1.1 Enterprise Flashcards
Business and its environment
Purpose of business activity
Combines factors of productions to produce goods and services to satisfy people’s needs and wants while employing people as workers and pay them wages to allow consumption of products by others
what do businesses do
Businesses identify the needs of consumers or other firms.
- They then purchase resources - or factors of production - in order to produce goods and services that satisfy these needs, usually with the aim of making a profit.
What is a consumer?
A person who purchases goods and services for personal use
consumer goods
products and services that satisfy human wants directly
Consumer Services
Businesses that provide services primarily to individual consumers, including retail services and education, health, and leisure services
factors of production needed by business
Land - renewable and non renewable resources of nature ( e.g oil, crude oil, timber)
Labour
Capital - finance & manufactured resources used in production (e.g computer, vehicle, machine)
Enterprise - provides the managing, decision making and coordination roles
Concept of adding value
Producing goods and services and selling them at a higher price than the cost of brought in materials
Concept of added value
selling price of a product sold by business - the cost of the materials that it brought in
opportunity cost
what you give up when you make a choice, the BEST alternative given up in making a decision
capital goods
Buildings, machines, technology, and tools needed to produce goods and services
Branding
A marketing function that identifies products and their source and differentiates them from all other products
Dynamic Business Environment
The idea that business is ever-changing because external factors, such as technology, are always changing.
Changes in the Business Environment
-New competitors
-Legal changes
-Economic changes
-Technological changes
Why do businesses fail?
- Poor management skills - (e.g planning, cash management, marketing leadership)
- Lack of cash
- Poor record keeping
local businesses
operate in a small and well-defined part of the country.
- They do not aim to expand so do not make attempts to attract customer across the country
(e.g hairdressing business)
