Unit 1 Business

Motives

Motives is the drive and the objectives of an entreprenaur.

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Profit

Profits is the difference between the total revenue and the total cost.

Pros:

  • Shareholders dividends
  • Invest in research and development
  • Use money elsewhere
  • lower costs
  • Retained profit (interest)

Cons:

  • Competitive advantage is more important, not profit
  • Social/ethical motives
  • Reputation with shareholders (e.g. Gov./customers/employees)

Depends on long term vs short term/ level of competition/ brand image/ customers' perception.

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Social and ethical motives

Pros:

  • Competitive advantage is more important
  • Can charge higher prices
  • Reputation with shareholders (e.g. Gov./customers/ employees)

Cons:

  • Shareholders dividends (happy)
  • High costs
  • Invest in research and development
  • Use money elsewhere
  • Retained profit (Interest)

Depends on long term vs short term/ level of competition/ brand image/ customers perception

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Financial motives. 1. piecework/piece rates

Definition: Pay based on amount produced

Pros:

  • Motivates theory x workers.
  • Improves productivity & output
  • less supervision required & better efficiency
  • Creates positive competition

Cons:

  • Reduced quality
  • Some workers may not have the ability
  • Theory y workers unhappy
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Financial motives. 2.Comission

Definition: Employees are paid a percentage of the value of each good or service that is sold

Pros:

  • Improves sales
  • Attracts best sales person

Cons:

  • Some emplokyees may not have good communication skills
  • Aggressive environment-employee competition
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Financial motives. 3.Bonus

Definiton: Money given at the end of the year due to employee's success.

Pros:

  • Encourages teamwork
  • Can drive high levels of productivity
  • Employee appreciation

Cons:

  • Frequent bonus without performance can create a culture of entitlement
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Financial motives. 4. Profit share

Definition: Where workers are given a share of the profits, usually as part of their pay.

Pros:

  • Allows employees to work harder.
  • lower recruitment and salary costs.
  • Improve efficiency and productivity.
  • Staff take more responsibility - motivated/money

Cons:

  • Negative focus on profits (e.g. Lowering costs thus lowering quality)
  • Less retained profit (e.g. Less expansion)
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Financial motives. 5. PRP

Performance-related pay: PRP gives workers extra pay for achieving targets.

Pros:

  • Boost motivation and morale
  • Productivity-connected to targets 

Cons:

  • Employee deficiencies.
  • Hard to change
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Non-Financial motives. 1. Delegation

Delegation: Passing down authority down  the hierarchy.

Pros:

  • Strengthen the self-esteem.
  • Less pressure on managers.
  • You fins staff who can take more of the workload in the future.

Cons:

  • Employees can feel dumped on.
  • Creates situations where a person does all the work but has no authority.
  • Other work/more important work needs to be put aside.
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Non-Financial motives. 2. Consultation

Consultation: Asking workers their opinion.

Pros:

  • Employees feel part of the organization.
  • Employees feel empowered.
  • Less staff turnover & recruitment costs

Cons:

  • Lack of skills and knowledge of employees making the decisions.
  • Time consuming.
  • Some workers may not wish to be consulted but to be told what to do.
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Non-Financial motives. 3. Empowerment

Empowerment: Allowing employees to make decisions.

Pros:

  • Faster probelm solving
  • Increased morale and productivity
  • Greater involvment leads to greater commitment.

Cons:

  • Lack of experience increases risk.
  • Potential for decreased efficiency.
  • Poor decision-making.
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Non-Financial motives. 4. Team working

Pros:

  • Social factor met - Maslow's theory.
  • results in common direction
  • more ideas are shared
  • increased efficiency

Cons:

  • conflict among team members.
  • takes time to organize
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