1.1 Flashcards
Why do businesses exist?
To provide goods and services for the market
What is the transformation process?
The process in which inputs are converted into outputs to satisfy the needs of customers
Whats the objective for primary sector businesses
To extract or grow raw materials
Whats the objective for secondary businesses
Manufacture goods using raw materials such as clothing and mobile phones
Whats the objective for tertiary objectives
Provide services such as hotels and cinemas
Whats a business mission statement
A statement which sets out the business’ beliefs and values
Why are business objectives needed
To achieve its corporate aims and fufill its mission
If a business objective wants to be SMART what 5 thing must it aim
Objects must be specific, measureable, attainable, realistic and timely
What is Profit Maximisation
Business objectives that requires a business to achieve the highest amount of profit for shareholders
Whats meant by Satisficing
Making enough or some minimum required level of profits
What is Revenue
The income generated by a business from selling goods or services
Revenue Equation
Revenue = Number of sales x sales price
What are costs
All the expenses a business pays
What are Fixed costs
Costs that do not change depending on the level of output from a business
What are variable costs
Costs that change directly with output
What is a cost leader
The business in the industry with the lowest costs
