1.1/1.2/1.3 Objectives Flashcards
Why do businesses exist?
To satisfy wants and needs.
What is a business?
A business is an organisation that is set up to provide goods or services to customers such as the public, government or other organisations.
What is a good?
A physical product e.g clothes
What is a service?
An intangible item e.g insurance or decoration
What is a product?
A more general term which includes goods and services.
Why are businesses important?
Create employment
Create wealth
Create new products
Enhance a country’s reputation
What are the 3 types of businesses?
Primary
Secondary
Tertiary
What are some common business objectives?
Profit Maximisation Growth Survival Cash Flow Social and Ethical Diversification
What are the 4 types of costs?
Fixed
Variable
Semi-Variable
Total
What is unit costs?
The cost of producing a single unit.
What are the 2 business categories?
Public and Private
What are the 3 types of Public Sector Businesses?
Public Corporations
Public Services
Municipal Services
What is privatisation?
When government sells businesses they own to private individuals.
What 3 documents do businesses have to complete?
Memorandum of Association
Articles of Association
Register with Companies House
Market Capitalisation?
Share Price x Number of Shares
What is external environment?
External forces that can influence a business activities but the business has no control over them.
Why are profits important?
- Attractive to customers
- May be taken over
What is the public sector?
Owned and run by the government
What is the private sector?
Owned by individuals
What are public corporations?
Enterprises owned by the state but offer products to both public and private sector
What are public services?
Provides a service to a nation
E.g NHS
What are municipal services?
Offered by local governments and councils
e.g leisure centres and libraries
Why would the government privatise?
- Raises finance for the government
- Privately run businesses are more efficient
What is a sole trader?
Business that is owned and managed by one person by may employ other people
Sole Trader points?
- Unlimited Liability
- Easy and cheap to set up
- Limited sources of finance
- Long hours
- Be their own boss
- No continuity
- Keep all profit
- Finances kept private
- No specialist skills
What are partnerships?
2 or more people
Partnership points?
- Easy and cheap
- Unlimited liability
- No continuity
- Shared profits
- Specialist skills
- Additional sources of finance
- Shared workload
- Finances kept private
- Sleeping partners
- Disagreements
What is meant by incorporation?
The process of establishing a business as a separate legal identity that allows it to benefit from limited liability.
Why buy shares?
- Primarily financial reasons
- Increased share price
- Dividends from profits
What can influence share price?
- Company’s performance and business environment
- Economy, employment level`
What are market conditions?
Number of features of a market such as the level of sales, the rate at which they are changing and the number and strengths of competitors.
What would be some market conditions?
- Demand
- Competitors
- Fashion and technology
- Suppliers
- Consumer income
- Innovation
How do businesses pollute?
- Emission of gas in production process
- Pollution when transporting goods, congestion and noise
- Dumping
- Destroying natural environments
How have environmental issues been stopped?
Legislation Environmental Protection Act 1991 and Environment Act 1995
What is fair trade?
A fair price is given for a good/service
