportunities and challenges associated with working in teams for both employees and employers.
2 how employers and employees can work together to create a more sustainable workplace.
2 S GA how digital technology impacts on the workplace.
2 2 the opportunities and challenges associated with remote and blended working arrangements for both employees and employers.
2 A A S the ethical and sustainability issues associated with remote and blended working.
2 4 the importance of corporate wellness and investigate the impact of corporate wellness on employee motivation and organisational culture.
2 the role of leadership in promoting corporate wellness.
Case Study:
AI Allied Irish anks was established over 0 years ago with the merger of three banks, making it one of the country s longest establis ed financial instit tions it o e 1 0 branches and more than 10,000 employees in Ireland and internationally, it provides banking services to people across Ireland. It has implemented robust human capital management practices to manage and develop its workforce effectively. Its focus on employees oti ation is e ected in its ellbein p o a e, ic o e s co ses on ental, social, financial and p sical ealt t regularly surveys its employees in an effort to understand their needs, is committed to fostering a culture of diversity and inclusion, and has adopted policies and initiatives to
support gender e uality Its employee resource groups R s are a platform for employees to connect and share their e periences. AI s recruitment strategy aims to attract top talent with its remuneration packages and career development opportunities, and it o e s e ible o in conditions and a s ppo ti e o en i on ent ond ctin regular performance reviews and promoting a culture of continuous feedback enables employees to understand their strengths and acknowledge their areas for improvement. AI s approach to has helped it to develop highly engaged, skilled and motivated e plo ees and e ects its co it ent to b ildin on its st on , di e se o o ce
hat ishuman capital management C
Humancapital ispeople s abilities,skillsand knowledge,investedinand developed to helpthem to bemoreproductiveand realisetheirpotential.
Humancapitalmanagement isthe process by whichanorganisation attracts,developsand rewardsits workforce,sothatitcontributesas well asitpossiblycan to theachievement oftheorganisation s goals.
ai s to a i ise t e potential o a fi s an capital o an eso ces to ac ie e t e o anisation s oals and ob ecti es ile a i isin p ofits oc ses on addin al e to a fi s human capital its employees so they can perform their obs to the best of their ability. ffective can help create a strong organisational culture. usinesses rely on their employees to help them ac ie e t ei o anisational oals, and in ol es ana in t at e eso ce o t e fi to elp achieve those goals.
or forceplannin : onitoring staff retention and labour turnover carrying out skills and labour audits and analysing recruitment targets analysing company goals and strategic plans to ensure that labour supply needs are met.
2 otivatin andre ardin employees: nsuring that employees are motivated that each employee is paid fairly and ade uately developing remuneration packages for each employee in line it t ei e pe ience and alifications de elopin a pac a e o non financial e a ds and motivators.
Business and Financial Literacy Theme
ecruitmentandselection: iring and laying off of employees sourcing potential candidates developing an effective selection procedure evaluating candidates to select the best candidates for new roles.
4 Trainin and talentdevelopment: Investing in employees training to develop and improve their skills. This will improve staff retention and promote a culture of internal recruitment recruiting from within the workforce . easuring the effectiveness of staff training and the training spend per employee to benc a a ainst ot e fi s in t e ind st
Employeeen a ementandinvolvement: Surveying employee involvement in the business and in decision-making performance appraisal meeting regularly with employees to collect feedback and set goals and targets.
iversity: nsuring a diverse workforce and diverse senior management team in terms of gender, e pe ience and et nicit ende ap epo tin and ens in t e fi is co pliant it di e sit in employment legislation. irms may also run diversity programmes.
orporateculture: nsuring the company values and ethos translate into all company activities. is sta ts it e ecti e ec it ent policies to ens e t at ne e plo ees ill fit it t e company culture as well as induction and training programmes that ensure the company values and culture are conveyed to employees.
Time, attendanceandpayroll: In some companies, monitors employees working hours and attendance to ensure that payroll is accurate employees getting paid for the correct number of hours as well as any necessary deductions .
Benefits of good HCM
The company will at all times have enou h staff iththeri hts ills ach employee will be employed in a role that suits their skills, talents and strengths, ensuring that the company gets the best from each employee.
2 otivatedandhard or in employees: An team that motivates and rewards staff will make employees feel valued and empowered.
Productivityandefficiency: ffective performance appraisal means that each employee is closely monitored to ensure they are meeting targets and developing their skills to enable them to pe o t ei oles e ficientl
4 Positiveor anisationalcultureand or atmosphere: ffective training and results in positive industrial relations between employers and employees. Staff will be happier at work, leading to a positi e c lt e t e ill be o e co ope ati e and e ible and open to c an e
o staff turnover: otivated and happy employees will be less likely to leave, which means low sta t no e is ed ces costs o t e fi and ens es t at it ets a et n on its in est ent in talent development.
heorganisationalenvironment
Political–le al dimension
Competitors
Suppliers
Socio-cultural dimension
ners
Board of directors
Employees ulture
nternati nal dimension e en s o eor nis ion en iron en
Customers
Economic dimension
Strategic partners e ulat rs Technological dimension
An organisational environment is the set of forces or institutions surrounding an organisation that affect performance, operations and resources. These forces can be either internal or e ternal.
Internal factors: acto s it in t e o anisation t at in ence business choices and activities. They include employee behaviour, culture, mission statement and leadership styles.
E ternal factors: actors outside and surrounding the organisation t at in ence b siness c oices and acti ities e incl de customers, economic conditions and government policies.
The elements or factors of the organisational environment will impact on how a company manages its human capital.
Stop Colla orate
Discuss as a class how the organisational environment might impact on . ook at the different elements of listed on pages. hich of these elements are internal aspects of the organisational environment and which are e ternal
A positive organisational environment promotes higher employee retention and improved performance as employees feel supported and valued.
ample: A culture that encourages innovation and continuous learning will motivate employees to lea n ne s ills, ic ill i p o e t ei p od cti it , benefitin t e co pan
ternal factors, such as technological change, re uire organisations to invest in training and development. This ensures that their workforce is ready to adapt to new challenges and industry trends.
rainingandprofessionaldevelopment
Trainin istheplannedac uisition oftheknowledge,skillsandabilities employeesneed to performtheir taskseffectively.
e e a e se e al t pes o t ainin
Development involvespreparing employees to takeonmore responsibility andnewchallenges.Itisalong-term approach for e istingemployees.
Inductiontrainin : Introducing new staff to their ob and t e o anisation t elps ne e plo ees fit into t e
o place b a ilia isin t e it
a The work the organisation does b e fi s policies and code o et ics
c Rules relating to health, safety, dress code, etc.
2 n the o trainin : arried out in-house people learn from their colleagues e perience teaching skills and knowledge through practical e perience.
ff the o trainin : a ied o t o tside t e fi co ses, lect es, se ina s o specialists, e a ood sa et co se o a deli o e a e ass co se s op oo t ainin ad inist ati e training technical training manual handling.
4 Staffdevelopment: roviding staff with additional skills so that they can take on new responsibilities and greater challenges. It is a long-term approach for e isting employees, e.g. a bus driver receiving training to be a manager.
ulti s illin : Training workers in a wide range of different obs, instead of ust one, so that they a e adaptable and can fill in o absent collea es elps dete ine et e t e a e s itable for promotion.
Benefits of traininganddevelopment
Increases output , improves uality, reduces wastage employees will reach targets. usiness will be more competitive, which leads to better service for customers. etter service for customers improves the fi s i a e appy employees lead to good staff morale, so t e fi ill be o e e ficient ow labour turnover.
repares workers for promotion and makes them better able to adapt to change.
id ou now
Training and development are vital components of . They enhance employees skills and knowledge, leading to improved performance and productivity. A culture of continuous learning fosters innovation and adaptability, enabling employees to respond to change.
Analyse the advantages of training and development listed here to identify why this function is an essential part of human capital management.
e n c i n
A team isagroupofpeople working together to achieve acommon goal.
ccess l tea s s a e co on c a acte istics
All team members share a common oal very team member contri utes to discussions and problem-solving.
All team members acceptandshare responsi ility for both failures and successes
There is clear and open communication to ensure every team member s ideas and thoughts are heard, leading to better decision-making.
Collaboration istheactof workingwithsomeone to producesomething.Itisapartnershipinwhich agroupofpeopleproducesomething together.
Teamwork and collaboration both involve people working together. hile teamwork involves individuals working towards a common goal, collaboration occurs when a group of people complete something collectively.
Sta es of team formation
Sta e : ormin The team is formed and a leader is appointed. The team discuss issues they will tackle and get to know each other There is no trust between team members.
Sta e : Stormin on ict occ s as e be s disagree on how to achieve the goal. Team members get to understand reasons for differing viewpoints. There is little trust between team members.
Sta e : ormin The working relationships within the team improve Different opinions are considered and trust builds.
Sta e :Performin The team becomes taskoriented they realise the goal must be achieved . on icts a e been esol ed, t st is fi l established and the team work as a unit.
Sta e : Transformin The team has achieved its goal. It will either be reorganised to achieve a new task or disbanded.
Stop Colla orate
ork in pairs to think of a situation you were involved in that re uired teamwork maybe your Transition ear mini company an you think about how your team performed an o ecall eac o t ese fi e sta es o o tea pe o ance en o a e finis ed discussing this in pairs, share your thoughts it o class ates at a e t e benefits of teamwork
pportunitiesandchallen es of team or oremployees
pportunities
mployee morale Improves employee motivation and satisfaction, resulting in happier employees.
Communication i ffective teamwork re uires clear and open communication skills. mployees will improve their interpersonal skills and build strong workplace relationships.
le i ility ea o p o ides o o e e ible o in a an e ents, allo in employees to work remotely ifferent perspectives mployees are e posed to a wide range of different skills and perspectives. They can learn from these perspectives and improve their own skills and strengths.
Resilience mployees who have worked in teams will have e perienced working with others and dealing with challenges. This gives them greater resilience and makes them better able to cope with change.
nfi en i i y challenges
Challenges
ea o p o ides o eate eedo and e ibilit o o e s, b t t is means that team members have no control over where other team members a e o in and o confidential in o ation a be s a ed
ivision of roles oles a e not clea l e plained it can lead to con ict as so e tea e be s duties might overlap. Some team members may not fully complete their tasks.
iversity Teams will have a variety of complementary talents and skills. This diversity may be challenging for employees to manage.
ifferent personalities ach team will have a range of employees with different personalities. Some e plo ees en o o in it ot e s ot e s find it st atin and c allen in If trust and respect have not been established this will be challenging and may lead to con ict
oremployers
mployee motivation
Betterdecision in
mproved productivity
e ce c n ic
anaging communication
pportunities
eople are more motivated when they work as part of a team. This means they are less likely to leave, resulting in higher employee retention.
Team members will have a variety of skills and e periences, leading to improved decision-making for the business.
ea e be s s o ld be assi ned tas s t at atc t ei specific s ills and e periences, leading to tasks being completed more uickly and to a higher standard.
Teamwork re uires good communication skills. lear and open communication bet een collea es es lts in e e con icts in t e o place and an con icts bein esol ed ic l
Challenges
mployers have to ensure that there are clear lines of communication. n o ation st be dist ib ted ic l and e ficientl to ens e t at tea s can perform their tasks effectively
raining costs ea s e i e e ficient p ocesses to enable t e to co plete t ei tas s and to ensure a high uality and safety standards. This re uires training, which can inc ease costs o t e fi
aintaining organisational culture
ffective teams are diverse, with a wide range of skills, e periences and personalities. aintaining a positive organisational culture can be challenging as employers strive to ensure an inclusive culture built on respect.
ata security nc eased e ibilit and e ote o in eans t at a ide an e o employees working in a variety of locations may be using and sharing confidential in o ation is can p o e a c allen e o fi s in aintainin data confidentialit
Ethics and Sustainability
A sustainable workplace isonethat strives to useits resourceswithoutnegativelyimpacting theenvironmentoremployees health.
reating a sustainable workplace involves both employers and employees. orking together, they can c eate a o place t at ill not onl benefit t e environment but also foster a culture of wellbeing and productivity in the organisation. reating a sustainable workplace involves more than ust putting environmental initiatives in place it also involves the wellbeing of everyone in the workplace which we ll look at later in the chapter . In a genuinely sustainable workplace employees feel valued, are engaged, work productively and have opportunities to thrive both personally and professionally. e ll loo b ie at so e a eas e e bot e plo e s and e plo ees can a e a di e ence
Employers
Prioritiseemployee ellness: ncourage employees to have a real work life balance see orporate wellness , below reateapositive or environment: An organisation that promotes open communication between employees at different levels and encourages collaboration will give employees a sense of belonging.
Provideopportunities fortrainin andprofessionaldevelopment: ncourage employees to take part in additional training or to upskill their current skillset. This could involve on-site training or mentoring supports from other colleagues. Implement reenpolicies: Set up recycling measures and energy conservation programmes in the workplace.
Enhancesustaina lepractices: ncourage the use of eco-friendly materials for production and distribution. Try to use more eco-friendly suppliers.
Takinginitiative
Initiating programmes and policies, lobbying and activism, putting environmental interests first
Influencing others
Educating and training for sustainability, encouraging and supporting
Conserving
Reducing use, reusing, repurposing, recycling
Working sustainably
Choosing responsible alternatives, changing how work is done, creating sustainable products and processes
Ener y conservation: Turn off lights and electronic devices when not in use. se natural light if possible se ene e ficient appliances o de ices e e possible
ecyclin : All organisations should have a recycling policy and employees should follow recycling guidelines. ake simple changes such as using reusable cups and containers.
Sustaina letravel: se the cycle-to-work scheme, carpool with colleagues or use public transport.
Support reeninitiatives: any organisations invest heavily in green initiatives in the workplace. Supporting these initiatives shows both camaraderie and commitment to the choices the company is making in its efforts to be more sustainable.
Beapositiveinfluence: Setting a good e ample to colleagues is a simple yet very effective method of being sustainable. or e ample, only printing documents when necessary, setting personal sustainability targets, encouraging colleagues to be sustainable, buying eco-friendly supplies.
Stop Colla orate
orking with a classmate, e amine at the link below one of these si case studies on s stainabilit in b sinesses epa e a s o t epo t and p esent o findin s to o class ncl de t e ans e s to t e ollo in estions hat sustainable approaches did the company take o is benefitin o t ei app oac
Do you think they could do anything else to be even more sustainable ou may need to do some further research on the company you choose.
edco.ie/5fda
mpact of digitaltechnology on e ce
Theme
i ital Transformation
There is no uestioning the impact that digital technology has had on the workplace in recent years. one a e t e da s e e e plo ees o ld sit in an o fice o a to p , cond ct all t ei meetings in a room and rely on slow internet connections to carry out their work. e are now in a period of technological advancement which has seen change in the workplaces in terms of communication, a to ation, a tificial intelli ence, p od cti it , obotics, b id o in and collabo ation et s e amine some of these.
AutomationandArtificialintelligence(AI)
AI can perform routine and repetitive tasks that employees would usually have done, which means that some employees are being laid off and computers taking over their role. e see in hapter 19 that I A uses automation for aspects of its recruitment process, such as sifting through s and cover letters. to ation inc eases t e e ficienc o some processes, allowing employees more time to focus on more creative and strategic tasks.
ommunication
ommunication is the essence of any successful business and without the proper channels of communication in place a business will simply fail to succeed. e look at communication in hapter 1.
usinesses use several different methods of communication, from letters to memos to emails. ith the surge of the internet in the late 1990s, email became the primary means of business communication, allowing businesses to save money on paper, stationery and even mail rooms. mployees now had the capacity to send and receive information to one or many people instantly and emails could still be printed and shared physically if needed.
id ou now
As of April 0 , Ireland was sending over . billion emails a day, ust behind ermany and the SA.
After emails came instant messaging, which is e tremely evident in business today. sing tools such as icrosoft Teams, businesses are able to communicate with customers and co-workers in real time from all corners of the world. Originally seen as informal and even somewhat distracting, it has become the norm in most workplaces today. The added capabilities of instant messaging, such as one to one c ats, o p con e sations, ideo con e encin and file s a in , o e endless tools for businesses to encourage their employees to communicate effectively with one another. ore importantly, it enables collaboration between management and staff.
o otics
Stop Colla orate
Several companies have adapted their business to use robots for tasks that are dangerous or costly, and they are becoming more common in manufacturing.
or e ample, car assembly, cake factories. They are also used in neurosurgery and bomb detection.
any people in lower-skilled obs fear that they can easily be replaced by robots, which are e pensive initially but in the long run a costsaving measure.
ook at the clip at the link below about the use of robotics in obs. Discuss as a class how robotics has impacted obs. an you think of other e amples where robots take the place of humans
edco.ie/x6ht
am ip
hen you are asked how something has impacted on something else, this means looking at the conse uences of something happening. These conse uences can be both positive and negative
e sicon
o o ic c iner usedin roduc ion
e e in
Theumbrella term remote working describesasituationwhereanemployeedoestheir obfrom theirhomeeitherallthetimeorsomeormostofthetime,ratherthan goingintothecompany o ficeo p e ises tcanalso e e to a b o in o co o in a an e ent, e e e plo ees seas a edo ficespaceo b int ei localco nit ,close to t ei o e, it otherpeoplewhoarealso working remotely.Thehub wouldhave facilitiessuchasdesks,meeting rooms,videoconferencing facilitiesandbroadbandaccessthatpeoplecanuse forasmall fee.
Theme
ample: -work, telecommuting, telework, hub-work, homeworking, co-working, hotdesking, smart o in , intelli ent o in , obile o , o e o fice, i t al o fice, locationless o , and plat o work are all words and phrases you may have heard or seen used to e plain a situation when an employee works from home. i ital Transformation
The digital revolution has enabled many workers to choose a remote working option for some or all of their working week. The number of employees choosing remote working options or blended working arrangements working in t e o fice o so e o t e o in ee and working from home on other days has increased in recent years.
Stop Research
nal se t e in o ation in t e ap in t e lin belo and disc ss o findin s it a pa tne an o find p to date in o ation o eland and pe aps o local a ea o pop la is e ote o in in eland lic t e lin s to find t o a ticles t at a be a se l starting point for your research.
edco.ie/uk4c
edco.ie/csb4
et s e amine the opportunities and challenges of remote working for both the employee and the employer.
Stop Colla orate
efore we go any further, T I what some of these might be. ou might know someone who works remotely Do they like it hy or why not ist some of these views in your copy. Then AIR up with a classmate and discuss your thoughts. S AR your collective answers with the class.
le i ility
Cost savings
Reduced stress
pportunities
acilitates a better work life balance. eople can work at times when they are most productive. Reduced t a el ti e eans o e s find it easie to balance their personal and work lives, giving them more time for social and sporting activities, improving their wellbeing.
Remote working allows employees to choose cheaper housing outside cities. eate e ibilit can iti ate t e need o c ildca e costs o e plo ees it young families. Travel and commuting costs are also reduced.
ommuting can be stressful. In a recent report , over 0 of workers in both the public and private sectors cited reducing commuting time as a leading motivator for remote working. Studies have shown that remote working could save a worker 9 hours per year in reduced commuting.
ositive environmental impact
ncreased o satisfaction
Reduced commuting means a smaller carbon footprint. mployees are not availing of lunch and refreshments on the go, which means a reduction in single-use plastics.
The reduced stress and increased autonomy that come with remote working lead to greater ob satisfaction. etter employee morale leads to increased loyalty to employers.
Challenges
e an e ote o e s find it di fic lt to s itc off They may feel pressure from themselves or their manager to work longer hours and a not ta e s ficient est b ea s is can lead to overwork and increased stress.
roductivity Remote working provides greater autonomy for workers but they need to be self-motivated and highly organised. There are greater distractions when working from home, as well as a lack of direct supervision, which can negatively impact productivity
solation orking from home can lead to isolation and loneliness. Reduced social interactions can pose problems with communication and make teamwork challenging. mployees can also miss out on conversations that happen in the o fice and a not be di ectl in ol ed in decision a in
nternet access
The non-availability of broadband can impact an employee s ability to work remotely They may need to rely on hubs or co-working spaces oor broadband connection may make some aspects of the ob slow and frustrating.
Company culture orporate culture is an important factor in adopting remote working and blended working arrangements. Trust and communication are key aspects of a workplace culture that can act as barriers to remote working. olicies on remote working should be introduced.
Stop Colla orate
Take a few minutes on your own to read the a ticle at t e lin belo en o a e finis ed, have a class discussion on remote working from an employer s perspective. hat might some o t e benefits o e ote o in be o an employer hat are the challenges they face
edco.ie/23te
id ou now
Theme Studies have shown that employees who work from home two to four days per week can reduce their carbon footprint by up to 9
Ethics and Sustainability
ortheemployer
ower costs
ncreased productivity
ess a senteeism
Access to talent
pportunities
e e e plo ees co in into t e o fice eans lo e tilit bills and business overheads. mployers can negate the rising cost of commercial property by adopting remote working. ewer work stations are needed and e ible o space a an e ents e des s a in can be ade
Remote working can increase employee productivity as employees have more time to focus and concentrate in a uieter environment, away o t e dist actions o a la e o fice
Greater employee retention o idin e plo ees it e ible o in a an e ents and t e increased autonomy that comes with remote working leads to higher ob satisfaction. Increased employee morale can boost retention and reduce labour turnover.
Reduced no commuting and travel and better work life balance can reduce absenteeism. mployees who may in the past have called in sick a contin e to o e otel , inc easin e en e o t e fi
conomic growth results in a higher demand for labour, and recruiting highly skilled workers becomes a priority roviding remote working and blended working arrangements can make an enterprise more attractive to top employees and can be an important ob criterion for potential candidates.
Challenges
ess colla oration aintaining a corporate culture that centres on collaboration can be challenging. Remote working means fewer face-to-face interactions and more electronic communication, which can impact idea generation and make it harder to establish healthy, productive workplace relationships. an e plo e s a e e i in e plo ees to o in t e o fice o a minimum number of days per week to encourage communication and teamwork.
nduction of new employees
Remote working can pose a challenge when introducing new employees to the business. It can be challenging to foster a sense of community and embed corporate culture when not all employees are present in t e o fice
Access to resources plo ees a not a e access to s ficient eso ces to s ppo t them in working remotely Access to technology, networking tools and I T devices and infrastructure should be in place for remote or blended working arrangements.
ata protection mployers should have clear policies on IT and communication that set out the appropriate use of work phones and devices. mployers also have legal obligations around data protection. mployees who are working from home must ensure the safe and secure storage of information and data.
ro ect management nsuring all employees stay on task and complete their work can be challenging. anagers and leaders may need to communicate more regularly and use a variety of tools to track employees progress and ensure pro ects stay on target. Daily or weekly check-ins will be needed to ensure that all employees and pro ect team members are informed and up to date
E ic n in i i y i e e in id ou
now
The ork ife alance and iscellaneous rovisions Act 0 , enacted on April 0 , gave all employees the right to request remote working.
On arch 0 , the inister for nterprise, Trade and mployment approved a de Practice published by the Workplace Relations Commission (WRC), which set out practical guidelines for both employees and employers to ensure they comply with the Act.
The code states that employees have a right to re uest a remote working arrangement o t e fi st da o t ei e plo ent owever, they must complete a minimum of si months continuous employment before an approved arrangement can begin. They must give details of the arrangements they are seeking and the reasons, in writing, for the re uest.
mployers must respond to a remote working re uest within four weeks, taking both the business s and the employee s needs into consideration. Re uests must be dealt with in an ob ective, fair and reasonable manner
mployers should consider the suitability of the role for remote working and the employee s suitability to work remotely If the re uest is denied, alternative arrangements may be considered, but employees should not be penalised for making a remote working re uest. mployers can terminate an arrangement i t e e plo e is satisfied t at it o ld a e a s stainable ad e se e ect on t e b siness
an e plo ee is not satisfied it t e e plo e s decision t e can as t e to e ie t e process of the decision and the reasons behind the refusal, but the R cannot review the decision made. The R can award compensation to the employee if there has been a breach of process.
ample: Recently, a worker took a case of discrimination against her employer with the R . She had sought a remote working arrangement as a reasonable accommodation in respect of a recognised disability AD D . The employer refused her re uest. The R found the worker had been discriminated against and awarded her compensation of ,000
Stop Research
an o find e a ples o ot e cases t at e plo ees a e ta en to t e in elation to remote working hat happened hat was the outcome Do you think it was a fair outcome Do you believe further guidance is needed from the government
e ici i n
Regionalandruraldevelopment
Remote working means that individuals with disabilities and those with caring responsibilities can more easily participate in the labour market It can facilitate employment for people with disabilities as it removes barriers to work such as transport and lo istics e eate e ibilit e ote o in provides means individuals with caring responsibilities can tailor their working hours to suit their needs.
On the other hand, remote working and the use of video conferencing may be challenging for people who use sign language. This may have a negative impact by reducing the visibility of people with disabilities and decreasing morale.
ighly skilled and highly paid roles may be more geographically dispersed around the country as a result of remote working, providing balanced regional development and growth. Rural areas may see e pansion and regeneration as more people choose to move location because they can work remotely
This may also result in higher rents or house prices in these areas and decreased footfall in city centre locations. A move to remote working may result in a reduction in demand for commercial properties, which will ultimately impact government revenue.
nvironmentalimpact
Reduced commuting results in reduced emissions, estimated to a e a oneta benefit o app o i atel pe ea ndi id al fi s co ld ed ce t ei ca bon e issions b do nscalin t ei co po ate o fices ed ced e issions ill improve air uality and help Ireland meet its climate targets.
Remote working may result in an increase in household emissions and while employees may only be commuting to the o fice t o o t ee ti es pe ee , t ei co tin ilo et es may be longer if they have moved home. They may also increase their e penditure on heating and electricity.
mployers must adhere to the mployment uality Act 199 01 , including for employees who are working remotely or availing of blended working arrangements mployees working remotely must have the same access to career development , training and promotion opportunities as employees working on site.
e n fe y
It is the legal duty of employers to ensure the safety, health and welfare of all their employees while they are at work, and this includes the workspaces of employees who work from home. The ealth and Safety Authority SA provides guidance and checklists for employers to ensure they meet their legal obligations. The advice covers areas such as key responsibilities, managing work-related stress, providing e uipment and setting up ergonomic workspaces. hen employers provide work e uipment e.g. computers, laptops, chairs or desks they are responsible for maintaining it. If an employee uses their own e uipment the employer is responsible for ensuring it meets health and safety standards.
Adjust seat so that:
the desk is just underneath forearms; hands, wrists and forearms are parallel to the floor;
• your thighs are fully suppor ted on the chair and parallel to the floor; use a footrest if needed;
•your thighs, knees and back of legs are clear of sur faces
Sit upright and all the way back in the chair
Sit facing work area.
Shoulders relaxed and head naturally balanced.
Surveillanceandprivacy
Adjust monitor so that:
• the screen is as far away as is comfor table or about an arm’s length away ;
• the top of screen is at or slightly below eye level
Avoid twisting the upper body Position the keyboard and mouse next to each other and near enough so that elbows are close to the body
Take breaks and stand and/or move frequently
Remote working can often involve monitoring employees work and productivity by digital means sin specific so t a e, o e a ple is aises conce ns abo t e plo ee p i ac and a tono mployers should balance the need for accountability with respecting the privacy of their employees.
Corporate wellness
orporate wellness is the initiatives and programmes implemented by businesses to promote and support their employees wellbeing and health. It shows that management recognises that how employees are looked after in the workplace has an impact on their performance.
ample: o po ate ellness eas es incl de fitness p o a es, p o otin o li e balance, promoting physical health, screening programmes and, most important , fostering a holistic and positive work culture. Some companies organise company-wide retreats and invite guest speakers to raise awareness of wellbeing in the workplace.
Emotional
It is imperative that management practise what they preach and take care of their own wellbeing. mployee wellbeing is critical to ensuring that workers are in the right frame of mind to do their ob well.
mployers can incorporate wellness into their workplace in several ways. They will choose the app oac es t at best s it t ei needs et s ta e a close loo at so e o t e possibilities
Physicalfitness: ym membership or e ercise classes. mployees can take e ercise without having to leave the ca p s o otin fitness is one o t e best ways a manager can ensure their employees work to their potential.
inancial counsellin : mployees often st ess abo t t ei finances and cannot al a s o t o t ei financial di fic lties alone o idin access to financial co nsellin and ad ice and st ess management related to money matters can have a huge impact on the wellbeing of employees.
olunteerin opportunities: roviding employees with opportunities to volunteer can encourage them to give back to their community. Some organisations partner with a charity and set at least one day a year when all staff work alongside the charity These programmes boost productivity, raise morale, encourage teamwork and help with employee retention. They bring together employees who might not otherwise meet. or life alance: le ible working arrangements, giving employees greater control over their working schedule, is crucial for employee wellbeing. le ible working conditions and family-friendly programmes help to promote work life balance and reduce stress.
ealth screenin s: Access to healthcare provided as part of the renumeration package annual health check-ups and screenings vaccinations if re uired and general medical care. nowing they have access to healthcare if it is re uired can give employees a sense of security. ellnesschallen esorincentives: ompanies may organise workplace wellness challenges that will encourage a sense of camaraderie among employees. These challenges can support employees in establishing healthy habits that support improve their overall health, both physical and mental. or e ample, a step challenge, bike or walk to work, or even simply taking the stairs rather than the lift.
Case Study: Cor or e e ness oo e
oogle, one of the largest companies in the world, is renowned for its lucrative contracts and its la is ellness p o a es and o spaces ts onsite p o isions incl de fitness cent es and gym classes to encourage employees to move more during their working day. mployees can a ail o ee eals and snac s, do iendl o fices, pods o ta in a nap d in t e da and also generous annual leave. The renumeration packages are e tremely competitive and the wellness programmes create a uni ue work environment that focuses on fostering productivity oogle also prides itself on offering mental health resources and opportunities to check in, which can be the difference between leaving the company and choosing to stay. In addition to on-site facilities, oogle offers cooking demonstrations, virtual dance classes and fitness classes e a e already looked at its 0 Time policy, a huge incentive for employees within the company.
Stop Research
repare a short report on the corporate wellness programmes at acebook, , Instagram or Snapchat. Remember to save this in your Investigative older
id ou now
Thirty-two per cent of workplaces in Ireland have a formal health and wellbeing strategy, with offering an employee assistance programme, providing mental health support, and having on-site wellbeing initiatives.
Benefits of corporate wellness
co pan it ell establis ed co po ate ellness p o a es ill find t at its e plo ees adapt o e easil to ne ci c stances and c allen es e e a e so e o t e e benefits
Employeehealthand ell ein : ellness programmes can improve employees health-related behaviours by providing healthy eating options, healthy snacks and access to fitness cent es eople o eat ell and a e an active lifestyle are more likely to be productive in work, leading to reduced absenteeism.
orale: orkplace stress is common in many workplaces and wellness programmes can help reduce stress levels. hen management encourages employees to control stress their morale increases better employee morale can lead to stronger relationships, improved communications and more successful outcomes when working together
Productivity: mployees who are healthy, energised and feel good in themselves are more likely to en oy their ob and in turn be more productive. aving the appropriate supports in place to help employees deal with whatever struggles they are e periencing allows them to focus on their work rather than their problems.
o er staff turnover: or many people a strong wellness programme is key in deciding to oin a company. mployers need to offer incentives to their employees in order to retain them and a comprehensive wellness programme can do ust that. Offering wellness programmes shows an organisation s commitment to retaining staff, and employees will want to stay with organisations where they know they are respected and valued.
eadershipin corporate ellness
orporate wellness is constantly evolving and one of the most important factors ensuring its success in an organisation is the leadership behind it. Those at the top play a pivotal role in how a company s corporate wellness is seen and used. ffective leaders who speak for workplace wellness initiatives and model healthy behaviours gain the respect of their employees, in ence e plo ee en a e ent and acco ntabilit and improve overall wellbeing in the workforce.
ow can management ensure that the wellness programmes they have spent a huge amount of time, resources and money on are a success
ead y e ample: This is one of the most powerful things those in leadership can do. hen management show their employees that they themselves can maintain work life balance they can inspire employees to do the same. If employees see their managers looking after their eating habits, prioritising self-care, taking part in wellness activities, taking a break when re uired, they can feel encouraged to do the same. oth employees and managers will see that wellbeing is valued and accepted in the workplace.
2 earesourceprovider: nsure that all employees have access to the resources needed to s ppo t t ei ellbein , e on site fitness acilities, access to ental ealt s ppo ts, financial advice support and healthy lifestyle programmes. hen these resources are provided it shows a commitment by management to their employees wellbeing and should encourage employees to take care of their own wellbeing.
ommunicateand een a ed: ommunication in any organisation is fundamental to its success. e will e amine communication in further detail in hapter 1. lear communication between all parties in a company will help create a path of openness and honesty. It is essential that leaders communicate the importance of wellness programmes that are in place and also t e benefits t e o e nco a in e plo ees to ta e pa t in c allen es o incenti es eeps co nication o in
4 Providea safeenvironment: It is essential that leaders in an organisation create an environment where employees feel supported. anagement should try to reduce the hush-hush approach to mental health, for e ample, and promote a healthy work life balance to show employees that they are valued, respected and listened to. An open-door policy can help with this, creating an environment where employees know they can approach their management for help or guidance when they need it. anagement must listen to employees and act on their feedback.
Stop Colla orate
sing a company of your choice, design a wellness day that incorporates physical, mental and emotional wellbeing. Try to include at least fi e acti ities and list t e benefits t at these would bring to both employees and the organisation as a whole.
Q QChapter uestions
ec f n e n in
1. Define human capital management.
2. u ine the functions of human capital management.
3. in what is meant by the organisational environment.
4. Discuss t e benefits o e ecti e an capital ana e ent
5. in what is meant by training.
6. u ine the different types of training and professional development that may be offered to employees. Support your answer with suitable e amples.
7. in what is meant by teamwork.
8. u e the impact of digital technology on the workplace. Support your answer with suitable e amples.
9. in what is meant by remote working.
10. in what is meant by corporate wellness.
11. u ine the role of leadership in corporate wellness.
evelopin your no led e
1. in what is meant by human capital management.
2. Discuss the role of human capital management.
3. u ine how the organisational environment is a factor in the development of human capital management.
4. Dis in uis between training and development.
5. Discuss the importance of ongoing training and professional development in an organisation.
6. Dis in uis between teamwork and collaboration.
7. n se the opportunities and challenges of teamwork for both employees and employers.
8. u ine the opportunities and challenges of remote working and blended working arrangements for both employees and employers.
9. n se the ethical and sustainability issues associated with remote working.
10. Discuss the corporate wellness programme of a company of your choice.
11. n es i e how corporate wellness impacts on employee motivation and organisational culture
Store t earn t
olla oration: The act of working with another person other people to produce something.
orporate ellness: An organisational focus on e uality, diversity, inclusion and the overall wellbeing of the workforce to nurture a diverse, inclusive and healthy workplace.
o or in : mployees work remotely in a s a ed o fice space o b in t ei local community with other people who are also working remotely. The hub would have facilities such as desks, meeting rooms, videoconferencing facilities and broadband access.
evelopment: reparing employees to take on more responsibility and new challenges in the workplace.
uman capital: The competencies embodied in people, invested in and developed to help them to be more productive and realise their potential.
uman capital mana ement: The process by which an organisation attracts, develops and rewards its workforce, so that it contributes as well as it possibly can to the achievement of the organisation s goals.
Business and Financial Literacy Theme
n the o trainin : n o se t ainin t e trainee learns from colleagues. Teaching skills and knowledge through practical e perience.
ff the o trainin : Training carried out b specialists o tside t e fi , e co ses, lectures, seminars.
r anisationalenvironment: The set of forces or institutions surrounding an organisation that affect performance, operations and resources.
emote or in : An employee completes their work ob from their home all the time, some of the time or most of the time instead of working solely in the company s premises.
Staff development: roviding staff with additional skills so that they will be able to take on new responsibilities and greater challenges in the future.
Sustaina le or place: A workplace that uses its resources without negatively impacting the environment or employees health.
Team: A group of people who work together to achieve a common goal.
Inductiontrainin : eneral introduction of new staff to a ob and an organisation.
Trainin : The planned ac uisition of knowledge, skills and ability re uired to enable employees to perform their tasks effectively
ulti s illin : Training workers to be able to undertake a wide range of different obs, instead of ust one.
e ec i
uman capital management C
efinition
plain the organisational environment and how it is a factor in development
enefits o ood
Training and development
efine t pes o t ainin and development and their application in the modern workforce
Importance of different types
e n c i n
efine
Outline stages of team formation
Opportunities and challenges of working in a team for both employees and employers
mpact of digitaltechnologyinthe ce
Remote working
thical and sustainability issues of remote working
Corporatewellness
Types
Impact on employee motivation and organisational culture
Role of leadership
2 he mportance of Communication
earningoutcomes Strand
At the end of this chapter you should be able to:
A the importance of communication in an organisation.
2 different modes of communication and analyse the efficacy of each mode as an approach within an organisation.
SC SS how technology enables communication in organisations.
4 SC SS how communication might be improved in an organisation.
Case Study: D n e s
Theme
Entrepreneurial Thin in
Dawn eats, established in ounty aterford in 19 0 by three farming families, is a second-generation family-owned Irish company. The company markets uality beef and lamb products to a global customer base spread across 0 countries. hannels of communication are incredibly important for a company of this si e and it uses a range of internal and e ternal communication methods. Dawn eats sells 90 of its products in overseas markets and employs more than , 00 people at locations in Ireland, the , continental urope and Asia. As a large organisation, Dawn eats understands the importance of engaging its workforce so that the company can remain competitive against other leading dairy and meat suppliers The company has e panded its internal communication systems and is committed to continuous improvement , leveraging its lean communication structure, social media, intranet and bulletin boards. It runs weeklong events centred on themes such as the environment , health and wellbeing and food safety. Dawn eats realises that effective communication ensures that everyone in the company knows who to report to, who they can liaise with and how to get messages to the correct stakeholder The Da n Direct suppliers newsletter was launched in 010 as a way of communicating with farmer suppliers and keeping them informed about agricultural and environmental initiatives. The newsletter is sent out to 10,000 farmers across the and Ireland. ternal communication includes press releases, social media and live events, for e a ple to i li t t e openin o t e o t o ean a et to is bee o t e fi st time. or a company the si e and scale of Dawn eats, clear channels of communication and a range of communication methods are core aspects of the business and key to its success.
hat is communication
Communication involvesthetransferofideas,information,messages, etc.from a sender to a receiver Thepurposeis for the receiver to understandthesender s message.Itistheinteractionor e change which resultsinthetransferof a message orinformationbetweentwo ormore parties.
ood communicators make sure that their messages are clear, understood and acted upon.
T E ESSE TI E E E TS
U I TI S I S
ISTE I G
Strong observational skills to fully understand the message being conveyed
E U I TI
Body language like posture, gestures and eye movement
EI G E
Choosing the right words to deliver a message that’s easy to understand
EI G ISE
Using fewer, well-chosen words to convey your message
EI G I E T
The right message with the appropriate non-verbal communication
EI GPE S E
A friendly tone and a simple smile can go a long way
EI G P TIE T
Being composed and not rushing when conveying your message
ese a e so e o t e e stones o e ecti e co nication ccuracy: The information communicated should be up to date and accurate ppropriatelan ua e: The language should not be too tec nical o too di fic lt oid a on and a e s e t e message is clear, concise and to the point. eprepared: now your audience and make sure the tone and content of the message is appropriate e rief: Too much information can be confusing. Confidentiality: Sensitive information should be communicated face to face, for e ample, so that it isn t seen by the wrong people. eed ac llo oppo t nities o eedbac and cla ification to avoid misunderstanding.
Theme Take note of these points. They will be important as we move through the chapter.
Business and Financial Literacy
hy is communicationimportant
Increasedproductivity: ood communication ensures that every employee is clear on what they have to do. ngaged employees are more committed to their employer, working faster and more e ficientl , inc easin p od cti it and ed cin costl e o s
2 Avoiding conflict: ffective communication means improved relationships in the workplace. ith clear communication and active listening, disputes between stakeholders in a business will be resolved uickly
Increasin en a ement: ustomers are more likely to have a positive e perience when dealing with the company. ommunication is central to developing brand loyalty, which will lead to increased sales.
4 Supportin colla oration: ffective collaboration re uires clear and open communication across the organisation. Accurate information is shared between all staff members, enabling good decision-making.
Promotespositiveculture: mployee morale is improved when employees receive clear instructions and are included in decision-making. onest and transparent communication is essential in developing a positive, healthy and strong workplace culture.
Business and Financial Literacy
er e din nd n in n r nis ion
ana in chan e: ommunicating effectively ensures that all stakeholders are managed successfully ommunication and collaboration build resilience and trust among staff, enabling the business to deal with change.
Promotin innovation: Developing innovation and promoting intrapreneurship re uires open and honest communication and the input of all employees. nsuring that a variety of voices are heard when developing ideas leads to better outcomes for the business.
Stop Colla orate
Think of an organisation or company that you belong to. It could be a sports organisation, your school or where you work at a part-time ob. ow would you rate the communication in this organisation Is it effective hat methods of communication does the organisation use ould it make improvements If so, how
odes of communication
very employee in a business relies on communication to get things done properly Therefore, it is essential that companies set up channels of communication, both internally and e ternally, with all stakeholders involved in the business.
am ip
o a be as ed to anal se t e e ficac o each mode as approaches to communication it in an o anisation ficac eans t e po e to produce an intended result. In other words, how effective is each mode of communication
Internal communication is with staff, e.g. staff meetings, noticeboards, intranet, intercoms.
E ternal communication is with the outside world, e.g. customers, suppliers, investors, through letters, email, websites, telephone, etc.
Routes of communication
Channel planation amples
ownward rom manager to employees below them in the chain of command
pward rom employee to the person they report to
ori ontal etween people on the same level in the organisational structure company ladder
Tasks that need to be completed
Salesperson s weekly sales report to the sales manager
Re uesting information or offering a suggestion
od ction ana e as s t e finance ana e for money for machinery
ormal pecific p oced es o et ods etters, reports, monthly meetings
nformal nplanned and unrecorded
Staff discussing business after work earing news on the grapevine
odes of communication
ethod planation amples mplications
er al oral ommunication through speech Internal Telephone calls
ersonal conversations eetings face-to-face or online, e.g. oom ternal
Telephone call Trade fair Radio
ideoconferencing, e.g. oom, Teams
on ver al ommunicating without words and gestures ody language ye contact
ritten ommunicating through the written word ssential when sender and receiver are not in the same location or when a permanent record of the conversation is necessary
Internal emos oticeboard etters
Social media ebsites rochures
usiness documents ternal rochures inutes of meetings mail
reater productivity as there won t be any confusion over instructions ewer errors
It can often say more than words
Reinforces meaning, conveys e otions, defines elations ips elps build trust, clarify intentions and build relationships
ficienc easil s a ed and stored
The message can be reviewed and revised before sending, reducing the potential for misunderstandings and ambiguity
isual
ethod planation amples mplications
ommunicating by visual means
id ou now
ails e e fi st sed in the 19 0s. The use of email has evolved since then and generated increasing user numbers, pro ected to surpass . billion by 0 .
nte nal and e te nal ie charts hotographs lipcharts raphs ictograms ine charts ower oint presentations
Information can be absorbed uickly
Sometimes easier to understand, e.g. using trend ap s to e plain fi es to a board of directors
Often used to reinforce a message
Removes linguistic barriers messages can be understood by speakers of different languages
i plifies ideas t o t e use of imagery and colour
er al oral
se a st on , confident spea in oice se active listening oid fille o ds
Avoid argon
on ver al
otice how your emotions feel physically e intentional i ic non e bal co nication o find e ecti e
ritten
Strive for simplicity Don t rely on tone
Take time to review your written communication eep a file o itin o find e ecti e o en o able
isual
Ask others before using visuals onsider your audience
Only use visuals if they add value ake them clear and easy to understand
Stop Colla orate
ith a classmate, make a list of all the different ways you have communicated over the past two days. or each method e plain the situation you were in and why you chose that method of communication. as there a common communication type between you and your classmate If so, why do you think this is
er al(oral) communication:videoconferencin
This is a telecommunication service in which huge amounts of information, including pictures and video, are sent and received at very high speeds over the internet. olding a meeting with people who are in different locations, even countries, is an essential element of communication for businesses that trade internationally and have operations abroad. oom is one of the largest videoconferencing platforms.
Advantages
Speed
eetings can be arranged uickly and people can oin meetings at short notice.
Cost savings tremely cost-effective way of holding meetings with people in different places and time ones
Saves on travel and other costs.
isadvantages
echnical pro lems poo inte net connection can a e eetin s di fic lt i people a e nable to hear each other properly or if there is a break in the conversation.
Cost There is a cost involved in installing the software. mployees might need additional training, at e tra cost to the business.
id ou now
In arch 0 0, the oom app was downloaded by .1 million people around the world. ess than a year later, at the beginning of 0 1, oom had had a total of million downloads.
ritten communication
Businessletters
A business letter is a longer, more formal method of communication used by a business to share detailed information with its customers, employees or other sta e olde s t as a specific ai and t e in o ation shared should be clear and concise.
Advantages
Recap
Take a moment now to go back to hapter 1 when we learned the correct format for writing letters, reports and emails.
ransfer of information onveys a message about business activities to interested parties, e.g. customers, suppliers, debtors, government authorities and any other stakeholders
Cost ow-cost they do not re uire software or social media platforms
isadvantages
ormal structure
It can be frustrating to follow the formal protocols of a business letter utdated ore businesses are using emails and other methods of communication
Reports
epo t is a o al et od o co nication t is a doc ent itten abo t a specific e ent , iss e o problem. It presents relevant information and recommendations to the people who re uested it. There a e t o ain t pes an indi id al epo t sed o inte nal p poses e a sales epo t and a ene al report , which may be published e ternally publicly
Advantages
lanning elps e ecti e and e ficient plannin o t e t e
eci i n in rovides a blueprint to enable accurate decision-making isadvantages
ime consuming Reports can take uite a long time to prepare and can be e pensive.
Bias A report can have a biased point of view depending on who wrote it. It should be written from a neutral perspective.
mails
mail is an abbreviation for electronic mail. essages can be sent electronically around the world. An email is similar to a letter.
Advantages
Speed eedback from an email can be received instantly, which allows businesses to get information fast and make important decisions uickly mails can be sent all around the world at the same time ow cost e cost e ecti e no posta e, statione costs, etc
isadvantages
Security onfidential in o ation can be accessed b ac e s i passwords are not kept private or if they are weak iruses iruses are common in email attachments and can damage a ersonal omputer system by deleting or damaging content.
Socialmedia
Advantages
Audience an attract millions of potential customers from around the world instantly
ow cost There is no charge for creating a social media account. isadvantages
c in Social media accounts are at risk of being hacked from e ternal sources and it can take some time for a business to rebuild its social media platform.
Brand awareness t is ite di fic lt to eas e t e oneta et n o social media accounts.
Social media comprises a range of computer programming applications that allow individuals share videos, messages and other content around the world. Social media platforms such as acebook, Instagram, etc. can be accessed through smartphones, tablets and s.
isualinformation
o e t pes o is al in o ation a e
Piechart: A circular diagram divided into segments, each segment representing a piece of information. ie charts are easy to understand.
Picto ram: ses shapes to represent numbers of people ob ects. ine raph: sed to represent a trend over time.
archart: Displays numerical information in either vertical or hori ontal rectangles. isto ram: Similar to a bar chart , but only one topic is dealt with and there are no gaps between the bars.
Stop Colla orate
It s important that you are comfortable with drawing each of these visual information charts. ith a classmate, plot the following information in two different visual charts. Then decide between you which method you feel presents the information better es ode i ion
o Coro
hoosin a method of communication
acto s to conside incl de
Cost
ature of message
rgency speed
Appropriateness
echnology availa le
These are the factors that will help you determine the e ficac o eac ode o co nication and elp o decide which mode to use in a particular situation.
A company should look at the cost of each method of communication, e.g. a company director communicating with management in different continents may choose to hold meetings virtually to cut down on costs.
If the message is something that can be put in writing, it s best to do so as it allows for feedback and a record can be kept
hen a prompt response is re uired, e.g. when a supplier needs to be contacted uickly, use a phone call or a te t.
The medium chosen must be appropriate to the message. A letter would be more appropriate than an email if terminating employment. Te ting is inappropriate for formal communications.
The method of communication chosen must be something that both the sender and the recipient can understand and have access to. am ip
anguage se language that is clear and easy to understand, e.g. customers need to be able to understand the message clearly, otherwise it may lead to confusion. A business must choose language that is appropriate to their customers. The se o is al s ppo ts can be o e benefit to co panies en t in to communicate with consumers.
ee c accuracy record
The business may be looking for feedback in order to take further action, e.g. communication with the Revenue ommissioners may involve regular correspondence and written records. In this case business letters and emails can provide formal evidence of the feedback process, eliminating misunderstandings.
echnology and communicationin usiness
Technology has revolutionised how businesses communicate onducting business in the 1st century re uires businesses to be adaptable to change, willing to embrace new communication methods and o e it t e ti es ec nolo acilitates o e e ecti e, aste and o e e ficient con e sations t supports decision-making and enables businesses to collaborate more than in the past.
Stop Colla orate
o in s all o ps to find e a ples o scena ios en a b siness o e plo ee ad to communicate information. It may have been a personal situation your part-time ob or minico pan , o e a ple o o i t find b siness e a ples in t e ne s o e a ple a b siness announcing redundancies .
hat method of communication was used as this the best mode to use, in your opinion hy or why not Remember to ustify your opinion.
a ples o tec nolo in b siness co nication incl de Emailandinstantmessa in : or both formal and informal communication. latforms such as icrosoft Teams and hatsApp enable real-time communication, group chats, posting polls and uestions, generating fast responses.
ideoconferencin : Tools such as oogle eet and oom enable face-to-face meetings regardless of location. ssential for remote working and for companies with different locations around the world.
Enterprise socialnet or s: ompanies such as acebook use a platform called oom orkplace, which enables employees in different locations to communicate and share information.
Artificialintelligence(AI)andautomation: Streamline several aspects of business, e.g. recruitment , automatically routing messages to the correct department. hatbots and virtual assistants interact with customers and handle routine ueries. They are also used to schedule meetings.
olla oration: latforms such as oogle orkspace and icrosoft support real-time collaboration and allow multiple employees to work on, share and e change documentation simultaneously.
Technology has impacted business communication both positively and negatively
Advantages
Speed Technology enables real-time interactions across the world. It enhances collaboration through tools like email, instant messaging and videoconferencing, allowing for uick decision-making and problem-solving.
Access Technology has e panded global reach for companies connecting businesses with international markets and new diverse customer bases, which otherwise wouldn t have been possible.
Cost to ation, tificial ntelli ence and ideocon e encin a e ade b siness co nication o e e ficient anisations e i e e e e plo ees and tas s can be co pleted aste and o e e ficientl , ed cin costs o t e fi
roductivity ec nolo s c as clo d based file s a in , ideocon e encin and obile technology enables workers to work from anywhere in the world, which increases productivity.
Information is disseminated uickly
mployees can manage multiple tasks and stay connected with colleagues.
Colla oration o ect ana e ent so t a e and clo d based file s a in plat o s enhance communication, collaboration and teamwork.
irtual meetings and videoconferencing mean that team members can work across multiple locations. Instant messaging software has enabled faster communications to help forge stronger team connections.
Sustaina le usiness practices
odes of communication
ideoconferencing and virtual meetings make businesses more sustainable and inclusive, reducing negative impact on the environment.
Theme
Ethics and Sustainability
The variety of communication methods have made co nication aste , easie and o e e ficient , allowing for uick dissemination of information and real-time conversations.
Challenges
Cy ersecurity any people are unaware of their consumer rights when shopping online. ersonal information can be hacked.
Online banking is at risk from viruses and scams.
Increased reliance on technology and the number of transactions processed online daily e poses businesses to new threats. t is beco in o e di fic lt o b sinesses to p otect patent and copyright laws.
c f engagement romotional emails tend to be generic and not personalised. This can take away from the true nature or core beliefs of a business. onsumers tend to respond to promotional campaigns that have a personalised approach.
Cost nt od cin tec nolo ies e i es si nificant capital in est ent e fi ill also inc aintenance costs, licensing costs and staff training costs. Some of these costs a be o set b inc eased e ficiencies
nformation overload oo c in o ation can o e el people and t e constant in o e ails to businesses can lead to decreased focus and productivity Important emails and essa es can et lost a on t e p o otional ate ial oodin inbo es
ini Case Study: esco re nd
Tesco, one of Ireland s leading supermarket retailers, with over of the market , is continuously striving to keep up with technology. It embraces technology to make consumers shopping e perience as pleasant as possible. Technology has si nificantl t ans o ed esco s ope ations, en ancin bot c sto e e pe ience and b siness e ficienc e int od ction o Tesco Direct, an online grocery platform, in its Dublin stores in October 000 was such a success that it e panded uickly across the country and was available in every Irish store before the end of the decade. Tesco Direct has allowed the company to e pand its reach with click-and-collect , catering to the growing demand for online shopping. In-store, Tesco implemented Scan as you shop devices and self-checkout stations, streamlining the shopping process and reducing the need for staffed checkout lines. These advances have not only improved customer convenience but also driven Tesco s growth in the digital marketplace, demonstrating the retailer s commitment to innovation and customer-focused services.
Stop Research
hoose an Irish company and research the impact technology has had on its business in recent years. repare a short report that you can present to the class. Try to include some visual communication methods to enhance your report.
mproving communicationinanorganisation
A business s decisions on how communication is delivered and received by all its stakeholders will ultimately determine whether it will survive in a competitive market. ere are some strategies it co ld adopt
omposition: ake sure messages use the correct format and are not too long. A poorly composed message, e.g. too long, too technical, can lead to confusion for the recipient , delaying processes and decision-making.
Choosetheappropriatemethod/medium: sing the wrong method of communication will impact on how a message is received, e.g. employees hearing about redundancies on the radio. atch the method to the degree of formality. The method chosen should suit both the message and the audience.
isten: ot listening to one another, e.g. when both parties are angry with one another of if there are distractions in the background, leads to important information being missed. anagement should encourage active listening and have a s ste in place e e e plo ees can as o cla ification They should also acknowledge valuable ideas and inputs from employees so that they feel valued. Recap
hapter 1 looks at con ict esol tion
esco s c n s ou o de ices
an ua e: Avoid using terminology that is too technical or that the other person may not be a ilia it oid a in o nnecessa tec nical a on sin s o t , clea sentences and visual supports as necessary will keep communication channels open.
Authority/organisational structure: Too many people giving instructions on the same issues can cause confusion and miscommunication, and affect t e o o co nication ana e ent s o ld loo at using an organisational structure that suits their employees and encourages cross-departmental pro ects and collaboration, which in turn will lead to clear interdepartmental communication.
Providere ularfeed ac : eedbac confi s to t e sende t at t e essa e as deli e ed appropriately and understood. A lack of feedback leads to ueries not being answered and even confusion. Organisations should provide opportunities for employees to give feedback to management.
pen communication: A lack of trust is a barrier to communication in a number of businesses ow credible is the sender of the message Are there inbuilt pre udices between the sender and the receiver If so, will the receiver believe and trust the information anagement should foster a culture of open communication and encourage both transparency and an open-door policy, where management are approachable and employees are not intimidated.
Stop Colla orate
In groups, take one of the headings above and look at practical ways to implement these strategies in a workplace. Try to think of some real-life e amples. repare a short presentation for your classmates. elow is a list of companies that have made great strides to improve communication you could use one of these to inform your answer.
oogle
AI Allied Irish anks
Stop Research
nilever Ryanair S Tesco Diageo
atch the video at the link below e plaining barriers to communication. ake notes for when you are revising this topic. Once you have completed this, research companies that have e perienced barriers in communication.
edco.ie/4bje
Recap
a e a o ent no to loo at apte , ic co e s con ict resolution and active listening. ork in pairs to practise some active listening
Chapter uestions
ec f n e n in
1. in the term communication .
2. us r e your understanding of the term channels of communication and list two methods.
3. is three methods of written communication used by a business.
4. is three types of verbal oral communication and non-verbal communication used in a business.
5. Descri e three principles of effective communication.
6. u ine four barriers to communication.
7. u ine t o benefits tec nolo as o co nication
8. in the importance of communication.
9. Dr a ba c a t to ep esent t e ollo in in o ation it ic lot in td eco ded last ont s sales o its top sellin b and o s oes
Small 0 units edium 0 units arge units arge 0 units 1 units.
10. is one advantage of both a business letter and a memo for a business.
11. in the term videoconferencing .
12. Define the term email . ist two advantage of using email as a method of communication.
13. u ine o e ails and a tificial intelli ence a e enabled co nication in b siness
evelopin your no led e
1. in the terms internal communication and e ternal communication .
2. Descri e two principles of effective communication.
3. u ine the importance of effective communication.
4. Descri e one advantage and one disadvantage of using visual and written communication in a business.
5. Dr a memorandum sent by Thomas urphy, Information and ommunications Technology I T anager, on today s date to all sales managers reminding them that there will be a promotional campaign happening across all stores ne t week.
6. u ine three problems of using email in business.
7. us r e two communication barriers that a manager might have with staff in a large organisation and e plain how they can overcome those barriers.
8. u ine the role technology plays in business communications today.
9. anagers spend a lot of their time communicating with different stakeholders. us r e the factors a manager should consider when they communicate with those stakeholders.
10. u ine the advantages and disadvantages of writing a report.
11. u ine how technology has enabled communication in business
12. Dr a business letter to the managing director of a franchise e plaining four barriers to communication they might e perience in the business.
13. e ollo in sales in o ation is ta en o t e boo s o t e es otel a oo s , a , esta ant , nction oo , a oo s , a , esta ant , nction oo , Illustrate this information in a bar chart.
Store t earn t
usiness letters: A formal method of communication used by businesses to convey detailed information to their customers, employees and other stakeholders.
hannels of communication: erbal, nonverbal and written methods of conveying information.
ommunication: Transferring ideas, information, messages, etc. from a sender to a receiver The aim is for the receiver to understand the sender s message.
y ersecurity: rotecting computer systems, networks and data from digital attacks, unauthorised access and other threats.
o n ardcommunication: rom managers to employees below them in the chain of command.
Email: An abbreviation of electronic mail . nables messages to be sent electronically around the world.
ormal communication: is in ol es specific procedures or methods, e.g. letters, reports, monthly meetings, etc.
Theme
Business and Financial Literacy
ar on: o ds o e p essions t at a e di fic lt for non-specialists to understand.
emo: A short , informal communication tool used in businesses worldwide to convey messages.
on ver al communication: ommunicating without using words.
eport: A formal method of communication. doc ent abo t a specific e ent , iss e o problem.
Socialmedia: A range of computer programming applications that allow individuals share videos, messages and other content around the world.
Up ard communication: rom employees to the person they report to, e.g. a salesperson s weekly sales report to the sales manager er al(oral) communication: Spoken communication, e.g. asking and responding to uestions, giving instructions.
ori ontal communication: essages sent between people who are at the same level in the organisational structure.
Informal communication: ommunication that is usually unplanned and unrecorded.
Communication
Importance of communication
ffective communication
ideoconferencin : A telecommunications service that enables people in different locations to participate in a virtual face-toface meeting.
isual communication: ommunication by visual means graphs, diagrams, charts, etc. ritten communication: ommunicating through the written word
ideoconferencing
Social media
actors to consider when choosing a method of communication
odes of communication ou should be able to anal se t e e ficac o eac mode of communication and outline a situation where it would be best used
Internal vs e ternal
erbal oral on-verbal ritten isual
Routes of communication
echnologyand communication
Discuss how technology enables communication amples of technology in communication enefits o tec nolo to co nication mproving communication
Strategies to improve communication
hapter 22 he Rationale for lanning
earningoutcomes Strand
At the end of this chapter you should be able to:
4 the internal and external changes that organisations encounter through their lifetime.
4 2 A A S the reasons for resistance to change in an organisation.
4 the practices that promote innovation and entrepreneurial/ intrapreneurial thinking.
4 4 a range of approaches which may help to overcome resistance to change.
4 what is meant by strategic planning and appreciate the importance of strategic planning as an ongoing process.
4 SCR B the benefit of strategic planning for an organisation.
Case Study: or er i er
Twitter was founded in 00 by van illiams, i Stone and ack Dorsey. It uickly became a social networking tool, with many businesses using it for promotion and communications. Twitter became a public company in 01 . Despite its popularity it lacked a clear revenue stream. In 010 it introduced romoted Tweets followed by romoted Trends and romoted Accounts. t finall beca e p ofitable in , a in a assed 0 million monthly users. In 0 , Twitter announced lon usk would ac uire it and become the company s sole owner. Three months later, however, usk withdrew his bid. Twitter s share price dropped and it sued usk to force him to buy the company. e finall bo t itte in ctobe o billion e rebranded Twitter as and it became a private company.
Entrepreneurial Thin in
ne o s s fi st tas s as as to la o al t e company and allow users to purchase the blue check a e ification at pe ont
Theme
Advertising revenue dropped sharply as usk disbanded the content moderation body and reinstated banned accounts. usk envisages as a super app where users can listen to a podcast, shop and watch videos.
Shortly after the ac uisition, usk emailed all employees stating that the company would be moving to an e tremely hardcore operation. Staff members would be re uired to work long hours at high intensity . The email asked employees to sign a pledge or leave the company with three months pay. e also restricted remote working at the company and in 0 reportedly emailed staff re uesting a one-page report on their contribution to the company before they could access their stock options.
Stop Colla orate
ave a class discussion about the changes that has undergone. ow have these changes been managed Do you think they have been successful so far hat would you have done differently
nternaland e ternalchangesinorganisations
The world of business is dynamic and ever-changing. It is vital that organisations can manage change and adapt to uncertain and unforeseen circumstances.
et s start by e amining the causes of change in an organisation.
nternal causes of change
Theme
Entrepreneurial Thin in
am ip
ST analysis is in hapter 1 .
Thesearechan esinitiated from ithinthe company The usinessitself ma esdecisions thatnecessitatechan e
ew leadership
rganisational culture
A new leader can change the strategic direction of the company and bring a change in leadership style, e.g. Satya adella at icrosoft see hapter 1 .
The culture within an organisation can facilitate and embrace change or restrict it e.g. the culture at oogle emphasises creativity and innovation, encouraging change.
ternal causes of change
Thesechan esare caused y eventsin thee ternalenvironment,outsidethe usinessitself
Customers onsumers tastes and demands change, e.g. the growing demand for vegan foods and plant-based diets.
Competition usinesses must adapt to growing competition, e.g. the introduction of new products and services, mergers and ac uisitions.
nternal causes of change
ision A change in organisational goals and ob ectives, e.g. a u irai, former O chairman of Sony, once said, Sony must change. Sony will change.
Restructuring delayering
co pan a es si nificant changes to operational and financial aspects, s all en acin financial p ess e o to prepare for sale or merger, e.g. ou erstner turned I s competitiveness around in the 1990s.
ternal causes of change
conomic changes hanging economic indicators impact on business and re uire them to adapt, e.g. increasing the minimum wage
Theme
echnology i ital Transformation
Technological advancement is a leading source of change, creating new business models e et i and c allen in e isting ones e.g. mainstream T such as RT .
pansion Strategies to grow and e pand the business, such as strategic alliances and mergers, can result in changes in organisational culture, finance, cont ol and p ofits, e ob Iger, chairman and former O of Disney orporation, led Disney through a large e pansion.
erformance fi i i y
p o in p ofitabilit and company performance may be a driving force for change in a business. Stakeholders may be concerned about company performance, which will necessitate operational and financial c an es, e Dave ewis, former O of Tesco, is credited with turning the company s performance around during his tenure.
mployees hanging work practices, e.g. remote working, re uire businesses to adapt and change.
Social Societal trends and attitudes, e.g. remote working and the growing importance of work life balance.
nvironmental The move towards more sustainable living has seen a growing market for electric vehicles, for e ample.
egal hanging laws and regulations, e.g. consumer protection laws and environmental regulations.
Stop Research
ot all cases of change management are successful. ind out about Stephen lop at okia and the changes he tried to make. hy do you think this didn t o an o find an similar, more recent e amples
Stop Colla orate
ork in small groups to e amine some of the above causes of change. Split your group in half, with each half working on either the internal or e ternal causes of change. ist two possible e amples of changes that have occurred or may occur under each heading. resent o findin s in an in o ap ic and s a e it o class
ypes of change
Incrementalchange: Small, day-to-day changes that occur gradually in an organisation. The changes are subtle and happen over time. There is usually little resistance to this type of change.
Stepchange: Significant , dramatic change in an organisation. It can often be instigated by new management with a new vision and strategic direction for the organisation. These are usually major changes and happen rapidly Resistance can be encountered.
Disruptivechange: This change is usually caused by changes to the external environment , e.g. the disruptive impact of technology. The change usually impacts the entire market (all the businesses within a market), e.g. the introduction of streaming services into the entertainment sector.
Resistance to change
anagement and members of the senior leadership team in an organisation may encounter resistance from staff when they try to implement changes. Resistance to change is an unwillingness to accept new ways of doing things or adapt to new circumstances. It may occur for a number of reasons.
Stop Colla orate
On your own, T I about why people don t like change, and write down some of your thoughts in your copy. ow AIR up with a partner and discuss your answers. S AR your thoughts with your class.
ear of failure: mployees may worry that they will not be able to cope with the new practices or changes in the workplace. They may be concerned that the changes may negatively impact their performance, which may lead to further insecurities about pay and ob security
o insecurity: mployees fear that restructuring will lead to ob losses and redundancy. ob insecurity can lead to reduced productivity.
oss of control: This is a leading cause of resistance to change in the workplace. mployees fear that they may lose control over their work, leading to uncertainty and confusion. orkers with a strong sense of ownership of their obs may fear a loss of autonomy and control. ew processes may challenge established norms and practices.
Impacton socialrelationships: mployees may fear that change will have a negative impact on their work relationships and interactions with colleagues. Strong workplace relationships improve organisational culture, leading to increased productivity. ew roles, esponsibilities and p actices a ca se con ict
ac of trust: mployees may not trust the leadership team introducing the changes. oor communication and an organisational culture that lacks transparency leads to distrust of the leadership team and an unwillingness to accept new changes.
ear of increased or load: mployees may feel the changes will increase their workload, giving them e tra responsibilities which they may feel are unnecessary This may lead to feelings of anger and resentment.
otterand Schlesin er:reasons for resistance to chan e
o n otte and eona d c lesin e a e t o leadin e pe ts in t e field o c an e ana e ent e identified o ain ca ses o esistance to c an e e ent on to de elop a si step app oac to managing change, which we will look at later in the chapter.
arochialself interest
eople resist change because of a perceived threat. They fear that something of value to them ill be lost, e ob sec it , financial sec it , status. They focus on their interests rather than those of the organisation.
eople resist change because their assessment of the situation is different from that of their managers. There may be disagreements about why the change is needed and what types of change should occur They see potentially greater costs t an benefits es ltin o t e c an es
ow tolerance for change andinnovation
very person has a uni ue tolerance for change. Some thrive on change and embrace it others fear they may not have the necessary skills or ability anagers must be aware that individuals have a limited capacity for change.
ifferent assessments of thesituation i n e n in n c f
eople resist change because they do not understand its implications, or they do not trust the person initiating the change. isinformation o ins ficient in o ation as a es lt o poo communication leads to greater resistance to change.
romotinginnovationandentrepreneurial in
ene
i in in
Recap
Intrapreneurship and innovation is covered in hapter 10 repare a concept map or infographic about intrapreneurship.
o p o ote int ap ene s ip and enco a e inno ati e t in in it in a fi , o anisations s o ld
reate a culture in the organisation where it s okay to make mistakes think independently ake resources a ailable to elp e plo ees to p s e t ei ideas e finance, ti e and t ainin or e ample, Intel Ireland has a tradition of encouraging intrapreneurship. The company provides t e eso ces, bot financial and ti e, to allo its e plo ees to c eate t ei o n p o ects
Offer re ards o e o t and c eati it ese e a ds co ld in ol e a i t e o financial incenti es e bon ses and non oneta benefits s c as p o otion, leade s ip oppo t nities and e ible o in a an e ents
acilitateteam or : Teamwork encourages creativity among employees, e.g. brainstorming sessions as part of the product development process.
Empo eremployees: iving employees more freedom to make their own decisions will encourage more innovative and entrepreneurial thinking in the workplace.
Employeeempo erment
mployee empowerment means giving staff more power to make their own decisions about how to do their obs and achieve their goals. It is the process of helping employees to take ownership of their obs and take responsibility for improving their performance. mpowerment means that management hands over control, responsibility and power to subordinates.
mpowerment places decision-making responsibility in the hands of the employees, who are closest to the customer mpowerment is not ust delegation it involves getting employees to realise their full potential and encouraging them to seek more power. enefi
Decisions are made more uickly Decision-making and control is in the hands of employees, who se t ei eate s ills and no led e o t e benefit o t e b siness
Increased customer satisfaction. mployees become more responsive to the needs of customers and come up with ideas to solve issues innovation and intrapreneurship .
Improved morale because employees are more motivated and have greater ob satisfaction. They feel valued.
mployees are better prepared for promotion. anagement has more time to focus on strategic planning.
Stop Research
amine a local, national or international company of your choice. Does it encourage employee empowerment ow is this evident ive e amples of how it encourages employee empowerment. ould its approach be improved
vercomin resistance to chan e
e ollo in st ate ies can be sed to ana e c an e s ccess ll anagement should be fully committed to the change process. eaders should lead by e ample.
onsultation should take place with all key stakeholders regarding the proposed changes. veryone should be included in the decision-making process. mployees should be listened to and their voice respected.
e otiation should take place around alterations to remuneration packages, productivity agreements, changes in work practices, etc. that may be necessary to accommodate the changes.
rovide proper trainin and funding, if needed, for new technologies.
nsure effective, honest and transparent communication between all parties throughout the change process. This will reduce uncertainty and tension.
nsure there is ade uate fundin for the change process. rovide remuneration packages for staff to re ard an increase in productivity e.g. bonuses pay rises .
Recap
er berg s two-factor theory is e amined in hapter 19.
Do not criticise employees who resist change. Instead, adopt a policy of encoura ement Instigate an ongoing revie process to identify and resolve any problems.
ollow an agreed timeframe to implement changes.
ncourage employeeempo erment se policies of ob rotation, ob enlargement and ob enrichment.
hange mana ement style from controller to facilitator.
Controller acilitator
anager lays down rigid rules and ensures they are obeyed. Autocratic Theory in style.
on-routine matters must be referred back to manager.
This style prevents employees from using their full talents to the fi s benefit
All the responsibility is on the manager, which can make them become overloaded.
anager encourages employees to take on e tra responsibility Democratic Theory in style.
rovides training, advice and support when necessary.
Rewards and recognises success. mployees can handle change and have greater ob satisfaction
anager is free from routine decision-making, leaving more time for strategic planning.
siness can espond e ibl and appropriately to change.
Encouragement
ards
Commitment
Change
Trainin
Communication
rocess o cre e sus in e or ce
otter and Schlesinger see page 1 went on to research how management can overcome and deal it esistance to c an e e ca e p it a si step p ocess Educationand communication: e honest and open with stakeholders. ommunicating consistently about the need for change and why the change is occurring can help address misconceptions stakeholders may have This can be particularly useful when the resistance to change is based on misinformation and misunderstanding. ood relationships, time and effort are re uired when implementing an education programme.
2 Participationandinvolvement: Including the resistors to change in the design and implementation of the change process can overcome resistance. ncouraging stakeholders to participate ensures their voice is heard and they are included in important decisions. This leads to commitment to the change, as opposed to employees simply being compliant with the change.
acilitationandsupport: Introduce training, counselling and mentoring strategies to support employees through the change process. Adopting active listening and supporting employees can help to overcome resistance and deal with any ad ustment problems. This strategy can be particularly useful when fear and an iety are the cause of the resistance.
4 e otiationand ar ainin : Offer incentives and rewards to encourage those resisting to adapt to the change, e.g. an increase in wages in return for a change to work practices. This can be particularly useful when the stakeholder will potentially lose out as a result of the proposed c an es and also as si nificant po e to esist t e c an es t a , o e e , set a p ecedent o the introduction of further changes.
Qanipulationand co option: This strategy involves coopting a group or a leader of a group into the design and implementation of the change. It involves selective use of information. It is a form of manipulation as the initiators do not want the advice of this person but rather their endorsement. They want to create the illusion that they are engaging with stakeholders. It can have negative conse uences if people believe they are being lied to, however.
E plicitandimplicit coercion: This is a last resort and should only be used when management have no other choice. In this case, people are forced coerced into accepting the changes with the use of threats. These threats can either be e plicit obvious or implicit implied but not actually stated . or e ample, threatening loss of obs, ed ced p o otion possibilities o act all fi in people. It can lead to poor organisational culture.
anagers should use a combination of these approaches to effectively deal with resistance to change. ac o t ese et ods as bot ad anta es and disad anta es t e acto s to conside a e o much resistance is anticipated the power held by the initiators versus the power of the resistors the potential conse uences e.g. is it a crisis situation and the speed at which the change will occur
Stop Research
Research a company that has undergone change in recent years. ompile a epo t t at o tlines 1 the changes that occurred e.g. introducing a new product range, e panding markets, new work practices the strategies management used to implement the changes and e ection e al ation in your opinion, was the approach successful ould it have been improved
Chapter uestions
ec f n e n in
1. in the difference between internal and e ternal changes in an organisation.
2. u ine two internal changes in an organisation. Support your answer with an e ample.
3. u ine two changes that may occur in an organisation. Support your answer with suitable e amples.
4. in the term resistance to change .
5. den i two reasons otter and Schlesinger give for resistance to change.
6. n se the reasons for resistance to change in an organisation.
7. in the term employee empowerment .
Qevelopin your no led e
1. Dis in uis between internal and e ternal changes that may occur in an organisation.
2. u ine internal changes that may occur in an organisation. Support your answer with suitable e amples.
3. u ine e ternal changes that may occur in an organisation. Support your answer with suitable e amples.
4. us r e your understanding of resistance to change.
5. otte and c lesin e identified o easons o esistance to c an e u ine these reasons, illustrating your answer with appropriate e amples.
6. u ine the practices an organisation may use to promote intrapreneurial thinking and encourage innovation.
7. in what is meant by employee empowerment.
8. n se employee empowerment as a strategy for encouraging innovation and entrepreneurial thinking.
9. Discuss a range of approaches an organisation may use to overcome resistance to change.
10. Discuss o and Schlesinger si oaches managing sis chang tter s appr to re tance to e.
Store t earn t
isruptivechan e: sually caused by changes in the e ternal environment , e.g. technology The change usually impacts the entire market all the businesses in a particular market .
Empo erment: roviding staff with more power to make their own decisions about how to do their obs and achieve their goals. elping employees to take ownership of their obs take an interest in improving their performance .
Theme
Business and Financial Literacy
Incrementalchan e: Small, day-to-day changes that occur gradually, are subtle and happen over time. There is usually little resistance to this type of change.
esistance to chan e: An unwillingness to accept new ways of doing things or adapt to new circumstances.
Stepchan e: i nificant , d a atic c an e, often instigated by new management with a new vision and strategic direction for the organisation. These are usually ma or changes and happen rapidly Resistance can be encountered.
Causes of change:internal vs e ternal outline nameandgive e amples
Resistance to change: easons anal se ea o ail e, ob insec it , lac o trust, relationships, lack of control, increased workload otter and Schlesinger s four reasons Overcoming resistance to change ommitment , consultation, negotiation, communication, training, rewarding, encouraging otter and Schlesinger s si steps
romotinginnovationand en e ene i in ene i in in ulture, resources, rewards, teamwork, empowerment plo ee e po e ent plain enefits and is s
hapter 2 orce ieldAnalysis and Strategic lanning
earningoutcomes Strand
At the end of this chapter you should be able to:
4 A the importance of planning for change and discuss how a force-field analysis could support strategically planning for change in an organisation.
4 A what is meant by contingency planning in terms of crisis management in an organisation.
4 9 SC SS the factors that should be considered when developing a contingency plan.
Strategicplanning as an ongoingprocess
Recap
A strategic plan is a long-term plan developed by the seni r management team to co e abo t fi e ea s o t e b siness t cla ifies t e long-term objectives o t e fi as set o t in its mission statement. It focuses on long-term ob ectives s c as a et s a e, p ofit , capital e pendit e, e pansion and di e sification t ate ic plans a e ite co p e ensi e and detailed and will aim to cover all parts of the business. e elp ana e ent to e ficientl allocate eso ces
Recap
Strategic and contingency planning is e amined in hapter 1 . ork in pairs to complete a placemat activity on this chapter.
Ongoing strategic plans are vital for an organisation. Some organisations still maintain that a strategic plan has a clear start and end the planning process takes place and then the team aims to e ecute the plan. ut decision-making in business isn t always that simple. hange is always happening therefore business plans, such as strategic plans, have to be adaptable. hen planning is treated as a continuous ourney businesses can ad ust and make changes as they are needed.
Entrepreneurial Thin in Theme
e e a e so e easons o t eatin plannin as a contin o s p ocess
Employeeen a ement: onsistent strategic planning will help to keep the company s vision and goals in line with its actions, thus ensuring that all departments and teams are working towards the same clear ob ectives. To maintain this level of planning, engaging employees at all levels in the company is essential.
2 daptin to chan e: onstantly reviewing and revisiting plans will help a company identify any potential risks they can eliminate or opportunities they could capitalise on. hanges in technology, competition and regulations will need to be taken into account , so an ongoing strategic plan will allow organisations to adapt to these changes as they happen.
Building stakeholder confidence: eeping stakeholders informed and updated on any changes to a st ate ic plan elps b ild t ei t st and confidence and also s o s t e t at t e co pan is focused on maintaining its vision and achieving its goals.
Benefits of strategicplanning
t ate ic plannin o e s n e o s benefits to co panies, s c as
Empo erment: A strategic plan can empower employees by helping them to feel responsible for their work. It contributes to their engagement and can take away the fear of being micromanaged. ethods of providing feedback and positive recognition can be formalised in a strategic plan.
leardirection: t elps co panies to define a sense o di ection it e a d to t ei ision and mission. It outlines measurable goals and provides them with a clear sense of purpose and a path to follow. It helps them prioritise new initiatives and ensure that resources are allocated appropriately, reducing uncertainty
ecision ma in : Through careful analysis of data, strategic planning allows management to make informed decisions that will have an impact, positive or negative, on the company s goals. It also acts as an informative tool with regard to potential risks and challenges facing the company so that it can be proactive rather than reactive.
ommunication: The company s goals, vision and progress will need to be shared with employees. Open communication between different stakeholders ensures effective, two-way communication between management and staff A strategic plan also means that different departments work collaboratively towards the same ob ective, minimising resistance.
Strategic planning plays a pivotal role in ensuring that companies operating in the current domestic and global market have a clear direction and make informed decisions focused on the long-term success of the business. It will bring together efforts and people from all areas of the business and ensure they have the skillset and knowledge to adapt to change.
Stop Research
Research the strategic plan of a company of your choice. repare a short report on what its st ate ic plans a e, sin t ese points as a ide to s ppo t o ans e ision and ission state ent at lon te oals as t e co pan set at ob ecti es, specificall , is it loo in to ac ie e in t e ne t t ee to fi e ea s
ow does it plan on doing this
ow does the company allocate its resources in order to support the strategy ow is success measured
ini Case
Study:
et i
et i , t e la est st ea in se ice in t e o ld, it o e 9 million subscribers globally, was founded in 199 by two friends, Reed astings and ark Randolph. The idea for et i as bo n en a ea d abo t a ne apanese product called a D D. They realised that D Ds would soon replace S cassettes and after a few attempts the two friends established a successful business model a subscription-based service that did away with due dates and late fees.
a l in its isto , et i st ate icall planned to transition away from the original D D rental model to a streaming service. It was acutely aware of t e po e and in ence o t e inte net and t e limitations of physical media, so it made this ump into streaming before anyone else had the chance. eca se et i didn t ant to el solel on licensed content , it once a ain st ate icall planned to produce its own original content. This began with the series ouse of ards and continued with successful globally watched series such as uid ame
Its strategic planning once again became apparent with its aim to e pand globally, and by 01 it had entered over 190 countries. This e pansion was carefully and meticulously planned, factoring in local regulations, pricing strategies and content preferences. Offering its consumers a tiered pricing strategy shows evidence of strategic planning catering to di e ent c sto e se ents allo ed et i to a i ise e en e b appealin to a b oad a dience ts app oac to plannin as been e to its s ccess al a s loo in to be one step ahead in all areas of business while at the same time maintaining a competitive edge.
e e ill et i ta e its s bsc ibe s ne t e ll a e to ait and see
Activity
orking in small groups, complete the ission Statement akeover on pages 1 -1 of your Student Activity ook. our ob ective is to analyse and improve the mission statements of well-known companies, looking at how a clear strategic mission statement helps to guide their overall goals.
i ital Transformation
Theme
lanning for change
hange is inevitable, regardless of the industry hange can come about due to technological advancements, changes in the economy, competition in the marketplace, internal changes in the organisation or simply because it is needed. hatever the reasons, businesses must be willing to adapt, o se e al easons
Strate ic oals: lanning appropriately allows an organisation to ensure that change will align with its current strategic goals. ew incentives and ideas can be treated as long-term goals and won t be seen as a distraction from the current goals.
ommunication: lanning involves communication across all departments. eeping stakeholders engaged and informed about upcoming changes in the company will help reduce any uncertainty they may have
Efficiency: aving structured plans in place will reduce the disruption that can often occur when change is brought into an organisation. Often change can bring with it a degree of chaos, which wastes bot ti e and eso ces ficient plannin ens es t at an c an e can be i ple ented s oot l , with clear ob ectives, responsibilities and timelines for all parties to follow, reducing uncertainty aintaincustomer satisfaction: lannin ill ens e t at t e fi s acti ities and eso ces a e focused on the customer, increasing customer satisfaction.
Force fieldanalysis
A forcefield analysis isabusiness toolused to maketheprocessofdecision-makingmore effective.It wasdeveloped by urt ewinasa tool to e aminethe forcesthatareeitherdrivingor pushinganorganisation to change,suchascompetition, technologicalchange,customerdemand ornewopportunities,orthe factorsthatblockchangeandlead to resistance to change e.g. employee resistance,lackof resources, fear,poorculture .
usinesses use this tool to reach decisions about whether or not to go ahead with proposed changes. It helps businesses understand the dynamics behind change and assists with strategic planning by looking closely at what these forces are. et s take a look at how it can support strategic planning for change.
Stop atch
atch this short clip for a clear e planation o at o ce field anal sis is
edco.ie/gtdp
e benefits o o ce field anal sis a e o tlined belo
Identifiesdrivingandrestraining forces: e have seen that change can come about at any time and for many different reasons. e know that there will always be factors that are pushing the change to occur driving forces and factors that are resistant to change est ainin o ces o ce field anal sis elps to identify all these forces and will help management to better understand their stakeholders and the current environment and then make better strategic decisions in favour of the change.
easuresreadiness forchan e: o ce field anal sis ill elp an o anisation to assess et e they are even ready for change by e amining and weighing up the strength of the driving forces versus the restraining forces. If the restraining forces outweigh the driving forces, organisations will be able to highlight areas that need to be strengthened before the change is enforced.
Prioritises company actions: a in o t a o ce field anal sis ill elp a co pan to p io itise t e actions it can decide to spend its ti e and ene on st en t enin t e d i in o ces o a decision or working on reducing the restraining forces. or e ample, if one of the restraining forces is a lack of employee skills, the company might decide to prioritise training programmes for all staff before implementing the change.
idsdecision ma in : o ce field anal sis ill i e an onest and st ct ed ie o t e proposed change, which will help those in a decision-making role to make informed decisions about whether or not to implement the change, whether they should look at delaying it or whether they should cancel it altogether and ad ust their plans, focusing on another area of the company.
id ou now
oca ola ses o ce field anal sis en it is considering entering new markets or adopting sustainability programmes such as trying to reduce water usage. sing this tool allows them to e amine the driving factors, e.g. new markets, against the restraining factors, e.g. environmental concerns.
Activity
In small groups, complete the orce ield Analysis for lassroom hange activity on page 1 of your Student Activity ook. This will re uire critical thinking about change and the challenges it brings.
Contingency planningincrisis management
A contingencyplan isaback-upplanused to dealwithunforeseencircumstancesoremergency sit ations tisessentialt atafi asplans to ini isedis ption,andpotentiallostp ofits,i anemergencyarises.
In the conte t of crisis management , contingency planning is the process of preparing an organisation for une pected events or crises that could disrupt operations. The process includes identifying possible risks and then developing a comprehensive set of actions and strategies to alleviate the impact of those risks, should they occur. The main aim is that the company will be in a position to respond uickly and effectively to a crisis.
evelopin a contin ency plan
hen developing a contingency plan there are certain steps an organisation will need to take to ensure that the plan is effective, detailed and, most important , adaptable to any potential crisis. ollowing these guidelines should help an organisation develop an effective plan.
is assessment: ossible is s a e identified ese co ld incl de nat al disaste s oods, earth uakes , operational disruptions power outages, cyber attacks and e ternal events economic downturns .
2 Prioritiseresources: ete ine t e eso ces needed d in a c isis, e pe sonnel, financial resources and communication systems. hich are critical to ensure the organisation can function
esponse strate ies: tline specific actions to be ta en in esponse to a c isis, s c as a o nication e e s o ld be a clea co nication st ate identified ic o tlines which stakeholders will be communicated with and how.
b oles and esponsibilities denti o ill andle specific tas s in t e e ent o an e e enc to avoid confusion.
c ecision a e s o ill be esponsible o a in decisions d siness and ope ational contin it at p oced es ill be in place to ens e contin it during the disruption
e eco e plans at action ill be ta en to esto e no al b siness as soon as possible once the crisis has passed
4 Plandevelopment: nce all t e is s a e been identified, t e contin enc plans a e c eated
These will need to include a step-by-step guide as to how the organisation will respond to each crisis scenario as it happens. Ideally a business wants to continue to operate should a crisis occur, so it will create plans that will minimise damage to its operations and reputation. eeping stakeholders informed will be key at all stages.
Trainin : Assigning key roles and responsibilities and ensuring that staff are trained in what to do in a c isis is e plo ees st no t ei oles so t at t e eact ic l and e ficientl
evie andrespond: ontingency plans are always sub ect to change. They will need to be e ie ed and t en odified and pdated acco din to ele ant acto s, bot inte nal and e te nal or e ample, advances in technology will play a role in changing a contingency plan.
In summary, contingency planning and crisis management are intertwined. Together they ensure that organisations can respond to une pected challenges, react uickly and recover fully.
or a step-by-step diagram of contingency planning see page .
Review and respond
Identify risks
Training
Prioritise resources
Contingency lanning
Response strategies
Develop a plan
Chapter uestions
ec f n e n in
QQ1. in t e ole o o ce field anal sis in a b siness
2. u ine how an organisation can encourage intrapreneurial thinking.
3. us r e your understanding of the term strategic planning .
4. u ine t e benefits o st ate ic plannin
5. De ons r e o nde standin o a o ce field anal sis
evelopin your no led e
1. De ons e your understanding of the importance of strategic planning as an ongoing process.
2. in what is meant by contingency planning as part of crisis management within an organisation.
3. Discuss the factors that should be considered when developing an effective contingency plan.
4. in the term strategic planning and its role in business today.
5. u e the importance of strategic planning.
6. De ons r e o nde standin o a o ce field anal sis and t e ole it pla s in plannin o c an e
Theme
Store t earn t
Force fieldanalysis: A business tool used to make decision-making more effective. Developed by urt ewin as a tool to e amine the forces that are either driving or resisting change.
Strate icPlan: A long-term plan developed by the senior management team to cover about fi e ea s o t e b siness t cla ifies t e lon te ob ecti es o t e fi as set o t in its mission statement.
e ec i
Strategicplanning plain
Importance enefits
Business and Financial Literacy
ontin ency Plan: A back-up plan used to deal with unforeseen circumstances or emergency situations. It is essential that a fi as plans to ini ise dis ption, and potential lost p ofits, i an e e enc a ises
cefie n y i Contingencyplanning plain actors to consider
hapter 24 Co nsumerRights andResponsi ilities
earningoutcomes Strand 4
At the end of this chapter you should be able to:
S GA the rights and responsibilities of consumers using current relevant consumer legislation.
A R C A the importance of making informed consumer decisions and use this understanding to discuss consumer-related stories in the news and media.
Case Study: e o oods nd u o er ices c
If you bought goods on or before ovember 0 your consumer rights are covered by the Sale of oods and Supply of Services Act 19 0
Rights of consumers under this Act
oods sold must be of merchantable uality This means they should be of reasonable uality relative to the price paid for the item.
oods sold st be fit o t e p pose intended. The product should do what it is supposed to do.
oods sold must be as described. The product should match any descriptions provided by the retailer. If you were given a sample it should match the sample.
e ices st be p o ided b a alified person with skill and using due care and diligence. Any materials used should also be of merchantable uality
econd and oods st be fit o purpose but consumers should not e pect them to be of the same uality as new items.
onsumers renting or buying on hire purchase have the same rights.
ou are entitled to a repair, refund or replacement for breaches of this Act.
Stop Colla orate
Discuss as a class some e amples of situations that you may have found yourself in where your consumer rights were denied. hat happened as the issue resolved ow
onsumer i hts ct
This piece of legislation came into effect on o e be t si plifies and pdates consumer protection laws and gives e tra powers of enforcement to the ompetition and onsumer rotection ommission .
e ill e a ine t e la nde t ee specific areas products, services and digital content and digital services.
am ip
ou are e pected to keep up to date with current consumer legislation. If legislation changes during your two years of study th year and th year you can engage with either the e isting legislation or new legislation.
od cts sold s o ld be fit o all t e p poses o ic oods o t e sa e t pe o ld no all be used. If you told the business you anted it for a particular purpose, the product should match this purpose.
roducts should match the description or sample provided to you beforehand or in your sales contract. In other words, they should correspond to the sample.
roducts should be of the uality described by the business and should work for a reasonable length of time with normal use.
roducts should be delivered with any accessories, packaging, installation instructions or other instructions that the consumer could reasonably e pect to receive.
The business should provide spare parts and an ade uate after-sales service as stated in the consumer s sales contract.
If the business is providing an installation service the installation should be done correctly
These obligations do not apply if the product stops working because of normal wear and tear, accidental damage or misuse, or because you did not install a necessary update
A product is delivered when physical possession or control of the goods is passed from the business to the consumer. This can also be someone you nominated to take possession of the goods on your behalf your neighbour or a courier, for e ample .
Delivery must take place on the date agreed or within 0 days of making the purchase.
edress or u oods
ou can cancel your purchase and get a full refund if a fault occurs within 0 days of receiving the goods. This is called a short termri ht tocancel
id ou now
This is also called a cooling-off period.
edress means remedy.Itisa way ofmakingrightanywrongdoing.
ou are re uired to in esti ate the rights and responsibilities of a consumer. It will be important that you can apply this legislation to real-life e amples and situations.
ou must inform the business in writing within 0 days and return the goods to the business at their e pense without delay.
ou are then entitled to
A full refund within 1 days of them receiving the returned goods se the same payment method you used when buying the goods unless otherwise agreed ancel any other service you ordered with the goods e.g. product insurance with a new T .
If a fault occurs after 0 days, you can ask for a repairorreplacement, which must be provided it in a easonable ti e, ee o c a e and it o t an a o di fic lt to o or seriouspro lems you can ask for a refundorpricereduction
ou can ask for a refund or price reduction if you have problems getting a repair or replacement e.g. if it takes too long, the fault keeps happening o it ill be too e pensi e to fi it
efund: ou must inform the business in writing that you are cancelling the purchase and return the faulty goods uickly. ou are entitled to a refund within 1 days, using the same payment method used to buy the goods.
Pricereduction: This can be agreed between you and the business. The Act states that this should be e uivalent to the difference between the price you paid for the item and the reduced value of the now faulty good.
Stop Research
Do you know your rights when you buy a gift voucher o to the website at the link belo to find o t a ise o findin s for your teacher using a format of your choice, e.g. ord document , anva, etc.
edco.ie/u6qb
id ou now
ou have si years to take a case against a business. The business must show within t e fi st ea t at t e product was not faulty when you got it.
Services should be supplied as per the service contract agreed to between the service provider and the consumer This means the business should carry out any works as they agreed to n p od cts p od ced b t e se ice s o ld be fit o p pose
The service should be provided at a reasonable price.
The service provided should match the description or advertisement
The service provider should ave the necessary skills and alifications arry out the service with care and attention se ate ials t at a e fit o p pose and match any descriptions provided. edress
Recap
Remember, before you purchase a service the business should provide you with information, as they would when you p c ase a ood an o e e be t e fi e pieces of information you are entitled to
If there is an issue with a service, and it does not work as it should or was set out in your service contract, the business must resolve the issue free of char e
It must be resolved ithinareasona letime and withoutsignificantinconvenience to the consumer.
The nature of the service and the comple ity of the service will impact how uickly the issue can be resolved.
As with faulty goods, you are entitled to a refund or pricereduction for serious issues that couldn t be resolved.
irst inform the business in writing that you are cancelling the service. Return any products they gave you and do not use the service.
ou can also ithholdpayment until the issue has been resolved.
ama es: o a e s e ed financial loss beca se o a se ice e a a lt tap oods o house you can also claim for additional damages e.g. you could ask the plumber to cover the cost o fi in t e tiles da a ed b t e ood
Digitalservice: Aservicethatallowsaconsumer to create,process, storeoraccessdataindigital form or aservicethatallowsthesharingoforinteractionwith dataindigital formuploadedorcreated by aconsumer or otherserviceuser 0 Act .
Digital content includes, for e ample, music, games or videos that you download or buy, or photobooks that you create and buy A digital service is any service that allows you to share, create and store information, such as a social media account or a streaming service.
Stop Colla orate
orking in pairs or groups of three, write down e amples of digital content and services that you have purchased or used in the past month. Are you aware of your rights relating to them
id ou now
pgrading your Sky Sports subscription is an e ample of a digital service.
Digital content services should atch the description, uantity and uality set out in the digital content service contract erform as the business said it would e.g. it is compatible with devices as claimed and features, accessibility and security features work as they should e fit o an p pose ic t e cons e needs it o as lon as o told t e b siness t is en you were buying it
e supplied with the accessories, instructions and any other assistance needed e updated as per the contract
atch any trial version or preview supplied.
The business should install the digital content or digital service correctly or provide instructions to enable you to install it. They must also provide information on any necessary updates. The business s obligations will not apply unless the consumer installs all necessary updates provided by the business.
edress
The business must resolve any issue with digital content or digital services they supplied that do not work as set out in your digital content service contract.
They should resolve the issue ree of charge it in a easonable ti e and it o t si nificant inconvenience.
These rights will only apply if you installed all relevant updates within a reasonable time. or serious issues, consumers are entitled to a refund or pricereduction
If the business did not supply the digital content service or did not supply it on the agreed date
Recap
an o e e be t e fi e pieces of information you are entitled to know before you buy something They apply here too
If the business did not or cannot supply what you ordered, cannot resolve it within a reasonable time, or cannot resolve it without serious inconvenience to you
If the same issue keeps occurring or the issue is too e pensive to resolve o don t a e confidence in t e b siness esol in t e iss e
ou should inform the business in writing that you are cancelling the service, return any goods supplied with the content service and stop using the service. The refund must be issued within 1 days
ou can also ithholdpayment until the service issue has been resolved.
Buyingonline
hen you buy online, from a catalogue, over the phone or from a salesperson who calls to your home you have a right to certain information and you also have the right to cancel.
nformation a usiness must provide you with
ame, address and contact details of the business
hat you are buying the product service and delivery supply details
osts involved total price plus additional charges
ancellation how to cancel if you wish ength of contract, terms and conditions
id ou now
Right tocancel
ou have 1 days from when you receive the goods to cancel and get a full refund.
ou do not need to give a reason.
If you bought goods on your doorstep you have 0 days to cancel.
Inform the business in writing within 1 days, return the goods and pay any costs. Do not use the service if you are cancelling a service, and pay for what you have used.
The right to cancel does not apply to products or services that have been personalised or goods that cannot be returned due to health or hygiene reasons. It also does not apply to passenger transport services and any contract that involves renting or leasing something for a set time period e.g. renting a holiday home or hiring a car .
Buyingoutsidethe
onsumer rights are different when you purchase from a business that is based outside the , e.g. the 1 -day right to cancel may not apply to websites outside the
Activity
Take a moment now to complete the worksheet on pages 1 9 1 0 of your Student Activity ook. Read the scenarios and suggest an appropriate way of resolving each of these consumer issues.
Stop Colla orate
Share with your class some e amples of times when you may have bought goods from outside the as it always plain sailing Share any tips you might have or lessons you might have learned
hec herethe usinessis ased: Don t rely on its website address not all .ie businesses are based in Ireland not all .co.uk websites are -based. o to its ontact s section or read the terms and conditions or privacy policy to get its physical address.
2 hec the usiness spolicies: Does it offer forms of redress If so, what are they hat happens if you change your mind or want to cancel omplaintspolicy: Take note of the company s policy and procedure for lodging a complaint.
4 atchout for ta esandchar es: AT, customs duty and customs processing fees may be added to the price when you are buying goods from outside the These are already included in orders from businesses. These costs will depend on what you bought , where you bought it from and the value of the items you bought.
eturnin anitem: If you do have to return an item you may be able to claim a AT refund. eep proof that you returned the item.
edress
our rights when buying outside the may be limited. aying with a credit or debit card means you may be able to use chargeback This is usually done because a supplier put through a transaction more than once, without authorising it it o fi st, o t e s pplie did not deli e t e oods se ice you paid for. There may be terms and conditions attached, depending on your card provider.
Chargeback isaprocesswherebythecardprovider bank agrees to reverseatransaction.
ontact the consumer body in the country you bought the goods services from. The International onsumer rotection and nforcement etwork provides a list of these bodies.
et legal advice if you would like to investigate the issue further.
onsumerProtection ct
Stop Research
o to t e lin belo to find out the different organisations that work to protect consumer rights around the world. repare a short report for your teacher Are there any organisations you are surprised to see on this list
edco.ie/hdga
This Act deals with unfair business-to-consumer commercial practices. It does not apply to dealings between businesses. It protects consumers by banning unfair, misleading and aggressive trading practices that are likely to impair a consumer s choice.
isleadingpractices
isleading advertisement , misleading information and withholding information are considered misleading practices. The Act prohibits alse or misleading product descriptions. This applies to advertisements, shop notices and claims made by sales assistants alse or misleading advertisements
alse prices. It is illegal to give false or misleading information on past, present or future prices of a product. oods marked as reduced in a sale must have been on sale at the original higher price for at least consecutive days before the sale. If there is a uota on the amount of an item someone can purchase, this must be clearly stated.
Aggressivepractices
The Act prohibits traders from engaging in aggressive practices, including arassment oercion forcing e cisin nd e in ence n ai p ess e Taking advantage of a consumer s misfortune Threatening or abusive language or behaviour
therprohi itedpractices
aking false claims for cures for illnesses
Offering free pri es when it costs money to claim them
Running competitions when the top pri e in not available ersistent cold calling having been asked to leave or stop
Demanding payment for unsolicited goods yramid schemes schemes where a person is paid for introducing other people into the scheme.
therareasofconsumerprotection
Price display regulations: The government can make a regulation that re uires the prices of certain products be displa ed in a specific anne , e incl din ees, charges and ta es.
Price controls: In emergency situations only
Damages: onsumers who are aggrieved by a prohibited act or practice may sue the trader for damages.
Stop Research
The Advertising Standards Authority of Ireland ASAI is an independent self-regulatory body responsible for promoting, regulating and enforcing best practice and high standards in marketing communications in Ireland.
o to t e ebsite at t e lin belo and find o t o it ac ie es its oals
repare a report for your teacher outlining its functions.
One of the ASAI s functions is investigating complaints regarding advertisements and commercial marketing communications. It publishes a list of decisions outcomes of recent investigations. Include some e amples of these in your report.
Remember to evaluate the ASAI at the end of your report. Is it effective hy why not
edco.ie/3nnp
Stop Colla orate
The ood Safety Authority of Ireland SAI publishes information on what should be included on food labels.
o to the SAI website at the link below and research the information that should be included on food labels.
o home this evening and check the labels on food items in your home. Do they all meet the re uirements
edco.ie/7jvv
Resolving consumer complaints
If you buy a product, service or digital content service from a business, it is legally obliged to sell you one t at is fit o p pose, o s it in a easonable ti e, atc es t e desc iption sa ples cont act you received and is installed correctly If it fails to do so, it must resolve the issue.
What should you do if you buy a faulty product or pay for a poor service?
ontacttheretailer: e fi st step is to contact the retailer about any fault. ommunications with the retailer should be in writing. Remember to keep a record of any communications between you the consumer and the retailer.
aulty products Inform the business about the issue and say whether you would like the product repaired, a replacement or for ma or faults a full refund.
aulty services and digital content services ancel the service and ask for a refund or to keep the service at a lower price.
2 a ea formal complaint: If you cannot resolve the issue informally you may wish to make a formal complaint. This should be in writing and you should know your rights before making a formal complaint. Include the following
a The date the complaint is being made
ompany name
(c) our contact details
d Details of what was purchased include order numbers or reference numbers and date of purchase
e Attach proof of purchase a receipt
Outline details of the problem include pictures if available
Outline how you would like the business to resolve the issue.
See help fromathirdparty: If the issue has not been resolved to your satisfaction you could contact a third party for assistance.
Smallclaimsprocedure
This procedure deals with consumer claims and business claims relating to goods or services purchased for private use, up to a ma imum value of ,000 epresentation: o solicitor is re uired. onsumers may wish to seek legal advice if the issue goes to court.
pplication: pplications can be ade online o at t e cons e s local ist ict o t o fice o must outline your complaint and the amount you are seeking. Recommendations are not legally binding but are generally accepted.
Ine pensive: A fee of is charged for all applications.
ompensation: a imum compensation of ,000 issued in the District ourt.
Small laims e istrar: andles all complaints and helps to try to resolve the dispute before it goes to court.
Types of claim: laims can be made for minor damage to property goods and services bought for private use or non-return of a deposit on a rented property like a holiday home. usinesses can also make claims against other businesses for goods and services purchased.
Speed: The retailer service provider is given two weeks to respond to the case, otherwise a court date is set in the District ourt.
Impartiality: The case is heard by an impartial udge who makes a decision on the claim.
ppeals: The decision may be appealed to the ircuit ourt if either party is not happy with the udgement.
in c i
The claimant the consumer completes the application form. They include their name, contact details and details of the claim being made. They also include the name, address and contact details of the respondent the business against which the consumer is making a claim .
2 The respondent receives a copy of the claim. They can a admit the claim b dispute the claim c ignore it or d counterclaim. They have 1 days to reply.
If the respondent admits the claim they either pay the amount , offer a conditional refund e.g. once they receive the good back , pay in instalments or consent to the udgement of the court.
4 If the respondent disputes the claim or makes a counterclaim the matter will go to a hearing in the District ourt.
The respondent has days to reply to a udgement made in the District ourt. If they don t the claimant can contact the Small laims Registrar, who may issue a decree forcing the business to pay.
Decisions can be appealed in the ircuit ourt.
e n i e i e e i n
Stop Colla orate
ork with a partner to research the steps involved in making a claim through the small claims procedure. sing mini-whiteboards, take it in turn to illustrate the steps and e plain them to your partner ave a class discussion en o a e finis ed to evaluate the role of the small claims procedure.
An ADR body can help settle disputes without the dispute going to court. It will involve a neutral third party acting as a mediator between the business and the consumer. It is uicker, easier and cheaper than going to court. ediation and conciliation or arbitration may be used to resolve the dispute.
Authorised ADR bodies in Ireland inancial Services and ensions Ombudsman ommission for Regulation of tilities Royal Institute of the Architects of Ireland et eutrals td.
They have online complaint forms on their websites. The whole process usually takes appro imately 90 days.
Stop Research
o to t e lin belo to find o t o e abo t ADR and the authorised ADR bodies in Ireland. repare an infographic for your teacher that outlines the work of each of these bodies.
edco.ie/mdzd
Stop Research
e learn about mediation, conciliation and arbitration in hapter 1 . Take a minute now to recall these key terms and note them in your copy. an you come up with e amples of consumer disputes that can be resolved using these methods
n ine i e e i n
onsumers who bought goods online in Ireland or elsewhere in the can make complaints via the uropean ommission s online dispute resolution platform. This enables the consumer to contact the b siness di ectl and can elp cons e s find a sol tion o a ee on an bod to elp
Stop Colla orate
In groups of four, prepare a poster infographic presentation to outline solutions to the following consumer problems ela ed i ts roblems with a package holiday oods were damaged during delivery honey free offers ou changed your mind after you bought something rice discrimination.
o find t e in o ation o ill need, o to t e lin belo
edco.ie/55nn
uropeansmallclaimsprocedure
This deals with consumer complaints against businesses based in any member state e cept Denmark . laims of up to ,000 can be made. It is ine pensive a fee of applies. o solicitor is re uired.
It is facilitated through the District ourt in Ireland.
It deals with issues such as
1 payment of money
2 damages from an accident
3 delivery of goods
4 lfil ent o a cont act o
5 prevention of an illegal act.
Application forms can be downloaded through the uropean e- ustice portal and should be completed and returned to t e cons e s local ist ict o t o fice
Application forms are also available from the local Small laims Registrar
Dund Cour ouse ere oc si in s o e Dis ric Cour e ce
The Registrar reviews the application form and sends it to the defendant who either admits the claim, disputes or challenges the claim, counterclaims or challenges the court s urisdiction. udgement is usually given within 0 days of receiving the defendant s response. A hearing may occur at this point , which can also be done by video conferencing.
The udgement is enforced according to the law of the member state where the defendant is based. This may change from member state to member state.
Consumerorganisations
PThe main functions of the are to
Stop Research
o to t e ebsite to find o t abo t t e important work they do. repare a report for o teac e o tlinin o findin s ncl de some e amples of recent reports investigations.
Provideinformationandadvice to thepu lic on their rights as consumers through its website ccpc ie , p blications, telep one elplines and in o ation lea ets
Provideinformationandadvice to usinesses on their legal obligations regarding consumers and other businesses.
dvisethe overnment on how to ensure fair competition and on consumer welfare.
Encoura e compliance iththela by publishing a cons e p otection list, iss in fines and se in compliance notices on traders.
Investi ateandchallen e practices that damage the consumer or the economy.
E aminemer ersand ac uisitions to ensure they are not anti-competitive.
Endanti competitivepractices, referring cases to the Director of ublic rosecutions D where appropriate
Enforce the relevant consumer law. The can
Theme
Business and Financial Literacy
Recap
e looked at mergers and ac uistions in hapter 1
Accept a written undertaking from a retailer that the prohibited practice will cease. This may include whatever terms and conditions the sees as appropriate. Apply for a prohibition order from the ircuit ourt or igh ourt.
Serve compliance notice on a trader. If the trader fails to comply the can take criminal proceedings.
ss e on t e spot fines
ublish a onsumer rotection ist list of traders found breaching consumer law .
id ou now
In 0 the opened an investigation into Ticketmaster Ireland and its handling of the sale of tickets for Oasis concerts.
European onsumer entre(E ) Ireland
Provides information and advice via its website about travel issues and consumer rights when buying goods and services in member states and Iceland, orway and the .
Consumer rights policy: It produces consumer rights reports on problem issues such as air travel, e-commerce and cross-border bank charges. It participates in uropean onsumer entre etwork pro ects, surveys and research to contribute to policy development.
Co-operates with national consumer organisations including the and enforcement agencies small claims procedure to create awareness of consumer rights and enforce these rights.
Stop Research
Ireland provides templates for letters that consumers can use in different situations should they wish to contact a business directly o to the link below and use one of the templates to create a letter based on a consumer rights issue that you or someone you know has encountered. Share this letter with your classmates. ould the letters be effective in resolving a dispute hy why not
edco.ie/9p5b
Mediation service Ireland reviews complaints made against businesses by consumers. If it feels there is a case it will contact the centre where the business is based and begin mediation. If the dispute is not resolved through mediation it will advise the complainant of their legal options.
Office of theOmbudsman
is o fice e a ines co plaints o e be s o t e public who believe they have been unfairly treated by public bodies. This includes government departments, local authorities, the S , charities and voluntary bodies that deliver services for the S , public hospitals, publicly funded third-level education bodies and public and private nursing homes.
id ou now
e e a e ot e o b ds an o fices in Ireland, including Ombudsman for hildren, inancial Services and ension Ombudsman and arda Ombudsman.
It looks into complaints relating to accessible buildings, services and information for public bodies.
Stop Research
atch the short video clip at the lin belo o t e fice o t e Ombudsman to learn more about the functions of this organisation. hen you a e finis ed, ite a piece e al atin t e ole o t e fice o t e b ds an Is this organisation effective at resolving issues hy hy not
edco.ie/mwfv
Chapter uestions
Stop Colla orate
e fice o t e b ds an at t e link below outlines a number of case studies on its website. ork with a partner to e amine some of these case studies. ere they effectively resolved hat is the key message you would say is most important to remember in avoiding and resolving disputes
edco.ie/367v
Stop Check for nderstanding
1. e the Act that applies to goods and services purchased on or before ovember 0 . Outline the rights of consumers under this Act.
2. u ine the implications of this piece of legislation on service providers.
3. The onsumer Rights Act 0 came into effect on 9 ovember 0 . De ons r e the rights of consumers in relation to roduc s under this piece of legislation.
4. den i the methods of redress available to consumer who purchase faulty products.
5. u ine the rights of consumers in relation to services as set out in the onsumer Rights Act 0 . . Dis in uis between digital content and digital services as described in the onsumer Rights Act 0 . . in the methods of redress available to consumers of digital content and digital services.
. De ons r e the rights of consumers who purchase goods and services online . Co re the rights of consumers who purchase from retailers within the to those who purchase from retailers based outside the
1 . u ine the main provisions of the onsumer rotection Act 00
11. u ine the steps a consumer should take to resolve an issue or dispute arising from buying faulty goods or services.
12. Descri e the options available to consumers who have a dispute with a retailer.
13. u e the role of the small claims procedure in resolving consumer complaints.
14. u ine the steps involved in the small claims procedure.
15. in what is meant by a Alternative dispute resolution b Online dispute resolution.
1 . in what is meant by the uropean small claims procedure.
1 . u ine the functions of the .
1 . u e the role of the in protecting consumers.
1 . u ine the role of the uropean onsumer entre Ireland. .
Theme
Store t earn t
har e ac : hen a card provider bank agrees to reverse a transaction.
i ital content: Data produced and supplied in digital form, including computer programs, applications, ideo files, a dio files, sic files, di ital a es, e boo s and ot e e-publications.
ChapterChecklist
Sale of Goodsand Supply of Services Act 9
Rights of consumers
Redress
ConsumerRights Act2 22 rights of consumersandredress availa le ineach category: roducts
Services
Digital content and digital services uying online information you are entitled to, right to cancel uying outside the
Business and Financial Literacy
i italservice: A service that allows a consumer to create, process, store or access data in digital form or a service that allows sharing or interaction with data in digital form uploaded or created by a consumer or other service user.
edress: Remedy A way of making things right.
Consumer rotection Act2
Resolving consumer complaints
Steps
Small claims procedure e plain, steps
Alternative dispute resolution
Online dispute resolution
uropean small claims procedure
Consumerorganisations functions, evaluate uropean onsumer entre Ireland
Ombudsman
2 aking nformed Consumer ecisions
earningoutcomes
Strand 4
At the end of this chapter you should be able to:
2 S RA how consumer behaviour might be informed by ethical and sustainability concerns.
S GA how digital technology impacts on consumer behaviour.
4 S GA how personal data is protected by European regulation.
A R C A the importance of making informed consumer decisions and use this understanding to discuss consumer-related stories in the news and media.
thics sustaina ility and consumer ehaviour
onsumer choices and behaviour impact on the three pillars of sustainability social, environmental and economic. As consumers, when making choices we should look at the impact of our choices from a social perspective ow does it impact on people and communities , from an environmental perspective ow does it impact on the natural world and from an economic perspective ow does it impact on the economy .
An ethicalconsumer buysproductsthatareproducedinanhonestand fair waythatis respectful to all stakeholders,includingthenaturalenvironment.
n et ical cons e b s p od cts and se ices t at e ect t ei o al al es e ill conside the following before making a purchase Where was the product made?
ow many air miles did the product travel to get to me hat is the carbon footprint of this product Who made it? How were they treated? here they paid a fair wage ere there human rights violations ere child labour laws adhered to
What products were used to make it? Were they sourced sustainably? hat is the environmental impact Are the materials renewable an the product be recycled ere compostable materials used How will I dispose of the product and its packaging?
Greenconsumer: Aconsumerwhotakesconcern fortheenvironment seriouslyandwillonlybuyproductsthatminimisedamage to the environment. anyhouseholdcleaningbrandsnowhave plant-based versionsoftheirproducts to targetgreenconsumers. Ethics
Case Study: i s co C e n
illy s co lean is based in onnemara, ounty alway It was established in 00 by two women who were concerned about the many side effects when cleaning domestically and professionally in our everyday lives. The founders set out to develop a range of safe cleaning products, and illy s co lean was established. The company produces a range of plantbased soaps and surfactants using natural ingredients like vinegar, salt , essential oils and naturally derived fragrances. Their products are vegan and vegetarian friendly and are not tested on animals. The company et os is ealt co es fi st t ses 100 recyclable packaging and has a n be o ill s co lean efill stations around the country.
Read the interview with illy s co lean owner Titta ones at the link below
edco.ie/g54z
Stop Research
ave a look around your nearest store. ow many products are branded and marketed as ethical or sustainable ow do they make consumers aware of this ake a list of these products and share them with your class.
Stop Colla orate
hen you have compiled your list of ethical p od cts and b ands, o in s all o ps to find out more about one of these brands. repare a presentation for your class about this brand product. Include as many details as you can on the materials used to make it , and where and how it is p od ced ncl de a e ection at t e end o your presentation. hat was your opinion of this brand before you began researching as your opinion changed as your consumer behaviour changed as a result of your research
Corporate socialresponsi ility CSR
Responsi ility
This is the concept that a business has a responsibility to society and to its consumers. It is a business model or approach that helps a business to be socially accountable to itself, its own values and ethos and its stakeholders.
sociall esponsible b siness ill eas e its s ccess b o e t an st p ofit t ill also ta e into account its impact on people stakeholders and the planet environmental impact .
Reducing practices that will harm the environment.
Decreasing pollution, reducing greenhouse gas emissions, reducing waste, making greater use of recyclable materials.
sing green energy supplies.
unding climate action research.
Actions by the business that strive to make the world and society a better place.
Donating to charities or voluntary organisations.
Supporting worthy causes that align with company values.
ehaving in a fair, honest and ethical way with all stakeholders.
aying employees a fair wage or living wage
Sourcing ethical and sustainable materials. ot using products or materials that are produced using child labour or slave labour
Supporting its commitments through financial eans
any companies have SR policies and outline these on their website to inform consumers. In hapter we can see that part of A DI s SR policy involves commitments to having 0 of its food and drink sales come from healthier items and providing honest and transparent nutritional and marketing information to its customers.
Stop Research
o to t e lin to find a list o airtrade products. Research how eac one is ade and find o t e e you can buy airtrade products.
id ou now
edco.ie/knnx
Stop Research
Research the SR policy of a company of your choice. ote the details of its SR policy in your copy. hat actions does it take to ensure it is being socially responsible Share this with your teacher and remember to keep a copy in your Investigative older
airtrade is a movement that aims to change how trade works by ensuring better prices, decent working conditions and a fairer deal for farmers, producers and workers in developing countries. hen people buy a product with the airtrade logo they are buying from a business that has met internationally agreed standards. atch the short video clip at this link, which e plains how airtrade works.
heshadow economy
The shadoweconomy alsocalled thehiddeneconomy isalleconomic activitythat goesunrecordedinthe nationalincomeaccounts.
edco.ie/k5zd
Stop Colla orate
T I for a moment about activities in the hidden economy. In your copy, note down some of them and how you think they impact on consumers, businesses and the economy. AIR up with a partner and share your thoughts. en o a e finis ed, o es lts it your classmates.
In other words, people and businesses avoid their legal responsibilities by not declaring or under-declaring their income to Revenue so they do not have to pay the appropriate ta es on it. This may involve doing work off the books or ni e s so ta and a elated ocial ns ance isn t paid, o in ile also clai in benefits from the Department of Social rotection or selling products that have been sourced illegally e.g. illegal tobacco products .
Consumer
Healthandsafety: roducts sold in the hidden economy may not adhere to health and safety legislation. They may be dangerous and put consumers at risk.
Employeeprotection: orkers employed in the shadow economy often lack legal protections such as minimum wages and health and safety standards. This can e pose workers to e ploitation and unfair treatment.
Business conomy
Reducedsalesand profits: egitimate retailers e perience reduced sales and p ofits as cons e s choose to buy cheaper goods in the hidden economy.
Unemployment: egitimate business owners may struggle to compete. Reduced sales and business activity may lead to ob losses and redundancy
Government revenue: The government will receive less in ta revenue as AT and other ta es are not paid on unreported income. This is money that could have been spent on essential public services.
Enforcement: The government may have to allocate resources to enforcement measures such as inspections and fines is is money that could have been spent elsewhere, e.g. healthcare.
Circulareconomy: Abusinessmodel ofproductionandconsumptionwhich e tendsthelifecycleofproducts, reduces wasteandcreatesfurther value.
Stop Research
atch this short clip at the link below that e plains how the circular economy works.
edco.ie/fd3b
Recap
e learned about the circular economy in hapter . Take one minute to write down anything you can recall on this topic. Share your thoughts with your class to refresh your memory before moving on.
Circular conomy
The llen acarthur oundation, at the link below, has some fantastic resources if you would like to learn more about the circular economy. There are some e cellent videos, podcasts and case studies, each focusing on a different industry.
edco.ie/dmu3
ork in groups to summarise the circular economy in different industries. ach group should focus on a different industry e.g. fashion, health, construction and s a e t ei findin s
mpact of digitaltechnology on consumer ehaviour
ouse o ddi i consu er e iour
Stop Research
e te in ence s as added to t e dictiona in ind o t o t e bi est in ence s a e in eland and ab oad hat products do they endorse Are there rules in Ireland that o e n at and o in ence s s a e online a e a class discussion when you have completed your research. ave you been in enced to b so et in e e o pleased it your purchase Should this industry be more regulated
id ou now
In 0 S T South ast Technological niversity, arlow offered a A degree in ontent reation and Social edia
ositive impacts egative impacts
Convenience ebsites, social media and apps make it easy and uick for consumers to purchase goods and use services. any services can be used in a digital format, e.g. online personal training sessions, at a time and place convenient to the consumer
Choice onsumers have access to a wide range of goods and services. They can purchase items, from a variety of countries, that they may not see on the shelves of local stores.
roduct information onsumers can make more informed choices. roduct information on business websites as well as online customer reviews means consumers can gather more information before they make a purchase.
ata protection
Stop Colla orate
ack of human interaction eople may be supporting businesses without ever having any human interaction. This can reduce customer engagement and loyalty for a business. It can also impact local town centres a decrease in footfall can result in business closures.
iffic y returning items t can be di fic lt to et n items that were bought online, particularly if they were bought outside the . There can be higher charges for consumers.
raud onsumers are susceptible to online scams and fraud. rotecting themselves and learning about cyber security are key to avoiding this.
i ital Transformation
n t e ata otection o issione fined eta a eco d b ea in illion o breaches of data protection law in Ireland. ou can read more about this in the RT article. ork in pairs to investigate this issue further hat happened ow did eta breach data protection law hat happened since as this the correct solution en o a e finis ed, a e a class disc ssion abo t o c o o pe sonal data la e s have access to Is enough being done to make consumers aware of this edco.ie/736v
General ata Protection e ulation (G P )
urpose
This regulation lays down rules about protecting people with regard to the processing of personal data and rules about the free movement of personal data and privacy of all citi ens. It protects data sub ects fundamental rights and freedom and in particular their right to the protection of data held about them.
nder data protection law, if an organisation or company is holding or using your personal data for any reason, you are known as a data sub ect. The organisation or company holding or using that data is known as a data controller The data controller can also instruct another person, organisation or company, known as a data processor, to process your personal data on their behalf
Theme
atasu ects rights
As a data sub ect you are entitled to seek compensation through the courts from an organisation, person or company that has used the data about you for breaches of data privacy. nder D R all data sub ects have the right to the following
ccess: The right to receive a copy of data held electronically relating to them within 0 days of lodging a written re uest.
orrection: The right to have errors inaccurate information corrected.
omplain: here breaches are found complaints should be made to the Data rotection ommission.
ompensation: The right to be compensated for loss as a result of inaccurate information held. The person also has the right to complain to the Data rotection ommissioner where a data controller is suspected to be in breach of the regulation.
emoval: The right to have their name removed from direct marketing lists.
atacontrollers o ligations
eepthe data secure: Data must be protected against unauthorised access.
orrectandupdate the information Data should be accurate and updated periodically se the data only for the purposeintended Information should only be used for the specified p pose
tain the information in an honest and fair way.
nsure that data is ade uate, relevantandnon e cessive
etain data for no longer than is necessary for the intended purpose s . rovide a copy of personal data to the individual on re uest.
ata rotectionCommission C
e final piece o t e i sa is t e ata otection ommission D , the national independent authority responsible for upholding the rights of individuals to have all their personal data protected at all times. Its functions are to aintain a register of data controllers and processors repare and publish codes of practice
rovide information to the public
i e pe ission o a t o ised o fice s to ente p e ises and obtain files
Investigate complaints and instigate legal proceedings against those in breach of the regulation
Issue enforcement notices to those in breach of the regulation.
Stop Colla orate
et s test your knowledge of D R In pairs, take the ui at the link below to see how much you remember about the D R.
edco.ie/nfgk
Stop Research
The clip at the link below will help reinforce the key points of D R.
edco.ie/fp7s
Chapter uestions
Stop Check for nderstanding
1. De ons r e your understanding of the term ethical consumer
2. illy s co lean is an ethical, clean brand. n es i e the growth of ethical brands in Ireland. Support your points with suitable e amples.
3. in what is meant by corporate social responsibility
4. De ons r e how consumer behaviour may be informed by ethical and sustainability concerns.
5. De ons r e your understanding of the term shadow economy .
. n se the impact of the shadow economy on consumers, businesses and the economy.
. De ons r e your understanding of the term circular economy .
. Discuss how consumers can contribute to the circular economy.
. n es i e the impact of digital technology on consumer behaviour.
1 . n es i e how D R protects consumers personal data.
11. u ine the rights of data sub ects as set out under D R.
12. u ine the obligations of da ollers in D R. ta contr as set out
Store t earn t
irculareconomy: A business model of production and consumption that e tends the life cycle of products, reduces waste and creates further value.
atacontroller: A business or organisation that processes personal data.
ata su ect: A private individual whose personal data is held or used by an organisation.
Ethical consumer: A consumer who buys only products that are produced in an honest and fair way that is respectful to all stakeholders, including the natural environment.
Green consumer: A consumer who takes concern for the environment very seriously and only buys products that minimise damage to the environment.
Shado economy also called the hidden economy All economic activity that goes unrecorded in the national income accounts. hen individuals and businesses avoid their legal responsibilities by not declaring income or under-declaring their income to Revenue so they do not have to pay the appropriate ta es on it.
ChapterChecklist
Impact of ethics on consumer behaviour
orporate social responsibility
Shadow economy
efine
Impact on consumer, businesses, economy
ircular economy efine
ow consumers contribute to circular economy
igitaltechnologyand consumer ehaviour
Impact of digital technology on consumer behaviour
G R
Rights of data sub ects
Responsibilities of data controllers
2 aking nformed inancial ecisions
earningoutcomes
At the end of this chapter you should be able to:
2 A the factors to be considered with saving, investing and borrowing.
2 2 A risk tolerance from a consumer perspective and investigate the range of risks acin cons e s o financial p od cts and how consumers can identify reliable sources o financial in o ation
2 the importance of considering s itc in bet een financial p od ct providers.
2 4 A how technology impacts the p o ision o financial p od cts and o tline t e benefits and c allen es o fintec
2 how a person s credit rating is established, the factors that can impact on credit rating and the conse uences of a poor credit rating.
Case Study: e o u
hen it comes to digital banking, stocks, cryptocurrency and loans, Revolut has become a household name. ounded in 01 , Revolut initially focused on low-fee currency e change and international money transfers, which made it incredibly popular with people travelling abroad. Since then it has grown to provide banking se ices, in est ents, sa in s and financial ana e ent se ices ons e s can a e mobile payments, open personal or business accounts, hold multiple currencies and have t e option to a e bot i t al and p sical debit ca ds e ol t calls itsel a lobal financial super-app and now has over 0 million customers worldwide. Revolut s bank was granted a full banking licence from the uropean entral ank in 0 1. In 0 it launched credit cards for Irish customers and insurance services, and in early 0 it began to offer interest on its instant access savings accounts. Revolut also offers easy access to stock trading and cryptocurrency trading for both beginners and e perienced investors. As part of its service it provides a range of budgeting tools including monthly spending limits, transaction analytics and spendin cate o ies, ic elps se s to ana e t ei finances ons e s can c ec t ei acco nts sin e ol t s eal ti e notifications and can benefit o t e insi ts into their spending habits. Revolut prioritises security with features such as disposable virtual cards, spending limits and the ability to free e or unfree e debit cards directly in the app. As of ebruary 0 , all Irish customers were given Irish International ank Account umbers I A s . The future of Revolut is bright its innovative app oac as ade it a a o pla e in t e fintec financial tec nolo ind st , it illions o users relying on its services daily for affordable financial ana e ent
i ital Transformation
Theme
Saving investingand orrowing
or anyone who decides to save, borrow or invest , it is essential to be informed about all the aspects of each decision.
nderstanding all the implications will help an individual ac ie e t ei financial oals and b ild t ei ealt e ill need to nde stand acto s s c as in ation, inte est ates, is , ta es and charges, the time frame of whatever investments are made short-, medium- or long-term goals and the e pected return on investment ROI .
Recap
e study all the economic indicators in detail in hapter . Take some time to work with a classmate to create a imme on in ation and inte est ates
actor hat isit hy isitimportant
n i n A gradual loss of purchasing po e t atis e ectedina general increase in prices of goods and services over time.
nterest rates
Risk
Interest is the amount a lender charges to a borrower. It is a percentage of the amount that was loaned. Interest rates in ence t e costo bo o in money and also the return on savings.
The potential or possibility of losing part or all of your investment. It can also refer to not achieving the desired return on an investment.
a es and charges These include capital gains ta , inheritance ta , brokers fees, etc. They all impact the net return on an investment.
Short medium long term goals
The length of time in which someone is looking to achieve their investment goals. ow long an investment will take to come to fruition will affect the type of asset an individual will invest in.
Return on investment R is eas es t e p ofit t at will be returned to an investor.
o a e sa in o in estin , in ation ill lessen the real value of your return. or e ample, if your sa in s o b eac ea b t in ation is you are essentially losing your purchasing power. or this reason it is vital that the investment you choose has a rate of return that is higher than in ation
ow interest rates make borrowing cheaper but result in a lower return for savers. igh interest rates generally make borrowing more e pensive b t i ea i e et n on sa in s and an fi ed income investments. It is important to understand t e di e ence bet een fi ed and a iable atesto make informed and appropriate decisions.
The level of risk depends on the investment. or e ample, a savings account is low risk but gives a low return stocks or cryptocurrencies are higher-risk investments that will offer a higher return. An informed investor will consider the risk of investing in relation to their age, their income and t ei financial oal
Investors must take into account that ta es and c a es ill ed ce t e o e all p ofitabilit of their investment. or e ample, a high-return in est ent ill p obabl co e it si nificant fees or will be heavily ta ed, which will result in a lower return.
Short-term 1 year ess risky, e.g. savings accounts or short-term bonds. They are more stable and nli el to ct ate in al e edium-term years oderate risk.
ong-term years or longer time frames people can take a greater risk. Stocks give the greatest return in the long term.
or any investor the aim is to ma imise the return on investment. An informed investor will nde stand t e si nificance o t e and t at elements such as ta es, fees and risk all need to be taken into consideration. aving a deep understanding will allow investors to choose investments with a realistic return.
aking informed decisions in relation to saving and investing will help ma imise return with as little risk as possible and also inc in as e c a es as possible acto s li e in ation, is , inte est ates, ta es and c a es and t e ti e a e o an in est ent all pla a ole in o o plan o financial oals
Risk tolerance
id ou now
The Irish eague of redit nions reported the following statistics in 0
Over billion was issued in loans.
Total investments grew to 1 . billion, up from 1 .1 billion in 0 , with the average level of return increasing from 0. in 0 to 1. in 0 .
embers savings increased from 1 .0 billion at 0 September 0 to 1 . billion at 0 September 0 . This represents an annual increase of . per cent.
Risk tolerance isameasureofthedegreeoflossan investoriswilling to accept.
Entrepreneurial Thinking
cons e s is tole ance is t ei financial and e otional capacit to andle an nstable a et should it occur. arkets can be volatile and uncertain, so consumers need to be comfortable with the degree of risk associated with their investment. onsumers with a high risk tolerance are much more at ease knowing that investments, such as stocks, can change in value. Those who have low risk tolerance would be more inclined to choose a stable investment , such as a savings account.
The level of risk tolerance that a consumer displays will depend on a number of key factors, including inancialsituation: A consumer with a stable income, little debt and in a strong financial position ill tend to tole ate i e risk.
Response to financialloss: If an investment slows down or its value falls during a volatile period, some consumers will panic, cut their losses and sell. hen this happens it would suggest that their risk tolerance is low.
on terminvestment: Some consumers choose to invest as a long-term goal, perhaps for when they retire, so it could be as long as a 0-year investment. onsumers who choose to do this will often be in a better position to tolerate a higher level of risk as they will have more time to recover if there is a downturn in the market.
ris e ue o Credi nions ui din o er oun ree Du in
Theme
i f c n e f fin nci c
ate e t e financial p od ct, t e e is always an element of risk involved for a consumer These risks will vary depending on t e financial p od ct t at is bein chosen insurance, stocks, savings accounts, stocks, government bonds . onsumers need to consider the following I RO risks
➜
➜
RC➜
Stop atch
Take a moment to watch the short clip on risk tolerance. ake note of any key terms you have forgotten from your study above edco.ie/yym6
Market risk: The risk of losing money as a result of changes in the market This would usually affect stocks, i.e. stock prices falling.
Inflation risk: The risk that the purchasing power of savings will be broken down over ti e d e to in ation is is inc edibl i po tant o indi id als o a e sa ed o e a long period of time, but in a low-interest account.
Credit risk: If you lend money to an individual, there is always a risk that the borrower will default on their repayments.
➜ Regulatory risk: aws and regulations often change, and new regulations may ne ati el a ect financial p od cts and also t e ind st ies t e a e a filiated it
➜ Operational risk: There is always the possibility that errors can occur, whether this is through an internal fault , fraud or even technical issues.
onsumers should also be aware of risks in relation to interest rates, li uidity and currency
e i e ce f fin nci inf i n
ons e s o a e p c asin financial p od cts st a e access to reliable information so that they can make informed decisions ere are some guidelines
Usereputa le sources of information
he ent a an of e and and financia e ato s provide up-to-date, unbiased information, economic trends and advice.
Investopedia and the oney Advice and udgeting ervice A lear and well-researched e planations of a range o financial p od cts and se ices, incl din the potential risks involved with each product. They are a great starting point for consumers starting out in the financial o ld
e s outlets ne spapers such as the inancial imes o financial s pple ents in national newspapers provide fact-checked financial ne s s ppo ted it financial statistics.
onsumer information resources iti ens Information and the ompetition and onsumer rotection ommission provide unbiased information and help consumers make informed decisions about financial p od cts o se ices
Theme
Ethics and ustaina ility
The entral ank of Ireland s onsumer ub has some e cellent information.
nline products or online products consumers are advised to check reliable review websites such as Trustpilot, which offer consistent and credible reviews from consumers who have purchased these products and services.
ross reference onsumers are strongly advised to cross-reference information against as many reliable sources as possible. If several websites report similar information it is more likely to be accurate
Stop Research
repare a short report outlining the services provided by any one of the following A S, the entral ank, , iti ens Information, Investopedia. e sure to include key facts and information.
Stop atch
ook at the short clip on A S and research how many A S services there are in Ireland. Do you think it is a worthwhile service for the people of Ireland
edco.ie/tsmp
i c in fin nci c i e
o ld a cons e conside s itc in bet een financial p od ct p o ide s e ans e is si ple
It might mean that they can get better rates, save on fees and charges, and access a greater range of p od cts et s ta e a close loo at cons e s a conside s itc in financial p o ide s etterinterest rates: oans and mortgages will have different interest rates depending on the financial p o ide , so s itc in co ld es lt in a lo e cost o bo o in
o erfeesandchar es: All providers have fees and charges that are passed on to consumers. itc in p o ide s it lo e ees can lead to s bstantial sa in s, especiall o financial products we use fre uently, such as a credit card or current account.
Improvedservices: inancial providers update their products and services as often as they can to remain competitive. This could be by introducing new features such as online banking, rewards or a more customer-friendly service, e.g. better customer support or additional perks such as cashback on mortgages.
id ou now
S offers home buyers up to back in cash. That s of t e al e o a ne o t a e p ont and in fi e ea s i o a e a fi st ti e b e , o e , p c asin a olida o e or switching your mortgage to S.
Personalisedfinancialproducts: an p o ide s oc s on a specific t pe o cons e , e st dents, b siness o ne s, olde people s itc in p o ide s cons e s can find p od cts tailo ed to t ei c ent sta e o li e o t ei financial li e c cle
Switching providers might seem like a no-brainer based on the information above, but it is important to note that some providers charge an e it fee to switch, and there will always be some risk involved. eing an informed consumer and researching products and services before purchasing them will give cons e s t e best insi ts into t e financial se ices a ailable o t e
intechandtheimpact of technology
Fintech(financial technology): Theuse o tec nolo to deli e financialse ices andproducts to consumers.Themobile applications,softwareand other technology thatenableusersandenterprises to access and ana et ei financesdi itall
e have e amined the impact of technology on many sectors of the business world throughout this boo o e ll loo at o it i pacts t e p o ision o financial p od cts e al ead no t at it as t ans o ed t e financial o ld and financial se ices, a in t e o e accessible to c o a sc een, do nloadin an app , e ficient and ta eted to c sto e s needs e o t o online ban in , t e se o di ital allets and e en t e ise o a to ated in estin as e odelled o financial products are viewed and consumed by people across the world. All of these have led to a more positi e cons e e pe ience it added benefits e o t ese i pacts a e nline mo ile an in : herever you are in the world you can access your online banking ustomers can co plete basic financial transactions such as transferring money to other accounts, paying bills and completing online purchases at any time of day or night.
ro dfundin anddi ital
lendin : Digital lending refers to obtaining loans through a digital platform instead of visiting a bank in pe son t is a e ible, technology-based option t at si plifies bo o in money. rowdfunding see hapter 1 and digital lending enable people to borrow money without intermediaries and eliminate e cessive paperwork. umm is an e ample of a digital lender.
E T E S
Data analyticsandAI(ArtificialIntelligence): ll financial instit tions e i e data and a tificial intelligence to gain an insight into consumer behaviour, such as how people spend their money. This enables them to offer more personalised products and detect potential fraud. Data analytics helps to drive informed decision-making.
Stop Colla orate
orking with a classmate, e amine the infographic above. hat is your opinion of the trends shown Do they surprise you Together make a list of the number of times in the past two weeks you have used online banking or used your phone to complete a purchase. Share your findin s it t e est o t e class e o spendin patte ns si ila to t ei s
ile tec nolo a es t e financial secto o e accessible and o e e ficient o cons e s, t e e are also some challenges.
Cen r n o re nd
Automates financial management and budgetary tools
New payment technologies
How your personal data is used
Automated ‘robot advice’
Benefits andchallenges of fintech
enefi
efficiency ower fees for consumers than those charged by mainstream banks. Affordable investment and savings management options.
Accessi ility asie access to financial se ices e sa in s acco nts, ins ance and loan products than traditional banks, particularly for people in rural areas.
Convenience andspeed i ital plat o s a eit c easie to co plete financial t ansactions s c as pa in bills, settin p di ectdebits o sin t e c atbotse ice to find in o ation on financial p od cts
Security improvements be sec it is sdoe ist, b t fintec p o ides additional sec it eas es, s c as t o step e ification, ic elp p otectpeople o a d lent acti it on t ei financial data
Challenges
Security risks andprivacy
Relying on digital platforms raises concerns about data breaches and personal information being obtained through cyber attacks. hile traditional banks can el on and a lts, fintec co panies need to contin all in est in two-factor authorisation and real-time alerts to make consumers aware of any suspected fraud attempts.
Competition intech s move away from traditional banking creates competition, which benefits cons e s t it p ts p ess eont aditional ban stoc an et ei products and adapt uickly, which may lead to reduced services in some areas and even more aggressive pricing strategies.
Regulation s asecto fintec is i l e latedand stco pl it all e lations is can c eate ale el o nce taint o bot cons e s and t e financial provider
echnology dependence onsumers can be left without access to mobile apps and digital platforms during power outages, cyber attacks or scheduled maintenance on the platforms. This reduces their access to their accounts and the ability to use essential financial se ices
Stop Colla orate
orking in small groups, divide the following fintec apps bet een o o tas is to research one and answer the following uestions
1. hat are the main features of the application
2. ow does it help users manage their savings or investments
3. at a e t e benefits and potential is s o using this app hoose from the following Revolut ay al oinbase umm
Stop Colla orate
hen everyone has shared their findin s, disc ss t e ollo in uestions as a class
hat have you learned about the con enience t at fintec b in s to the consumer
Did you discover any additional risk you hadn t considered previously n at a do o t in fintec ill s ape t e t e o financial services
Credit ratings
Creditrating: Anassessment ofthecreditworthinessof individuals,businessesor governments,indicatingtheir ability to repaydebt.
A person s credit rating is basically a measure of their ability to epa a debt, e ectin t ei past financial be a io e information used to establish a credit rating is compiled using data from various sources such as credit card companies, financial instit tions, ban s and t e ent al edit e iste , ic was established by the entral ank of Ireland under the redit Reporting Act 01 . very time a consumer wishes to apply for credit , when they make a payment on an outstanding loan or when they miss a scheduled payment , it all contributes to their credit rating score, which in turn measures their creditworthiness.
There are several factors that can impact a person s credit rating
ayment history
ength of credit history
Amounts owed
ew credit
Types of credit.
Paymenthistory: This is the most important factor because it reveals your history and your ability to repay a loan as payments fall due. Any late payments the later the payment is made the worse it becomes for a customer or failure to make a payment will negatively affect your credit history
2 en th of credithistory: The longer a person has credit accounts open, the better it looks on paper. This is because it shows their ability to manage credit over a period of time.
Amounts owed ength of credithistory ypes of creditinuse ew credit
c ors ec in credi r in aymenthistory
mounts o ed: This looks at how much debt you have accumulated in comparison to your available credit limits. The amount of available credit a person uses is key. sing too much c edit indicates so e financial st ain and lende s ill not loo a o abl on t is o e a ple, someone who has 100 left to spend on a credit card with a limit of 1,000 will be looked at more favourably than someone who has spent , 00 on a credit card with a limit of 10,000
4 e credit: ach time someone applies for credit a process known as a hardin uiry will be carried out. This is when your credit information is checked during the underwriting process. If t e e a e e ent e ests o c edit it a a e lende s a and s est financial instabilit on the borrower s part.
Types of credit: e final aspect is et e so eone as a i o di e ent t pes o c edit , s c as credit cards, mortgages, instalment loans, store accounts, etc. It will also e amine the total number of credit accounts someone has. This can have a positive impact on your credit rating as it will show whether you can manage different types of credit properly
onse uences of poorcredit ratin
If someone is deemed to have poor credit rating it can have a negative affect on various aspects of their life, especiall t ei financial li e t can es lt in an inc ease in the cost of credit and affect areas of life such as employment and housing.
C➜
R➜
➜
RCredit: There may be a limited access to the amount or type of credit given by lenders as a poor credit rating suggests the person may default on payments, ultimately seen as a higher risk. Applications for credit cards or mortgages may be refused.
Rates of interest: If a person with a poor credit rating is approved for a loan they will most likely face high interest repayments. This will make borrowing a lot more e pensive.
Insurance: Some insurance providers may e amine your creditworthiness and if it is seen to be poor it may suggest an indicator of risk. This could lead to higher premiums, especially for home or car insurance.
Employment: Although not common, some employers will check creditworthiness, especiall o a ob t at o ld in ol e ele ents o financial esponsibilit plo e s on t loo a o abl on e plo ees o st le to a e financial pa ents, especiall i t e ole t e a e ill in ol e financial esponsibilit
Rent: ne o t e fi st a eas a landlo d ill c ec it a potential ne tenant is t ei credit rating. If they have a low credit rating this may limit their housing or rental options or they might re uire larger security deposits in order to secure a property.
Chapter uestions
Stop Check for nderstanding
1. in three factors to be considered when saving, borrowing and investing.
2. Define the term risk tolerance .
3. Dis in uis between low risk tolerance and high risk tolerance.
4. u ine your understanding of market risk and operational risk in the acronym I RO
5. is t o ep table so ces o in o ation cons e s can access o eliable financial in o ation
. u ine t o t in s to conside en s itc in bet een financial p od ct p o ide s
. us r e o nde standin o t e te fintec
. u ine t o ad anta es and t o disad anta es o fintec o cons e s . in the term credit rating .
1 . u ine two factors that can affect a person s credit rating.
evelopin your no led e
1. u ine the factors to be considered when saving, borrowing and investing. plain the importance of at least three of these.
2. Discuss the factors that a consumer displays in relation to risk tolerance.
3. us r e your understanding of the acronym I RO.
4. u ine how consumers can identify reliable sources of information.
5. u ine t e i po tance o conside in s itc in bet een financial p od ct p o ide s
. in o fintec i pacts t e p o ision o financial p od cts
. u ine t e benefits and c allen es o fintec
. us r e your understanding of the term credit rating and utline two factors that can affect it.
. Descri e the conse uences associated with poor credit rating.
redit ratin : An assessment of the creditworthiness of individuals, businesses or governments, indicating their ability to repay debt.
i itallendin : Obtaining loans through a digital platform instead of visiting a bank in person.
intech: The use of technology to deliver financial se ices and p od cts to cons e s
ard in uiry: hen credit information is checked during the underwriting process.
S ( oney dviceand ud etin Service): Offers free advice on money, budgeting and debt.
I ris s: a et , in ation, c edit , regulatory and operational risk.
is tolerance: The degree of loss an investor is willing to accept.
ChapterChecklist
actors to considerwhen saving orrowingorinvesting
Importance of informed decision-making is s n ation inte est ates ta es and charges short-, medium- and long-term goals return on investment
heimportance of analysing potential i en c i in fin nci c orservices
Risk tolerance from a consumer perspective
The range of risks facing consumers of financial p od cts
ow consumers can identify reliable so ces o financial in o ation
hy consumersshould consider i c in e eenfin nci c providers ni ie n c en e f fin ec for consumers
ow technology impacts the provision of financial se ices enefits and c allen es o fintec
Creditworthinessandcredit rating
ow a person s credit rating is established actors that can impact on credit rating onse uences of a poor credit rating
2 inancialRegulation
earningoutcomes Strand 4
At the end of this chapter you should be able to:
2 S GA o t e financial se ices industry is regulated and discuss the potential conse uences of under-regulation.
2 a an e o financial a d acti ities and discuss how consumers can protect themselves.
2 SCR B entral ank Digital urrency and e amine the potential impact of digital currency on consumers and businesses.
2 9 A R C A the importance of making in o ed financial decisions and se t is nde standin to disc ss finance elated stories in the news and media.
Case Study: e uro e nCen r n C
Theme
Business and Financial Literacy
ounded in 199 and with its head uarters in rankfurt , the plays a fundamental role in supporting the economic wellbeing of millions of uropean citi ens. It is the central bank for the euro currency, overseeing the monetary policy of all 0 countries across the uropean nion that use the euro as their currency Its main task is to maintain price stability b a in s e t at in ation sta s lo , ic elps p ese e t e po e o t e e o t onito s and in ences inte est ates, money supply and credit availability. To achieve all these ob ectives the has to make decisions on monetary policy, ad usting interest rates in order to control in ation en in ation is i t e tends to raise interest rates to reduce spending and when the economy is slowing down it reduces interest rates in order to encourage spending, borrowing and investments. In addition to setting rates the has supervisory powers over ma or euro one credit institutions in order to maintain financial stabilit and p e ent a financial crisis. It also has the sole right to authorise the issue of euro bank notes and coins within the euro one. It oversees risk management and works closely with the national central banks and the uropean institutions to respond to any economic challenges and works to promote growth within the It also publishes reports and data to keep governments and cons e s in o ed abo t t e financial stat s o t e e o one t is c entl e amining the possibility of a digital euro, a form of entral ank Digital urrency that will help to secure digital payments for both businesses and consumers across urope.
e i n f efin nci servicesindustry
In Ireland and across the uropean nion a number of regulatory bodies, uropean authorities and la s e late t e financial se ices industry These have been put in place to aintain financial stabilit , protect consumers and keep a balance and sense of integrity in the financial a ets e ll loo at o t e financial se ices ind st is regulated in Ireland and the .
inancialre ulationinIreland
Stop Research
lick the link below to watch some short videos e plaining the important work of the entral ank o eland and its ole in financial e lation
edco.ie/4hck
id ou now
In addition to banks and insurance companies, the entral ank is responsible for regulating credit unions, which a e e be o ned financial co-operatives popular in Ireland.
The entral ank of Ireland is the primary regulatory authority in Ireland. Its responsibilities include icensin andsupervision: It grants licences to insurance companies, investment banks, banks and ot e financial b sinesses and as a n be o e lato po e s in s pe ision and en o ce ent t e lates o e t an , financial se ices in eland and ab oad t onito s t ei acti ities, ens es financial stabilit and a es s e t e a e co pliant it national and la s
is mana ement: t aintains t e financial stat s o t e ban in secto b settin idelines o risk management , including market risk, credit risk, foreign e change risk and li uidity risk. It also st ess tests ban s to a e s e t e ill be financiall sec e i t e e is an econo ic do nt n
onsumerprotection: s t e e lato o financial se ice p o ide s in eland it en o ces regulations to protect all consumers from unfair practices and to ensure that the best interests of consumers are protected. It oversees transparency in advertising, fair lending practices and access to personal information. It constantly reviews the consumer protection framework to make sure it is in line with uropean and international developments
Anti-moneylaundering(AML)and counter-terrorismfinancing(CTF): It ensures that all financial instit tions co pl it and , pla in a pi otal ole in en o cin e lations t at ai to p e ent c i inal e ploitation o t e financial se ices ind st t iss es idelines, cond cts inspections and can i pose penalties on an financial instit tion t at ails to eet its standa ds
inancialre ulationintheEU
t a opean le el financial e lation is nde t e idance o t ee ain s pe iso a t o ities the uropean anking Authority A , the uropean Securities and arkets Authority S A and the uropean Insurance and Occupational ensions Authority IO A uropeanBankingAuthority BA
e , ic as establis ed in a te t e financial crisis, plays a crucial role in ensuring that there is a stable and t anspa ent ban in secto ac oss t e t ens es financial stability, aims to protect consumers and harmonises banking regulations in all countries. Its main responsibilities are
Cen r n o re nd
Regulatory compliance
One of the key aims of the A is to create a single rule book to ensure that all member states adhere to the same rules so that no bank will have the power to e ploit any differences in national regulations.
Supervision andrisk assessment onitors the banking sector across the with regard to risks and conducts stress tests to e amine how a bank might sustain any potential economic shock.
Consumer protection romotes transparent and fair trading practices across the banking sector. It provides information on fair advertising, responsible lending and transparency in banking. It aims to protect consumers from practices that could threaten their investments.
Crisis management and resolution o s it t e to i ple ent eco e plans o an financial instit tion facing distress. The crisis management plan will try to ensure that any bank failures can be e amined without having too much of an impact on the wider financial s ste
uropeanSecuritiesand arketsAuthority S A
S A s role is to regulate securities markets to ensure fair and transparent operations. Its aim is to protect investors and make sure that markets are kept under control. Their main roles include
rotecting investors romotes fairness, transparency and accountability to protect investors. Sets standards that ensure companies issue clear and accurate information on any products they are selling, mainly investment products, which will help consumers make sensible and informed decisions.
Regulatory compliance akes sure that all securities markets across the follow the same guidelines. This reduces the chances o financial fi s e ploitin differences between national regulations for their own benefit
ata collection athers and analyses information on market trends in security markets and produces reports that are used to support policy development. The information helps regulatory authorities to address any potential risks to t e financial stabilit o markets.
Stop Research
atch the clip on S A s role, toolkit and milestones at the link below. Then answer these uestions
here is S A based hy was it created hat does it enhance ho does it directly supervise ame two organisations.
ist two milestones from the past decade.
ho is it accountable to edco.ie/z vy3
uropean nsuranceand ccupational ensionsAuthority A
IO A supervises insurance companies and pension markets to make sure that policyholders are protected. Its key role is to protect consumers in relation to insurance and pensions. Its key roles include
Supervision and regulatory compliance
nsures uniform standards across the insurance and pension sector. hen all member states follow the same standards and guidelines it helps to reduce rule-breaking and strengthens the internal market.
Consumer protection
romotes pension sustaina ility
orks to promote transparency and acco ntabilit in financial se ices amines consumer trends and ensures that all insurance products have been designed with customers at the core. hen re uired it issues warnings to consumers on potentially a l o nsa efinancial p od cts or services.
nsures that all pension schemes are appropriate and ade uate for people who are retiring. Aims to make sure these pension schemes are sustainable. onducts research and recommends guidelines on pension fund management. Its main aim is to ensure the long-term security of the retirement savings of citi ens.
he uropeanCentralBank
The s key roles and ob ectives are
Sets the interest rates at which it lends to commercial banks in the euro one also known as the euro area , t s cont ollin one s ppl and in ation
anages the euro one s foreign currency reserves and the buying or selling of currencies to balance e change rates
ns es t at financial a ets and institutions are well supervised by national authorities, and that payment systems work well
nsures the safety and soundness of the uropean banking system
Authorises production of euro banknotes by euro one countries
onitors price trends and assesses risks to price stability
uro e n nsur nce nd ccu ion ensions u ori
Stop atch
atch the two-minute clip on IO A and note any additional information you learn.
edco.ie/w6bs
Stop Research
atch this short clip at the link below, which e plains the history of the . Then write a short piece evaluating the role of the for Irish organisations and consumers.
edco.ie/z3qp
anagingrisk
or any consumer, it is vital to manage the risk linked to pensions, credit-based products, o t a e and c pto finance e ll loo b ie at o bot e lato a t o ities and consumers approach these risks.
Pensions: Regardless of the type of pension taken out by a consumer there will always be an investment risk associated with it. To manage these risks all pension funds must comply with solvency re uirements. onsumers are encouraged to e amine pensions based on the fees charged, the long-term stability and viability of the pension and its performance.
ort a es: is t pe o financial p od ct is highly monitored and regulated across the to protect consumers from unstable interest rates. In Ireland the entral ank is responsible for issuing limits to borrowing in order to make sure that consumers are not le t in an n ai financial sit ation and nable to make repayments.
redit asedproducts: efore any financial instit tion iss es a loan it ill check the customer s creditworthiness to protect them from over-lending. onsumers can maintain full control of t ei o n finance b li itin t e a o nt o finance t e bo o st o essential needs This will help to limit the use of credit.
Stop Recap
Revisit your learning on the to familiarise yourself with how it protects consumers, or go to the link below edco.ie/tk9b
Stop Research
hoose one product type from either ensions, ortgages, redit- ased products or rypto- inance. Research one main risk for your product and one way to manage it. Share your results with your class.
Cryptofinance: ryptocurrencies can be volatile and are prone to sudden ct ations e e is also t e is o c be ac in pto assets a e not c entl idel protected, but customers are encouraged to minimise their risk level by using only regulated platforms and, where possible, diversifying their product portfolios.
nder regulation
If a country doesn t regulate ade uately it is acting in an unethical manner and risking ma or disruption and pset o cons e s nde e lation in financial a ets as t e potential to arm consumers: nless there is a consistent approach to supervision of the products and se ices bein o e ed, cons e s a find t e sel es bein e posed to i is in est ents, poor product offerings and e tortionate fees and charges.
Increase fraud: en a ce tain a ea, s c as c ptofinance, is nde e lated t e e ill be a is of fraudulent schemes and even money laundering. This will threaten both investors and the wider financial stabilit o t e a et
Increaseris : a financial a et is not p ope l e lated t e e is t e possibilit o financial instabilit , ic can lead to a financial c isis, e t e lobal financial c isis
id ou now
There is over billion in outstanding residential mortgages in Ireland currently, with 1 ,1 mortgages and 9, 1 residential mortgage holders in total moneysherpa.ie .
inancial fraud
There will always be scam artists who will try their best to take advantage of consumers through deceptive practices. These practices will involve tricking consumers out of their personal information or, more often, their money. ere are the ost co on t pes o financial a d
ype of fraud
hishing
Smishing
dentity theft
Almost two-thirds of Irish adults have e perienced phishing, making Ireland the most phished country in the world rte.ie . i ital Transformation Theme Ethics and ustaina ility
hat isit
Sending fake emails phishing , te ts smishing or calls vishing which appear to come from a legitimate source e.g. a bank . The aim is to trick consumers into clicking on unsafe links or attachments from there the scammer can e tract login credentials, personal account numbers and other personal information.
Sending te t messages pretending to be from a reputable company seeking account information from consumers.
Taking someone else s personal information e.g. credit card details, S number or bank account information and then using it for t ei o nbenefit e a dste ill impersonate their victim, carrying o t financial t ansactions and making purchases.
rotectionmeasures
erify the sender s information before clicking any links or attachments, especially where a re uest for personal details has been made.
Do not share sensitive personal information account numbers, passwords with anyone unless you are sure the recipient is who they say they are.
If in doubt, don t click
Credit de it card fraud our debit credit card number and, in so e cases, pe sonal identification number I is used to make unauthorised purchases or withdraw cash from your account. This type of fraud can include forging, signing or even buying someone else s debit or credit card or card information. The main difference between credit card fraud and debit card fraud is that a credit card has a spending limit , but there must be money in the account linked to a debit card for a fraudulent transaction to occur. Debit card fraud is more common as fraudsters can clone cards directly from AT s.
se comple , strong passwords for all accounts, ideally a combination of letters, numbers and symbols.
here possible, use two-factor a t entication on an financial accounts.
ever provide personal information or passwords to someone who calls when you are not e pecting it.
Shred sensitive documents before disposing of them.
here possible, use paperless billing.
eep your I safe and secure and when using an AT shield the keypad from onlookers.
heck your statements regularly and set up transaction alerts if your bank offers it.
Treat your bank or credit cards like cash and report any fraudulent activity as soon as possible.
ype of fraud hat
isit rotectionmeasures
nvestment fraud ainly involves misrepresenting information investors use to make decisions. Scammers promise a high return with little or no risk in order to attract investors. They tend to use technical argon or convey a sense of urgency with a limited amount of time to make the investments. The investigates investment scams see hapter .
id ou now
In 0 0 criminals made in e cess of million through more than uarter of a million fraudulent credit and debit card transactions in Ireland Irish imes, ovember 0 0 .
e wary of potential investment opportunities and thoroughly research and investigate any investment.
ake sure that the company is e iste ed it a iable financial institution.
ons lt afinancial ad ise be o e committing to an investment opportunity.
Stop Colla orate
Read the following article with a classmate and summarise the main points. hat types of identity theft are mentioned hat advice is offered
edco.ie/xr27
Stop Research
amine one of the types of fraud in the table above. Research one real-world e ample or a recent news story involving the type of fraud you are researching. se the following uestions as a guide
ow does this type of fraud typically occur
hat are the warning signs for this particular type of fraud
hat steps can a consumer take to protect themselves
Can you spot a scamartist ake the SA test
Financial fraudsters are finding increasingly sophisticated ways to target consumers. Take the F test before making any financial decisions or providing any personal information.
Stop Research
lic on t e lin to find o t o e abo t financial sca s and o o can protect yourself. atch the short videos and read the tips and then prepare an infographic or presentation to share with your class.
igitalcurrencies
Theme
i ital Transformation
A digitalcurrency is a currency that is only accessible via computers or mobile devices. It can also be called digital money, electronic money or cybercash. There are a number of forms of digital currency
ryptocurrency
Remember if you are offered something that seems too good to be true, it is most likely a scam!
edco.ie/asa2
This is a form of digital currency where funds are e changed through a computer network but without any central organisation to uphold or guarantee them. It is a digital currency that uses cryptography to secure and verify the transactions in a network. There are only set amounts of this type of digital currency available. Their limited availability affects their value. They are decentralised not provided through a central, public body and use blockchain. itcoin, Dogecoin and itecoin are all forms of cryptocurrency Blockchain isashareddatabaseorledger thatplays animportant roleinmaintaining thesecurityanddecentralised recordof cryptocurrencytransactions.
A new transaction is entered.
The transaction is then transmitted to a network of peer-to-peer computers scattered across the world.
The transaction is complete.
These blocks are then chained together, creating a long history of all transactions that is permanent.
This network of computers then solves equations to confirm the validity of the transaction.
Once confirmed to be legitimate transactions, they are clustered together in blocks.
A CentralBankDigitalCurrency (CBDC) is anelectronic formofcash forthedigitalised world.Itgivesconsumerstheoption to usecentralbankmoneyinadigital format, complementingbanknotesandcoins.
A D is different from stablecoins and cryptocurrencies. It is a digital currency that has been issued by a central bank rather than a commercial bank. It is made available to the public by the government of a country.
In the euro area, the is working with national central banks including the entral ank of Ireland to consider a digital version of the euro currency a digital euro.
It is an electronic e uivalent to euro banknotes and coins. It does not replace them but can be used alongside them. A faster, more secure form of payment , it can be used to transfer money from one person to another, pay for goods and services, make online payments or pay public bodies.
id ou now
In 0 the Reserve ank of India launched India s D , the digital rupee. The ahamas, amaica and igeria have also launched D s.
A digital currency differs from stablecoins its stability and reliability depend on the issuing entity and the credibility and enforceability of their pledge to maintain the money s value over time. There is no sin le identifiable entit t at is liable o c pto assets
eyfeaturesofadigitaleuro CB C
Universally accepted: It could be used to pay for goods and services from any supplier that accepts other forms of digital payment , such as debit cards or credit cards.
ree: There would be no e tra charge for using a D .
Offlineuse: A D could be used without an internet or mobile network connection. These are currently re uired when paying for goods and services using a debit or credit card.
Secure: It will not be possible to identify someone when they pay for items using a digital euro. urrently, when you purchase something using a credit card, the retailer will be able to identify you. our card will be lin ed it a financial instit tion ill p o ide the same level of privacy as cash.
Guaranteed value: The value of a digital euro will always stay the same. One digital euro will always e ual a one euro coin.
i italeuro account: onsumers could set up a digital euro account with any bank, payment service provider or electronic money institution. If a consumer doesn t have a bank or payment account they could set p a di ital e o acco nt it t e post o fice
Stop Research
atch the short clip from the at the link below that e plains how a digital euro would work. hen you a e finis ed, disc ss it a pa tne how it might work for consumers and businesses. ow would it impact them
edco.ie/66z9
Remember, it will be important that you can apply your knowledge to realli e sit ations a e note o di e ent e a ples a o nd t e topic o financial se ices and financial e lation and eep t e in o n esti ati e olde
enefi f c n e
egaltender A D would have legal tender status, so it could be used ust like banknotes and coins.
ravel It could be used in all euro one countries, so consumers would not need to access AT s or use their debit cards abroad.
ess cash ewer consumers are using cash and are moving to a more digital economy. A digital euro would support that in a safe and secure way.
enefi f ine e
idely accepted It would be accepted throughout the euro area, making it an easier, more convenient option for businesses.
Cost effective Retailers would be able to negotiate conditions with payment solution providers and reduce their costs.
irect payment Retailers would receive payments instantly without incurring additional costs or conversion charges.
Disadvantages for businesses include y ersecurity: A D would be more susceptible to hacking. usinesses would need to increase their cyber security measures.
apital: Increased investment in upgrading systems would be needed to accommodate digital currency payments.
ow thedigitaleuro would work
igital uro Account
With a bank or deposit-taking institution or through an app/ card issued by the ECB
unding Sources
Stop Research
igital uro ransactions
In hapter 1 we showed you how to analyse a newspaper article. Over the course of this chapter and the previous chapter, you have had lots of opportunities to research p to date a ticles and topical iss es a o nd financial se ices a e ti e no to analyse the key issues you have discovered through your research. The newspaper analysis template at the beginning of your Student Activity ook may be a useful tool e e e e be to file o findin s in o n esti ati e olde
Chapter uestions
Stop Check for nderstanding
1. in what is meant by a digital currency
2. in t e ole o t e ent al an o eland in e latin finance in eland, and o tline t o of its responsibilities.
3. Dis in uis between S A and IO A.
4. Dis in uis between phishing and smishing as forms of fraudulent activity.
5. in the term identity theft and state how an individual can protect themselves against identity theft.
. u ine t e o t pes o financial a d lent acti it t at can occ
evelopin your no led e
1. Dis in uis between a D entral ank Digital urrency and cryptocurrency and stablecoins.
2. u ine the potential impact of a D on both consumers and businesses.
3. u ine t e ole o t e ent al an o eland in financial e lation
4. Discuss t e ole o t e in opean financial e lation
5. in the potential conse uences of under-regulation.
. us r e your understanding of the terms phishing and smishing .
. u ine t e di e ent o s o financial a d lent acti ities t at can occ and ill st ate o a consumer can protect themselves.
Store t earn t
loc chain: A shared database or ledger that plays an important role in maintaining the security and decentralised record of cryptocurrency transactions.
entral an i ital urrency ( ): An electronic form of cash for the digitalised world. It gives consumers the option to use central bank money in a digital format, complementing banknotes and coins.
entral an of Ireland: e p i a financial regulatory authority in Ireland.
redit de it card fraud: hen someone gains access to your debit credit card n be and o pe sonal identification n be I to make unauthorised purchases or withdraw cash from your account.
ryptocurrency: A form of digital currency where funds are e changed through a
computer network but without any central organisation to uphold or guarantee them.
i italcurrency: A currency that is only accessible via computers or mobile devices.
European an in uthority (E ): nsures that there is a stable and transparent banking sector across the
EuropeanInsuranceand ccupational Pensions uthority (EI P ): Supervises insurance companies and pension markets to make sure that policyholders are protected.
EuropeanSecuritiesand ar ets uthority (ES ): Regulates security markets to ensure fair and transparent operations.
Identity theft: Taking someone s personal information, e.g. credit card details, S number or bank account information, and sin it o t e sca e s o n benefit
Investment fraud: rimarily involves misrepresenting information investors use to make decisions.
Phishin : Sending fake emails that appear to be sent from legitimate sources e.g. a bank .
ChapterChecklist
e i n f efin nci c market
entral ank of Ireland authorities
anaging risk pensions, mortgages, c edit based p od cts, c pto finance
Conse uences of under regulation
y e f fin nci f ow consumers can protect themselves
Smishin : Sending te t messages pretending to be from a reputable company seeking account information from consumers.
Sta lecoins: A type of cryptocurrency
The value of this type of cryptocurrency is linked to another currency or commodity, which makes them less volatile than other cryptocurrencies.
CentralBank igital Currency CB C
Advantages and disadvantages
Differences from stablecoins and crypto-assets
otential impact on consumers and businesses
nce f in inf e fin nci decisions i c fin nce e e ie in e media
2 Beingan nformed mployee
earningoutcomes Strand 4
At the end of this chapter you should be able to:
A how employees are protected both legislatively and nonlegislatively in the workplace.
2 S GA how the rights and responsibilities of both employees and employers are set out in current relevant employment legislation.
A R C A the importance of making informed decisions as employees and use this understanding to discuss workplace-related stories in the news and media.
Case Study: i es e or s
ifestyle Sports is a retail business that has been operating in Ireland since 19 9 The company specialises in sports apparel, footwear and e uipment , and with over 0 stores in Ireland it has grown to become one of the largest sports retailers in the country, with over 00 employees. It offers a wide range of international brands such as Adidas, nder Armour and ike. As a retail business ifestyle Sports is sub ect to the same employment laws that govern all companies in Ireland. These laws protect employees in various aspects of their working lives, from contracts and pay to health and safety. ifestyle Sports must provide all its employees with a written statement of their terms and conditions of employment , including their ob title and holiday entitlements. The company is an e ual opportunities employer and is re uired to ensure fair treatment when it is hiring or promoting staff and also in its workplace policies. All employees at ifestyle Sports are entitled to the minimum wage There is a strong emphasis on customer service and in-store e perience. It has a legal duty to provide a safe working environment for its employees and must conduct risk assessments, provide ade uate training and ensure that all employees and customers are protected from any potential workplace ha ards. mployment laws ensure that all employees at ifestyle Sports, and other similar businesses in Ireland, are protected from unfair treatment , discrimination and other potential workplace issues. As a company, ifestyle demonstrates a strong commitment to employment laws and employee welfare, enhancing its reputation as an attractive employer in the retail industry
ow employeesareprotectedinthe workplace
am ip
Remember, it is important that you can A this legislation to real-life scenarios. efore we begin, work in pairs to research some e amples of disputes between employers and employees. a e note o at ca sed t ese disp tes and o t e e e esol ed e e be to file t e in your Investigative older
e islativeandnon le islativeprotections
In Ireland there are numerous legislative and non-legislative protections for employees in the workplace, including on working conditions, employment rights, health and safety and industrial disputes. The laws are designed to safeguard the rights and the wellbeing of each employee in a workplace.
egislative protections on legislative protections mployees are protected by laws. If employers b ea t ese la s, t e can be p osec ted o fined
on le islativeprotections
rotections that are not set down in law.
efore we e amine legislative protections, let s look at how employees are protected non-legislatively in the workplace. These protections are not legally binding but offer protection for employees through company policies, support of trade unions, and setting workplace standards and codes of practice.
Trade unions protect their members by negotiating on their behalf for better pay, improved working conditions and additional benefits and s ppo ts e eisst en t in numbers and trade unions advocate for workers, making employees voices heard. They support and represent workers in any grievances or disputes. e look at these in more detail in hapter 9
Business and Financial Literacy Theme
any industries have representative organisations that speak for all businesses within the sector. They establish codes of practice and guidelines for their members that promote and encourage fair conduct, e uality and safety. These codes of practice set standards and e pectations and encourage ethical behaviour and a respectful, positive climate.
Organisations have internal procedures for handling complaints and disputes e.g. about harassment or bullying . These policies provide a clear path for employees to raise their concerns, assuring them that their voice will be heard and acknowledged and that the problem will be dealt with. aving clear policies and grievance procedures creates a climate of trust within an organisation, leading to a positive culture.
any employers offer programmes to support their employees. These may take the form of corporate wellness programmes, which nurture a diverse, inclusive and healthy workplace. e learn about corporate wellness in hapter 0
Business and Financial Literacy
e islativeprotections
ay
ational inimum age Act
mployment uality Act
ayment of ages Act
Conditions
ealth, Safety and elfare at ork Act
Organisation of orking Time Act
Terms of mployment Act
egislation
iscrimination
mployment uality Act
ual Status Act
ealth and safety
ealth, Safety and elfare at ork Act
Security of employment and dismissal
nfair Dismissals Act
Redundancy ayments Act
nformationa out your o erms of mployment nformation Act 994
mployers must provide employees with a written statement contract of the terms and conditions of their employment , including ob title, pay, working hours, holiday entitlements and any other ele ant in o ation elatin to t ei ob is cont acts o ld be p o ided to an e plo ee it in fi e days of commencing their ob.
ailure to provide this information to an employee will leave the employer open to a claim.
Statement of information must be given to the employee no later than two months after their commencement date
Statement must include the following
ull names of employer and employee
Address of the employer
lace of work
Title of the ob
Date of commencement
Theme
If a temporary contract, the e pected duration of the contract
Rate of pay or method of calculation of remuneration
Terms and conditions relating to overtime, paid leave and pensions otice period.
Business and Financial Literacy
The Act does not apply to employees working less than eight hours per week.
e learn about D R in hapter .
Stop Colla orate
ou and your classmates may have part-time obs. ave a class discussion about the conditions of your employment. hat are your working hours ow many breaks do you get Are you getting paid the correct minimum wage for your age
ermsand conditions of employment rganisation of orking ime Act 99
Sets limits on the total amount of working hours currently a ma imum of hours per week ensures employees receive ade uate rest breaks and all annual leave entitlements.
Also covers night workers an employee whose night-time working hours e ceed half of their annual working time or three hours between midnight and a.m. .
mployees must have a 1 -minute break when they work more than hours this increases to 0 minutes when an employee works more than si hours these rules do not apply to the arda or the defence forces .
Different break rules apply to trainee doctors, farm workers and some retail workers.
All employees are entitled to annual leave, including full-time, part-time, temporary and casual workers.
ational inimum age Act 2 2
stablished the principle of a statutory minimum wage.
rom 1 anuary 0 , the standard minimum wage for workers aged 0 and above is 1 . 0 per hour
There are lower, age-based rates for younger employees
19 years old 1 .1 per hour
1 years old 10. 0 per hour nder 1 9. per hour
The rates apply to full-time, part-time, temporary, casual and seasonal workers.
e tain ind st ies, s c as sec it and cleanin , a a especific pa ates o e ned by mployment Regulation Orders ROs .
The minimum wage includes elements such as basic pay, shift premiums, bonuses and commissions.
an e plo e p o ides ood o acco odation t e a e allo edto acto inspecific amounts to the wage calculation.
The national minimum wage will transition into a new living wage by 0 .
Stop Colla orate
orking with a classmate, research the following uestions and complete the legislation activity on page 1 9 of your Student Activity ook.
hat is the current minimum wage in Ireland
ow many different wage rates are there and why are there different rates
hat government department decides on Ireland s minimum wage
hat does the -hour working week not include
ame two organisations that are e empt from the -hour working week.
The minimum wage may change whenever the government publishes a new budget. It is important to keep up to date with these changes.
Anti discriminationande uality inthe workplace
ual Status Act 2
rohibits discrimination in the provision of goods and services, education and accommodation.
Discrimination on nine grounds is outlawed ender
arital status
Age Disability amily status Race
Se ual orientation
Religion embership of the Travelling community
rohibits discrimination in the provision of accommodation services against people who are in receipt of rent supplement , social welfare payments or housing assistance. uality for disadvantaged persons is supported.
Advertising deemed to be discriminatory is prohibited.
mployment uality Act 2 9 2
Outlaws direct and indirect discrimination at work and covers both the public and private sector. omplaints under this Act are heard by the orkplace Relations ommission R .
All employees must be treated the same in relation to pay and conditions, recruitment , training or e perience, promotion and dismissal.
The Act also deals with complaints of harassment and insists all employers actively prevent this.
Discrimination on nine grounds is outlawed ender
arital status
Age
Investigation:
Disability amily status Race
Se ual orientation
Religion embership of the Travelling community
If an employee feels that they have been a victim of workplace discrimination they can take a case a ainstt ei e plo e toanad dication o fice at t e it in si ont s o t e disc i ination occurring.
A hearing will be held on the case each side can ask uestions and can be uestioned. All evidence will be considered and a written decision will be made and given to both sides. This decision is then published on the R website.
The decision can be appealed to the abour ourt , which will then make a legally binding ruling on the issue.
t e ad dication o fice finds in a o o t e e plo ee, t e e plo e can be o de ed to pa compensation for the discrimination.
id ou now
The Irish uman Rights and uality o ission as set p on 1 ovember 01 as an independent public bod ts p pose is to p otect and p o ote an i ts and e alit in eland and build a culture of respect for human rights, e alit and inte c lt al nde standin ac oss is societ
id
In the Irish workplace, the most common form of discrimination reported is gender-based.
Source https gendere uality.agency
Top1%ofearnings
Top10%ofearnings
Top25%ofearnings
Allemployment
ender re resentati ninem l yment y earnin s rac ets 2 22 em l yees
Stop Research
ind some up-to-date statistics on workplace discrimination. hat is the main focus of workplace discrimination Is there a difference in discrimination faced by men and by women hy do you think this is
overs all employees aged 1 who have worked over eight hours per week for more than one year with the same employer. omplaints are heard by the R .
The burden of proof is on the employer to show that the dismissal was fair. Unfair rounds for dismissal include pregnancy, race, religious beliefs, being a member of the Travelling community, membership of a trade union, unfair selection for redundancy, political beliefs. air rounds o dis issal incl de o e iscond ct, inco petence, lac o alifications, necessary redundancy to remain competitive in the industry
Incompetence: The employee lacks the ability to carry out re uired duties poor work performance, failure to meet set targets . They must be made aware of the standards e pected of them from the outset and if they fall short this must be e plained. There should be clear communication with the employer as to what improvements need to be made.
2 Qualifications: ac o o al, tec nical o p o essional alifications app op iate o t e o t e e plo ee as e plo edtodo isleadin e plo e in elation to alifications isconduct y theemployee: Improper unacceptable behaviour by the employee, e.g. theft substance abuse violence at work. This can also lead to dismissal from the ob with without pay depending on the seriousness of the misconduct.
4 edundancy: Due to closure competition decline in demand, cutbacks. air procedures must be applied e lastin, fi sto t , t e e plo e sts o t att e ed ndanc is necessa and that the employee won t simply be replaced.
See additional information on pages 9- 1 on unfair dismissals and the procedure following a dismissal.
nsures that employees who lose their obs due to redundancy are compensated.
Acts as a security net for those affected by redundancy mployees must be at least 1 years of age and have a contract of employment , an app entices ip o old an o fice in t e p blic se ice
The legislation does not apply to employment where the employer is a family member mployees must have at least two years continuous service with the employer to avail of redundancy under this Act.
Also applies to people who are over the age of and if not for their age would be insurable.
Redundancy must be genuine the ob must no longer e ist due to business closure, downsi ing or restructuring .
The redundancy payment paid is calculated as two weeks pay for every year of service plus an additional one week s pay.
It is the employer s responsibility to make these payments, but if they are unable to do so the Social Insurance und will step in to cover the payments. mployees must complete a redundancy payments form R 0 .
Stop Research
hoose an Irish Act that impacts employees, for e ample the Safety, ealth and elfare at ork Act 00 , the arental eave Acts 199 019, the aternity rotection Act 199 , the rotection of mployees art time work Act 001, or any other relevant Act. Research and answer the following uestions about your chosen law and prepare a two-minute presentation about it for your classmates.
hat is the name of the law
hen was it passed
hy was this law made hat problem was it trying to solve
hat does the law do plain in simple terms what changes the law made.
ho does the law affect or e ample, the en i on ent , people s ealt o specific o ps o people.
Stop Colla orate
Stop Colla orate
o in pai s to find e amples of real-life cases that employees took against their employers. ote the cause of the dispute and what happened afterwards. In your opinion, could these situations have been avoided
orking with a classmate, complete the case study scenarios on pages 1 -9 of your Student Activity ook. ou must be able to state what Act each case study is referencing.
Constructive dismissal
This is when an employer makes it so difficult for an employee to work that they are forced to stay out of work or to leave altogether, e.g. when an employee is constantly being harassed by their manager
Employees have the right to know the reason for dismissal, to argue against it and to be present at any meeting about the dismissal. They have the right to an impartial hearing, with representation.
2 Employees can complain to the rights commissioner and/or bring the complaint to the Employment Appeals Tribunal.
ip
The onus is on the employee to prove constructive dismissal.
Redress for unfairdismissal
If an employee wins their case with the adjudication officer for unfair dismissal they are entitled to the following:
Reinstatement (treated as if they had never been dismissed).
The employee:
1 Gets their job back
2 Is entitled to back pay from the date they were dismissed
3 Is entitled to any improvements in conditions of work since they were dismissed.
2 Re-engagement. The employee may:
1 Be given another job in the firm under acceptable conditions
2 Get their old job back, but only from a certain date, such as the date when the decision went in their favour They are not entitled to any compensation for loss of earnings. This remedy is rarely used.
Financial compensation (the most common remedy). The employee may:
1 Be entitled to up to two years’ salary if they have suffered a financial loss due to being dismissed
2 Be entitled to up to four weeks’ salary if they haven’t suffered a financial loss. They are not entitled to compensation for injury to their feelings or for stress resulting from the dismissal.
roceduresin a fairdismissal
Every business needs to have a clear dismissal procedure in place for all employees as you can’t just fire someone on a whim. There has to be clear procedures and they must be followed exactly as they are laid out. During the procedure for fair dismissal an employee can respond to the complaint at all stages or bring a colleague or a trade union rep with them to all meetings.
Counseltheemployee: The employer notices that the employee isn’t working to their potential. They arrange an informal meeting to address the issues and see if they can help by offering extra training, etc.
2 Verbal warning: The employee’s performance has not improved. A formal meeting is arranged, at which the employer states the improvements that need to be made and sets a timeline for these to be achieved.
Firstwritten warning: Issued to an employee if there hasn’t been any improvement in their work. Additional training may be offered to improve their performance.
4 Finalwritten warning: Given to the employee if there is still no significant improvement in their work. A timeline for improvement will be outlined and if things do not improve the employee may be suspended or dismissed.
Suspension: The employee is suspended without pay while the employer looks further into the matter and tries to get to the bottom of the employee’s underperformance.
Dismissal: The employer notifies the employee that their position in the company has been terminated because their work hasn’t improved, despite additional training, warnings, etc.
A man who had worked for 1 years in the same garage before being fi ed as a a ded , o n ai dis issal and ltiple t e breaches of employment law. Read more about it here
Case Study: n irdis iss
In a 0 orkplace Relations ommission R decision A ales ecutive v A oft are ompany the R awarded 9,199 to an employee in what was then the largest award for unfair dismissal ever made in Ireland. The case was about an employee who was dismissed on the grounds of serious misconduct, following allegations of bullying being made against him. The employee had appro imately months service with the employer and said that his annual remuneration was 0 , 9 this was contested by the employer . The employee claimed his dismissal was unfair for several reasons, including
The investigation leading to his dismissal did not follow the procedures set out in the employee handbook.
e should have had the right to legal representation.
The employer had decided to dismiss the employee before conducting the internal disciplinary procedure.
The employer said that there had been a full and fair investigation and disciplinary process, with provision for an appeal. The employee was warned about his behaviour and the employer had tried to deal with the issue before taking it to a formal disciplinary procedure. The employee s behaviour worsened and the employer opted to suspend the employee, with pay, pending further investigation. An investigation followed and the employee was dismissed following an appeal.
n is decision t e ad dication o fice c iticised t e e plo e o ailin to ade atel a n the employee that his role was in eopardy The employer did not ade uately engage with their own disciplinary policy and there was a lack of training for the employee on the bullying and a ass ent polic e ad dication o fice decided t at t e ann al e ne ation o t e employee, as calculated by the employee, was reasonable. The employee was unemployed for over two years and the new role he had obtained was paid substantially less than he had earned in his previous ob.
Source onor hite, argest award for unfair dismissal in Ireland , Irish Legal e s, uly 0
orkplaceRelations Act 2
This piece of legislation was enacted on 1 October 01 . It amended the primary employment and industrial relations legislation, providing the legal basis for the orkplace Relations ommission R which we learn about in hapter 1 , making the process more accessible and simpler This Act enables or empowers the R to undertake a range of functions that would have formerly been carried out by a number of different statutory bodies, such as the uality Tribunal and the mployment Appeals Tribunal. The Act also provides for the abour ourt to be the court of appeal or appellate body to determine appeals against decisions of the R .
Stop Colla orate
e learn about the role of the R and the abour ourt in hapter 1 . orking in groups, complete a placemat activity to recall the key terms relating to these state bodies. hen you a e finis ed, p t to et e a p esentation to s a e it o class teac e s o casin at o have learned. Include recent e amples of cases involving the R and abour ourt.
Stop Colla orate
ook at the statistics on the orkplace Relations ommission infographic below. Share your thoughts about them with a classmate
ey ndicators
Recap
The R published a ode of ractice on the Right to Disconnect, which came into effect in 0 1. It outlines an employee s right to disengage from work and not routinely perform work o tside t ei no al o in o s ead t e a ticle to find o t o e edco.ie/uv7w
id ou now
i o td as fined illion in for non-compliance with general data processing principles. hatsApp Ireland td as fined o e illion o ins ficient le al basis o data p ocessin
Source D R nforcement Tracker
mployment legislation in Ireland aims to protect all employees from being treated unfairly, e ploited or being forced to work in unsafe working conditions. It is about promoting a sense of e uality in the workplace and making sure that all employers provide the necessary paperwork and working conditions to all employees to ensure that they complete their work as outlined in their contracts.
mployees also have several responsibilities, mainly completing the duties as per their contracts and adhering to all workplace rules.
Chapter uestions
Stop
Check for nderstanding
1. is four different types of legislation that affect employees in the workplace.
2. in what is meant by the term discrimination .
3. Descri e the steps in a fair dismissal.
4. in the grounds for dismissal deemed fair under the terms of the nfair Dismissals Act 19 01 .
5. u ine your understanding of the mployment uality Act.
. u ine the process for redress for unfair dismissal.
. n es i e how the rights and responsibilities of both employees and employers are set out in current relevant employment legislation.
evelopin your no led e
1. u ine the rights of an employee in relation to their terms and conditions of employment.
e the two pieces of legislation that protect employees in relation to discrimination and e uality in the workplace. Outline the rights and responsibilities of employees set out in these pieces of legislation.
De ons r e your understanding of term constructive dismissal .
u ine the responsibilities of employers in relation to employment e uality and discrimination.
u e the role of the orkplace Relation ommission.
u ine the functions of the abour ourt
Discuss the rights of employees and the responsibilities of employers in relation to remote working.
Store t earn t Business and
iscrimination: hen one person is treated less favourably than another person would be in a comparable situation.
EmploymentE uality ct : Outlaws direct and indirect discrimination at work and covers both the public and the private sector.
E ual Status ct : rohibits discrimination in the provision of goods and services, education and accommodation.
ational inimum a e ct : stablished the statutory minimum wage effective from 1 anuary 0
r anisation of or in Time ct : Sets limits on the total hours an employee can work.
edress: Reinstatement , re-engagement or financial co pensation ollo in an n ai dismissal.
edundancy Payments ct : nsures that employees who lose their obs due to redundancy are compensated.
Terms of Employment(Information) ct : mployers must provide employees with a written statement contract of the terms and conditions of their employment.
Unfair ismissals ct : overs all employees aged 1 who have worked over eight hours per week for more than one year with the same employer.
ChapterChecklist
Rightsandresponsi ilities of employees aresetoutinlegislation e g : ay ational inimum age Act 0
onditions Organisation of orking Time Act 199
ealth and safety Safety, ealth and elfare at ork Act 00
mployees have othlegislativeand non legislativeprotection: R
abour ourt
mploye e Gove rnance
earningoutcomes Strand 4
At the end of this chapter you should be able to:
SCR B the role of trade unions in the workplace.
4 SC SS the role of the gig-based economy and identify the associated opportunities and challenges for workers.
S GA how the annual government budget impacts on workers.
A R C A the importance of making informed decisions as employees and use this understanding to discuss workplace-related stories in the news and media.
Role of tradeunions
Tradeunion: anassociationof workersfrom aparticulartrade,companyorindustrywho come together to try to improvetherightsof workerswith regard to pay, workingconditions, benefitsandsocialandpolitical stat s
Trade unions play a vital role in the workplace in several ways, but fundamentally through representing the collective voice and interests of their members A trade union must have a Trade nion egotiation icence to enable it to negotiate employee wages and other conditions of employment. This process is carried out through collective bargaining.
To oin a trade union and participate in collective bargaining see page .
radeunionsand collective argaining mployee rights mployer responsi ilities
mployers in Ireland are not obliged to recognise trade unions, but they do have an obligation to respect their employees rights to oin a trade union. They must not discriminate against employees who do decide to oin a trade union.
ere are some of the key roles that trade unions perform in Ireland ollective ar ainin : Trade union representatives negotiate with employers on the conditions of employment. They aim to secure better wages, improved working conditions and ob perks and benefits is p ocess is called collecti e ba ainin t p o ides e plo ees it an oppo t nit to achieve more collectively than they would if they were to act individually mployers are under no obligation to meet with trade unions to negotiate pay and working conditions.
2 Protectin or ers ri hts: They work to ensure that national labour laws, workplace policies and contracts are all adhered to, essentially protecting workers from unfair treatment. They work collectively to help address workplace discrimination or harassment and any dismissals they deem unfair As members of a trade union, workers will be kept informed about their rights and legal protections they are entitled to. Trade unions ensure that businesses abide by legislation on health and safety, overtime and family medical leave
e alrepresentation: Should an employee find t e sel es acin a le al c allen e, t ei trade union will provide legal representation. egal challenges could be to do with wrongful termination or a workplace accident. The support provided by the union reduces the burden placed on the individual in their pursuit of ustice. The union will help them receive fair treatment.
4 isputeresolution: In a dispute between employers and employees, trade unions mediate between management and employees. Disputes could include grievances about pay and conditions, working hours, unfair treatment or disciplinary actions. All unions have structured processes in place to help resolve con icts ei ai is to a oid st i es o le al battles with businesses.
TradeunionsinIreland
There are over 0 trade unions in Ireland. They all re uire a licence granted by the inister for nterprise, Tourism and mployment. Over 0,000 employees in Ireland are part of a trade union.
The Irish ongress of Trade nions I T is the umbrella organisation for trade unions, representing a range of interests of I T members, in both Ireland and orthern Ireland. et s look at the key aspects of I T
Represents workers in discussions with the government , employer bodies Irish usiness and mployers onfederation I and other interest groups
Represents almost all unions in Ireland egotiates national agreements with government and employers romotes the principle of trade unionism through campaigns and policy development rovides information, advice and training to unions and their members.
ris ion e c ers r nis ion
argest teachers trade union in Ireland
Represents primary school teachers in negotiations with the Department of ducation in relation to pay, pension rights and working conditions
articipates in collective bargaining
Offers legal representation to its members who are facing disciplinary measures
rovides professional development opportunities for its members, e.g. conferences, in-service and training
rs Represents public sector workers, including civil servants, local government workers, health workers and aviation staff
The second largest union in Ireland and the largest trade union voice in the Irish civil and public service
Over ,000 members
Advocates for fair wages, ob security and public sector reform
argest trade union in Ireland. urrently represents over 1 0,000 workers
Represents workers in sectors such as healthcare, education, manufacturing, services
ocuses on improving wages, working conditions and ob security
la s a si nificant ole in collecti e ba ainin and in encin labo policies
Represents workers in both the public and private sector
aters for full-time, part-time, permanent , contract and temporary workers, as well as retired and unemployed members
ris urses nd id i es r nis ion
The only union in Ireland that has collective bargaining rights for nurses and midwives
Over ,000 members
ights for better healthcare funding, safe sta fin le els and i p o ed o in conditions for nurses and midwives
Represents members from both the public and private sector
Stop Research
Select a trade union from one sector of the economy e.g. education, healthcare, manufacturing, etc. . reate a short report and investigate the following hat issues they focus on e.g. wage negotiations, worker safety, gender e uality . hat successes or challenges they have had recently ow they engage with workers and employers.
ere are some ideas of trade unions you might e amine I TO, ASTI Association of Secondary Teachers in Ireland , T I Teachers nion of Ireland , andate, nite.
Benefits of tradeunions
or employers or employees
egotiation on behalf of a large number of individuals.
ollective bargaining ess time-consuming than negotiating with individual employees. Once the union and employer have reached an agreement it will apply to all members of that trade union.
ational collective bargaining Takes place between interest groups representing the government , employers I and employees I T .
Role of
theshop steward
rotection akes employees aware of their rights in the workplace working conditions, etc. and will protect them if a business breaks any of these conditions.
ay and conditions egotiates with management on behalf of staff to gain better pay and conditions.
Information rovides information and support to members on issues such as pay and leave entitlements.
A shop steward isatradeunionmemberwhohasbeenelected by colleaguesastheir representativeinthe workplace.
Acts as a link between the union members in their workplace and the staff in the union . Relays concerns and grievances from workers to management and communicates the responses back to the employees.
ommunicates with employers on issues such as working conditions, wages and other terms of employment.
Receives information from the union and then passes it on to the members in their workplace.
nsures that all collective agreements made between the trade union and the employer are upheld.
Advocates for employees interests and ensures that employment laws are followed.
eets with management to discuss workplace issues such as changes in working conditions or disputes about contracts.
Acts as a support to and represents colleagues during disciplinary processes.
an act as an employee representative during the collective bargaining process.
Recruits new members to the union, encouraging people to oin by outlining how union e be s ip co ld benefit t e
elps to resolve workplace disputes before they escalate to a level that re uires e ternal intervention. egotiates, facilitates mediation and is part of the formal dispute resolution process. If a dispute cannot be solved internally, a shop steward will assist their union members to submit a case to the orkplace Relations ommission R and, if re uired, the abour ourt.
Stop Colla orate
orking with a classmate, read the article at the link below and answer these uestions hat governing body made the decision to award the worker , 00 and why ist two of the decisions the governing body mentioned that led to them awarding the money. hat union was the worker a member of hat role did the worker play in the situation outlined in the article at as t e ad dication o fice s decision
edco.ie/v5tc
Plumbers, pipefitters, welders and apprentices, who are members of the Unite trade union, are staging a picket outside the National Children’s Hospital site in Dublin in a dispute over travel allowances
Pickets set for sites in Dublin, Cork, Limerick and Kildare. Unite seeking reversal of austerity-era cut to “travel time”.
Industrial elations ct
is is anot e piece o le islation t at pla s a si nificant role in shaping the legal framework for how trade unions operate in Ireland. hen it comes to industrial action and collective bargaining trade unions have certain rights and responsibilities. The Industrial Relations Act 1990 sets out the rules for industrial disputes between employers and employees.
Tradedisputes
e ct defines a le iti ate t ade disp te as an dispute between employers and workers, which is connected with the employment or non-employment or the terms and conditions of employment of any person .
The Act sets out grounds for reasons for valid, or legitimate, trade disputes. Any disputes connected with pay and conditions of employment , health and safety, employee dismissal, employment policy, the range of duties re uired of employees, trade union recognition, improvement of statutory conditions, redundancies, etc. are all valid.
Illegal trade disputes include disputes about how a business should be run or political disputes.
Secret allots
o strike or other industrial action can take place without a secret ballot this means that how a person votes remains secret . All members must be given a fair opportunity to vote and no industrial action should take place unless a ma ority of votes are in favour of industrial action. The union must make results of the vote known to members as soon as practicable.
One week s notice of action must be given to the employer involved in a dispute.
An officialdispute is one where a union has received approval from workers in a secret ballot and t is is confi ed b
—Unofficialdisputes have no I T or union approval and workers receive no strike pay. anise s o no ficial disp tes a e no le al p otection a ainst bein s ed b t ei employers for loss of earnings.
t ade nion e be s en a e in an no ficial disp te, an e plo e can et an in unction a court order restricting certain activities against the workers involved.
Pic etin
Picketing isapeacefulprotestoutsidean employer splaceof work. orkers stand outsidethe workplacewithplacardsand signsletting othersknowtheyhave adispute withtheiremployer. Secondarypicketing is picketinganemployer otherthantheprimary employerinvolvedinadispute.
Primarypic etin is legal.
Secondarypic etin is illegal unless it is reasonable to believe the second employer was directly assisting the primary employer and aggravating the issue.
mployers cannot get a court in unction to stop employees picketing if they have followed procedures properly losedshop ille altradedisputes:
A closedshop is illegal. This situation occurs when a worker is forced to oin a particular union once they get a particular ob. o one in Ireland can be forced to oin a union.
Ille altradedisputes are when workers are sub ected to a closed shop, disputes due to politics and disputes on the way the company is run. If any of the above occurs a manager can sue if it causes losses for the company.
Immunity
Trade unions and union members are immune from legal action prosecution for damages or losses suffered by the employer as a result of a trade dispute. This is only the case if the disp te as an o ficial disp te and a sec et ballot too place
The Industrial Relations Act is a fundamental piece of legislation as it strikes a balance between allowing industrial action to proceed if re uired, but at the same time making sure it is carried out in lawful manner with a focus on no undue harm occurring to either employers or employees. It reinforces t e ole o t ade nions in fi tin o at t ei e be s eel is i t and st, b t in a anne t at is peaceful and constructive.
Recap
The abour ourt is a free and impartial service to resolve industrial disputes and decide on appeals to disputes. It is the court of last resort . Take some time now to look at the information about the abour ourt in hapter 1 . rite a note in your copy outlining the functions of the abour ourt. ind a recent e ample of a abour ourt case and share it with your classmates.
hegigeconomy
amples of obs in the gig economy include riting code for a business app or ebsite, delivering food, doing private tutoring or even a musician playing a session in a local hotel.
The gig-based economy in Ireland has grown si nificantl in ecent ea s, ost notabl since the ovid-19 pandemic.
The gigeconomy isthepartof thelabourmarket that relieson temporary,part-timeorfreelance work. eopleprovideon-demand, temporary workandservicesrather thanhavingpermanentpositions.
id ou now
Studies suggest that over 00,000 people in Ireland are in temporary or contingent employment arrangements. This e uates to 9 of the workforce.
Irish imes, September 0 0 Ethics
This sector of the economy is predominantly made up of workers who have short-term contracts, ca o t eelance o and s all a e te po a o e ible obs i o e s tend not to be employed directly by companies and work instead as independent contractors for them. eli e oo, be and st at a e st a e o t e co panies in eland t at pla a si nificant ole in the gig economy.
The gig economy, which is seen as a critical part of the Irish economy, is driven by a number of factors, including Technological advances hanges in customer preferences le ibility from both employers and employees.
The gig economy presents numerous opportunities for workers in Ireland, but it also highlights the challenges workers face with regards to workers rights, security and working conditions. et s e amine these further on the ne t page.
pportunities Challenges
le i ility ein e ible as to en, where and how long you work is a huge incentive. This style of work allows workers to balance their work life with their personal life. It s a real incentive for people who don t like the idea of a nineto fi e ob
Additional income orkers can supplement their primary income by working additional obs. latform-based obs online gigs are a common way to supplement income.
ack of o security ig workers have very little ob security in comparison with those in long-term employment. The obs they undertake are usually temporary and very dependent on the availability of gigs, leading to a lack of consistent income.
ack of workers rights ig workers often go without some of the traditional benefits associated it employment , such as sick pay, pensions, holiday pay and health insurance.
ntry level access
The vast ma ority of gigbased obs do not re uire a i le elo alifications or e perience e.g. delivery driver, rickshaw driver, freelance service provider . This gives those who might ot e ise st le to find employment an opportunity to work and earn money.
Stop Colla orate
orking with a partner, e amine the gig economy activity on page 1 of your Student Activity ook. our task is to decide which companies industries workers are part of the gig economy.
Stop Colla orate
orkplace safety orkers in the gig economy undoubtedly face challenges with security and safety e.g. road accidents, personal in ury . They often don t receive health and safety training, putting them at a higher risk. They can also e perience burnout and stress due to the pressure of accepting more gigs to secure income.
The gig economy sector is growing in Ireland. There are arguments that Ireland needs to e amine its labour laws to be in a position to provide more support for current and future gig workers. Debate this issue in class, remembering to support the points you make with relevant theory and e amples.
Stop atch
ook at the short clip on the gig economy and make sure you are confident in o nde standin of what the gig economy is edco.ie/wqce
he government udgetand workers
Stop Research
In October each year, the government publishes its annual budget ey economic indicators are covered in hapter . The budget will include key measures that impact on workers daily lives. ook up the most recent budget. reate an infographic t at o tlines t e ost si nificant eas es in t e budget ow will these impact workers resent your infographic to your class. Do you agree disagree with these measures e prepared to take the hot seat If you were in charge, would you have done anything differently Take it in turns to present your infographics to your classmates. Answer their uestions and defend your decisions
Sectoral e penditure
Activity
omplete the mind map on pages 1 -1 of your Student Activity ook to summarise this year s budget. ow will the decisions made in this year s budget impact you ow will they impact your a il o ill find so e se l in o ation abo t e e t e o e n ent allocates its eso ces and funding at the link below.
edco.ie/4zmt
e b d et o tlines o t e o e n ent ai s to aise additional finance s all t o ta ation and the sectors where spending has been allocated, such as public services, welfare and in ast ct e e b d et as a si nificant i pact on o e s, a ectin a eas o t ei li es s c as income, employment conditions and social protection measures.
a
elfare
orkplace regulationsand workers rights
ealthcare e b d et decides o c finance is allocatedtot e ealt secto is includes hospitals, mental health services and clinics. The more spent on healthcare, the fewer additional costs for someone re uiring medical attention.
ducation and training An increase in funding for education and training will help employees to upskill and or retrain. hen the government invests in further education and trades plumbers, ca pente s, etc t e a e benefitin t e co nt in ene al
ransport Investment in transport is key to Ireland maintaining our workforce by providing public transport that is accessible and affordable for commuters. f i in n in i n
ne o t e la est a eas e et e b d et can a ect o e s is eas es t at elp o setin ation and cost-of-living increases for workers.
alue Added a A A reduction in AT on essential goods and services, e.g. petrol, childcare and energy, will help workers manage rising costs in the economy.
uel allo ances subsidies These help reduce workers outgoings.
Support for usiness and o creation
e b d et can in ence e plo ent oppo t nities b allocatin ants and s bsidies, e in technology and manufacturing.
ay elated ocial Insurance I A reduction in RSI contributions helps businesses retain workers during economic downturns or periods of uncertainty a relief for start-up businesses encourages ob creation.
orkplaceregulationsand workers rights
The government can introduce new regulations on working conditions and allocate funding to regulatory bodies, e.g. more funding for the R means they can resolve more workplace disputes and protect workers rights even further The budget will also allocate funding to policies such as parental leave and sick leave, ensuring that workers will receive ade uate pay if they are out of work.
id ou now
About 1 ,000 people in Ireland earn the minimum wage, a group disproportionately made up of women, younger workers and people with disabilities, many of whom are employed in the retail, hospitality and services sectors.
Irish imes, 1 August 0
Stop Research
ook up the current minimum wage in Ireland. as it increased or decreased in the past few years plain your answer with reference to theory covered in the course to date.
To summarise, the government provides opportunities for workers through the annual budget in the following ways
ncreased disposa le income
2 o creation
mproved access to services
4 mprovement in work life alance
As we have seen, the budget plays a pivotal role in shaping how workers in Ireland live their lives. It takes into account their take-home pay, their access to public services and their potential to upskill and retrain. A government budget can create opportunities for increases in income, but it can also present challenges, especially if ta es increase or public services are reduced or underfunded. It is a key instrument in both keeping the economy in line and maintaining the welfare of workers.
Stop Research
In hapter 1 we showed you how to analyse a newspaper article. Over the course of this chapter you have had lots of opportunities to research recent articles and topical issues relating to employment rights. se the newspaper article analysis template on pages 9 10 of your Student Activity ook to help you apply your knowledge to these up-to-date case studies
Chapter uestions
Stop Check for nderstanding
1. Discuss the role played by a shop steward in a business.
2. in the term collective bargaining .
3. Descri e how the provisions of the Industrial Relations Act impact on trade unions.
4. us r e your understanding of two different trade unions.
5. u ine t e benefits o t ade nions o e plo e s and e plo ees
. De ons r e your understanding of three of these terms in relation to the Industrial Relations Act
a Secret ballot
b icketing
c Trade dispute
d Immunity
. Dis in uis between primary and secondary picketing as types of industrial action for employees.
. in the term closed shop .
. Dis in uis between I T0 and SI T as trade unions.
1 . u ine your understanding of the gig economy.
11. Di eren i e between the opportunities and challenges faced by gig workers.
12. in the purpose of the national budget.
13. is and b ie e in three areas of the budget that affect workers.
Store t earn t
losedshop: hen a worker is forced to oin a particular union once they get a particular ob.
ollective ar ainin : hen trade union representatives negotiate with employers on conditions of employment.
rsa: Represents public sector workers, including civil servants, local government workers, health workers and aviation staff.
Gi economy: The part of the labour market that relies on temporary positions, part-time workers or freelancers. eople earn money from providing on-demand, temporary work and services rather than having permanent positions.
I E (Irish usiness andEmployers onfederation): Represents over ,900 businesses.
Business and Financial Literacy Theme
Immunity: Trade unions and their members are immune from legal action prosecution for damages or losses suffered by the employer as a result of a trade dispute.
I (Irish ursesand id ives r anisation): Trade union representing nurses and midwives.
Pic etin : eaceful protesting outside an employer s place of work.
Secondary pic etin : icketing an employer other than the primary employer involved in a dispute.
Secret allot: ow a person votes remains secret o strike or other industrial action can take place without a secret ballot.
Shop ste ard: orker and trade union member who has been elected by colleagues as their representative in the workplace.
SIPTU(Services,Industrial,Professionaland TechnicalUnion): The largest trade union in Ireland, representing workers in sectors such as healthcare.
Tradedispute: Any dispute between employers and workers that is connected with the employment or non-employment or the terms and conditions of employment of any person.
Tradeunion: An association of workers from a particular trade, company or industry who come together to try and improve the rights of workers with regard to pay, working conditions, benefits and social and political status.
ChapterChecklist
Role of tradeunionsinthe workplace
Different trade unions
Shop stewards
Industrial Relations Act 1990
Gigeconomy
Opportunities and challenges for workers
AnnualGovernmentBudget
Investigate how annual budget impacts workers
Glossary of e rms
Thisglossaryisintended to clarifyconceptsand termsusedinthisbook.
usinessmodelcanvasA businessmodelcanvasisa toolused to mapoutabusinessmodelandincludes the keypartners,activitiesand resources,the valueproposition whythecustomer wouldchoosetheproduct service ,customers,customer relationsandchannels, costsand revenues.
irculareconomyA modelofproductionandconsumptionwhich e tendsthelifecycleofproducts, reduces wasteandcreatesfurther value.
ompetencies of entrepreneurs Theintegrationofknowledge,skills, valuesanddispositionsthatsupportand fosterinnovation.
orporate wellnessAnorganisational focusone uality,diversity,inclusivityandthe overall wellbeingof the workforce to nurtureadiverse,inclusivityandhealthy workplace.
Designthinking
Aninnovative,non-linearapproach to thedevelopmentofproductsandservices which focusesonsolutions fortheenduser.
entral ankDigital urrency D D isanelectronic formofcash forthedigitalised world.Itgivesconsumersthe option to usecentralbankmoneyinadigital format, complementingbanknotes andcoins.
Digitalcurrencydiffersfrom stablecoinwherethe stabilityand reliabilitydependon theissuingentityandthecredibilityandenforceabilityoftheirpledge to maintain t e one s al e o e ti e e eisnosin leidentifiableentit t atisliable o crypto assets.
DisruptiveimpactDisruptiveimpactisoftenused to describedhowdigital technologycanchangethe wayinwhichbusinessesoperate includingwithinthe workplace andhow consumersinteractwithbusiness.
nvironmental,social and governance factors
S
S stands forenvironmental,socialand governance.These factors formthepillars in S frameworksandbusinessesmayinsomecasesbe e pected to reporttheir performanceandprogressunderthesethreepillars.
intech inancial technology e seo tec nolo to deli e financialse icesandp od cts to cons e s
o ce fieldanal sis o ce fieldanal sisisanapp oac sed to identi andanal se o ces ic d i e andinhibitchange. orcescanbebothinternaland e ternal.
igeconomyThegigeconomy refers to apartofthelabourmarket which relieson temporary positions,part-time workersorfreelancers.
lobalisation
umancapital
Thegrowinginterdependenceandinterconnectednessofthe world seconomies, culturesandpopulationsarisingfromcross-bordertradein goods,services,digital technologyandmovementofinvestment,people,dataandinformation.
Thecompetenciesembodiedinpeople,investedinanddeveloped to helpthem to bemoreproductiveand realisetheirpotential.
International TradeThemovementor e changeof goodsorservicesbetweentwo urisdictionsoracross borders.Inconsideringinternationaltradeitisimportant to bemindfulofthe potentialoftradeontheislandofIrelandbetweenthe RepublicofIrelandand orthernIreland.
Irish governmentpolicy
ot o p ofit enterprises
Refers to thepolicyoftheIrish governmentwhichincludesactionsor statements ofguidancewhichareadopted by the governmentandusedasabasis for decision-making.
nterprisesmotivated by broadersocialob ectivesincludingcharities,social enterprisesand on- overnmentalOrganisations Os .
o te sfi e o ces model o te s odelincl desfi e o ces ic s ppo tdeepe nde standin o t e competitive forceswithinbusinesswhichdrivehoweconomic valueisdivided a on st sta e olde s efi e o ces it in o te s odelincl det et eato ne entrants,thebargainingpowerofsuppliers,thebargainingpowerofcustomers,the threatofsubstitutesandcompetitiverivalry.
ower-interestgrid
Sectorofthe economy inIreland
Apower-interestgridisa formof stakeholdermappingwhichconsidersthe oti ationso sta e olde sandt ei abilit to e e tin ence eit e positi eo negative therebymappingthemaccording to their relativepowerandinterest.
Thedifferenteconomicactivitysectorswhichcategoriseproducers service p o ide sbasedont e oodso se icest e o tp t e ent al tatistics fice SO publishesthelistofsectorswithintheIrisheconomy.
Shadoweconomy usinessandeconomictransactionsthataredeemedillegalina urisdictionbecause the goodsorservicesbeingtradedor e changedareunlawfulorthetransaction itselfisnotinlinewithlegislationor government reporting re uirements.
S ARTob ectives for research efinin a estion o esea c basedonitbein specific, eas able,ac ie able, relevantandtimebound.
SourcesofinformationSourcesofinformationcanbeeitherprimaryorsecondary. rimarysourcesinvolve o i inaldoc entso fi st andin o ationandcanincl deinte ie sands e s whilesecondarysourcesofteninterpret primaryinformation.
StakeholdermappingStakeholdermappinginvolvesconsideringthemain stakeholdersandtheirpower andin ence, ilelea nin abo tt e an eo sta e olde sandt eneed to considerarangeofperspectives.Stakeholdermappingcanbewrittenorvisualand shouldincludedifferent stakeholders,theirinterdependenciesandinter-relations ips,andconside ationo t ei po e andin enceondecision a in
ST analysisA ST analysismaybeused to assesstheimpactof e ternal factorsona business.Itincludesconsiderationofsocial S , technological T ,economic , environmental ,political ,legal and ethical factors.
GeneralBusiness e rms
A Annual eneral eeting
AO
Any Other usiness
A R Annual ercentage Rate
ASAI AdvertisingStandards AuthorityofIreland
ASTI AssociationofSecondary TeachersinIreland
AT Automated Teller achine reak ven oint
I enefitin ind
AD omputerAidedDesign
AI onsumerAssociationofIreland
A omputerAided anufacturing
AT apital Ac uisitions Ta ompetitionand onsumer rotection ommission
O ie ec ti e fice
ash low orecast
T apital ains Ta ompany imited by uarantee
S ompany imited by Shares
RO o panies e ist ation fice
DA Designated Activity ompany
DD DirectDebit
DIRT DepositInterest Retention Ta uropean entral ank uropean ourtsof ustice
DI lectronicDataInterchange traordinary eneral eeting uropean onetary nion
A nvironmental rotectionAgency
OS lectronic ointofSale
SRI conomic Social ResearchInstitute uropean nion i ed ost
DI oreignDirectInvestment
D R eneralData rotection Regulation
I A ealthInformation uality Authority
R uman Resource anagement
SA ealth Safety Authority
S ealthServices ecutive
I Irish usiness mployers onfederation
I TInformation ommunications Technology
I T Irish ongressof Trade nions
IDAIndustrialDevelopment Authority
I AIrish armersAssociation
I International onetary und
I I Irish anagementInstitute
IRO nd st ial elations fice
ISD IntegratedServices forDigital etwork
IT ustInTime anufacturing
O ocal nte p ise fice
T ocal roperty Ta
TD rivate imited ompany ember uropean arliament ulit-nationalcorporation
OS arginofSafety
A A ationalAsset anagementAgency
A ayAs ou arn
I e sonal dentification be ublic imited ompany
S ersonal ublicService umber
R ublic Relations
RSI ay RelatedSocialInsurance
R D Research Development
ROI ReturnonInvestment
SAIT Self-AssessmentIncome Ta
S Single uropean arket
S ASingle uro aymentsArea
SI T Services,Industrial, rofessional Technical nion
S Small to edium-si ed nterprise
SO StandingOrder
S OT S OT Strengths eaknesses hallengesOpportunitiesThreats
T Total ost
T Transnational orporation
TR Total Revenue
T Total uality anagement nlimited ompany
S niversalSocial harge
S ni ueSelling oint
AT alue Added Ta
RT ehicle Registration Ta
R orkplace Relations ommission
TO orld TradeOrganisation orld ide eb
A ank accrued e penses , 0
A OR S1 0 ac uisitions takeovers , 1 activelistening actuary advertising 10 11 advertising-supportedmodels1 1, 1
Af TA African ontinental ree TradeArea 11 a filiate b siness odel , , 0 aggressivepractices
AI AlliedIrish anks , 0 1 Airbnb 1
A DIIreland 0 alternativedispute resolution ADR
Ama on1 , 9 analytical tools19 19 AngloIrish ank arbitration , , 9, 9 articles analysisof10 ofassociation a tificialintelli ence , AssociationofSoutheastAsian ations AS A 11 autocraticleadership , 9 automation 9
B
balanceofinvisibletrade1 ,1 balanceofpayments1 1 ,1 balanceoftrade1 ,1 ,1 bank overdraft 1, 0 benefitsin ind , bibliography1 blockchain 1 , 1 , 1 ord ia borrowing 01 0 braindumping brainstorming ,1 0,1 branding 0 , 0 re it100,111 buildingsandcontentsinsurance 1
uilt to Innovate initiative1 0 urrenSmokehouse1 businessideas evaluationof1 ,1 1 factorsimpactingthe developmentof1 usinessinIreland SO report
Digital arkets Act D A 0 19 10 digitalservices 9 0, 90 digital technologies1 9 1 disruptiveimpactand191 19 impactonthe workplace 9 digitaltransformation9 di ectbenefits
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