1-what is a business? Flashcards
goods
physical or tangible products
services
non physics or intangible items
B2B-business to business
one business selling products/services to another
B2C-business to consumer
one business selling products/services to consumers
business
an organisation that makes goods or provides services to satisfy customers needs
transformation process
transformation of inputs into outputs. this process adds value to inputs
added value
amount added to the value of inputs or to a product or services
4 key factors
land, labour, capital, enterprise
primary sector
extract or develop natural resources
secondary sector
make use of extracted primary materials to build, manufacture or develop finished goods
mission statement
written statement of a business’ purpose, reason for existence and long term vision
tertiary sector
provide the services needed to meet the needs of the end users
corporate objectives
target or goals for the business as a whole that are set to achieve its mission
cash flow
movement of money in and out of the business
functional objectives
targets or goals for the business set for each business function
an effective mission statement
differentiates the business from its competitors
defines the market or business in which the business wants to operate
is relevant to all major stakeholders,
excites, guides and motivates
objectives
targets that help a business achieve its mission, set at various levels
smart objectives meaning
specific, measurable, agreed, realistic, time bound
profit maximisation
try to make the most profit possible to reward the owners, investors or shareholders
short termism
arises when a business prioritises short term profit rather than long time performance
profit satisficing
try and make enough profit to keep the owners comfortable
sales growth
where the business tries to grow in size to make as many sales possible- objective is to become a large business to be able to benefit from economies of scale
cash flow
having sufficient reserves of money immediately available to pay day to day debts
ethics
when setting objectives some businesses ensure that stakeholders and the environment are not harmed by the business’ activities
social
some businesses are run to not only generate a profit but to provide a service to the public- this service will need to meet the needs of the less well off in society
profit
amount of money left once all costs have been payed- profit=revenue-total costs
revenue
money received from sales- num of units x price of 1 unit
variable/direct costs
costs that vary with the level of output
total variable costs
num of units x variable/direct costs per unit
fixed/direct costs
costs that dont vary with level of output
total costs
fixed costs+total variable costs
