The Legal Function

When we look at business, we generally focus on large global businesses, such as Apple, Shell or Rolls Royce. While there are around 5.2 million businesses in the UK, in fact 99% of them are extremely small (HM Government, 2014). Despite the rate of business failure being high in the early years, overall numbers of businesses are slowly growing. Most new businesses start small, with a view to expansion. This narrows the choice of business medium, as some forms may not suit a particular business at its current stage of development. The focus of this chapter is on the legal structures for doing business. It adopts terminology from the UK’s legal system, but similar structures apply in other countries. The objective is to show when a particular legal structure might be appropriate and to highlight key differences between legal structures for enterprises. We also examine the concept of legal personality, which allows a business to be considered as a separate entity from its members, and allows the members of some organizations to have limited liability for business obligations. Most countries have some business forms where the proprietors carry unlimited liability and others where they can avail themselves of limited liability.

Employment Law

Employment laws are put in place to protect employees from any mistreatment from their employers, and are a vital part of a country’s efforts to protect its citizens. Some countries are regarded as having very restrictive employment laws whilst others are regarded as more relaxed. According to the Organization for Economic Co-operation and Development (OECD), who analyse and compare employment protections in various countries, the UK, Canada and the USA have the most lenient laws whereas France, Spain and Turkey have the strictest. This chapter will focus on UK employment law, where workers’ rights can be traced back to the 1300s and significant changes are still occurring today. By examining the UK’s history of employment law, the contract of employment, corresponding rights and duties of both the employer and employee and the circumstances in which the contract of employment might come to an end, students will gain a valuable insight into a unique area of UK business law.

Logistics and the Supply Chain

Critical to the success of any business is a supply chain capable of serving the end customer more effectively and more efficiently than the competition. Central to this premise is an understanding that in today’s global marketplace it is supply chains that compete, not individual firms. We explore the central role of logistics and the supply chain in gaining competitive advantage in a volatile global market by first defining the key principles of a market-responsive supply chain. Second, we discuss different supply chain strategies to improve the match between supply and demand, before dedicating two sections to the important subjects of logistics outsourcing and global sourcing. But first we begin by defining the supply chain, logistics and supply chain management.

Porters Five Forces and Generic Strategies

Competition is what keeps organizations and industries alive. Harvard Business School Professor, Michael Porter, was keen to understand the drivers of success in commercial organizations. His research indicated that industry structure mattered more than individual firm behaviour and his Five Forces model (1979) offers his explanation of the sources of competition at industry level. The model is based on the theory of determining the competitive intensity and attractiveness of a market. The five forces within the model include: competitive rivalry, threat of new entry, supplier power, buyer power, and threat of substitution. The model has been widely used by firms to analyse the external environment and specific external forces like competition, government policies, and social and cultural forces (Vining, 2011). Furthermore, to overcome such fierce competition created by the Five Forces model, and to ensure successful survival, Porter (1985) also introduced competitive strategies to gain a competitive advantage. By combining price and market type, Porter suggests these competitive strategies: cost leadership, differentiation, and market segmentation (or focus) to enable a competitive environment to prosper. This chapter concentrates on establishing and understanding the Five Forces model and the generic strategies.

Marketing to Create Value

Entrepreneurs generally feel enthusiastic when discussing their product or service idea but less comfortable when asked about their marketing approach. Marketing can suggest advertising, selling or tricks to influence people to buy things that they do not need, at a price they perhaps cannot afford. Marketing does include advertising and selling, but it is not about manipulating customers. Fifty years ago the Chartered Institute of Marketing defined marketing as “the management process responsible for identifying, anticipating and satisfying customer requirements profitably” (CIM, 2007). It is both a way of thinking about and a function within business – an activity and a way of thinking. It is the part of an enterprise that thinks about the customer first; by taking a customer-centric view it better understands needs and wants. It can then actively use the resources available to provide the very best value goods and services and develop a long-term relationship with existing and potential customers. For many smaller businesses marketing can seem to be an expensive luxury but this chapter will consider how any new enterprise will benefit from both the ideas and actions of marketing.

The Human Resources Management Function

Organizations come in different shapes and sizes, from small convenience stores to large multinationals. However, one common element found in any organization, regardless of size, shape or purpose is people, otherwise known as human resources (HR). Organizational success is largely dependent on such human resources (Petrone, 2014). As Petrone argues, a company is only as strong as its people. People construct organizational goals, bring creativity, skills and competencies, and largely make up the organization. Organizations, however, need to manage their people. Indeed managing HR is a fundamental part of the relationship between an organization and its people. The Human Resource Management (HRM) function is often given this responsibility in organizations. Torrington et al. (2005) define HRM as a continuous balancing act between fulfilling an organization’s goals and objectives, and those of employees. Effective management of HR should merge the needs of individuals with the demands of the organization. This chapter will examine the particular ways through which the HRM function achieves these objectives.

Corporate Social Responsibility and Corporate Governance

It is almost inconceivable that you have not used at least one of the following items today: a computer, a notebook, a tablet, a mobile phone, a video game console, a television or another electrical item. You probably did so without considering the social impact of the product upon people and natural resources, perhaps automatically, or possibly because you trust the manufacturers and retailers of these products to have made these considerations on your behalf. Unfortunately, in recent years, various incidents have brought their negative impacts to public attention, damaging trust in them and the companies that produce them. The trust placed in business organizations represents a form of social contract between businesses, customers and wider society. It is central to the successful functioning of business organizations. Several processes and measures are utilized by businesses to manage these relationships, and two of them – corporate governance and corporate social responsibility – are explored in this chapter.

Business Organizations The Internal Environment

Anyone embarking upon a journey towards a genuine understanding of business must acquire an underpinning knowledge of the inner workings of the firm, how a firm sustains its operations, and the relationship between the firm and its external environment. This chapter gives a detailed definition of the internal business environment, and the main purpose of both business organizations and strategy are discussed. Furthermore, an understanding of the key concepts relating to business organizations and how such organizations continue to create value for the consumer in today’s uncertain business environment will be developed.

Gender and Work life Balance

The concept of work-life balance is an increasingly important issue in today’s society as a result of changing labour demographics. The traditional 9-5 working week cannot cater for all workers and many employers recognise this. Research from the CIPD (2012) indicates that 96% of employers in the UK offer some form of work-life balance practice, with part-time working (88%) and homeworking (54%) being the most common arrangements offered. Despite the increased interest in the work-life balance, there is ambiguity around what work-life balance is. Much of the confusion comes from a lack of agreement over what constitutes ‘work’, and what is ‘life’. This chapter explains the concept of work-life balance, the measures organizations can take to support the work-life balance of its members and the potential benefits and barriers associated with their implementation. The chapter also considers the role of gender in work-life balance, as women are more likely than men to use a work-life balance policy, with 77% working flexibly in some way (CIPD, 2012).

Operations Management

Operations management is the activity of managing products, processes, services and supply chains. By managing these activities, an organization creates and delivers services and products that clients/customers want. Essentially, operations management is responsible for translating and executing an organization’s objectives, policies and strategies into day-to-day operations. In other words, operations management is responsible for delivering the performance objectives of the organization. In this chapter we present operations management in two parts. The first section provides a detailed account of the development of the field since its inception during the early 1900s through to the modern day. In doing so we introduce various concepts, methods, tools and techniques that are commonly used in operations management. In the second section a more detailed account of key concepts in operations management is provided. Some are covered in greater detail (e.g. process management) and others just introduced but covered in detail in other chapters (e.g. supply chain management).