Essential Business Concepts: Financial Incentives and Strategy

Financial Motivations

• Salaries: Fixed amounts per month or year for performing a role; these are common for most managerial positions.
• Fringe Benefits: Very common in businesses of all kinds; these include staff discounts, contributions to travel costs, and staff uniforms.
• Piece-rate Pay: Pay per item produced; becoming less common.
• Commission: Payment based on the value of sales achieved.
• Bonuses: Rewards for achieving specific targets.
• Shares and Options: Less common in small businesses, but popular in businesses whose shares are traded on stock markets.
• Pensions: Becoming less common and generous. Small businesses tend not to offer pension benefits.
• Non-Financial Incentives: Job enlargement, job rotation, job enrichment, teamwork, and empowerment.

Business Ethics

Ethical objectives are moral principles and values that underpin human behavior. Morals are concerned with what is 'right' or 'wrong'. Business ethics are, therefore, the moral principles that underpin business behavior.

Wholesale vs. Retail

Wholesalers generally buy a large quantity of products directly from distributors. High-volume purchase orders typically improve a wholesaler’s buying power. Retailers consist of small and large for-profit businesses that sell products directly to consumers. To realize a profit, retailers search for products that coincide with their business objectives and find suppliers with the most competitive pricing.

Workforce Planning

Workforce planning is a continual process used to align the needs and priorities of the organization with those of its workforce to ensure it can meet its legislative, regulatory, service, and production requirements and organizational objectives.

Payback Period

The payback period is the time required for the amount invested in an asset to be repaid by the net cash inflow generated by the asset. It is a simple way to evaluate the risk associated with a proposed project.

Corporate Audits

Social Audit

A formal review of a company's endeavors in social responsibility. It looks at factors such as:

• Company’s record of charitable giving
• Volunteer activity
• Energy use
• Transparency
• Work environment and worker pay

Note: A social audit is optional.

Environmental Audit

An independent third-party assessment of the current status of an organization’s compliance with local environmental laws and regulations.