1.1: Purpose and Nature of a Business Flashcards
What is a Business?
Organisation that produces and supplies goods (computers, furniture etc) or services (hairdresser, dentist etc)
What is a general term for Goods and Services?
Products
What are the main types of resources used to make and supply goods?
People, raw materials, fuel, buildings, machinery / technology
What is a Consumer?
Someone who uses a product
What is a Customer?
Someone who buys a product
What is a Service?
Intangible product (can’t be touched) such as a haircut or financial advice
What is an Entrepreneur?
Someone willing to take risks involved in starting a business after spotting a business opportunity
What is Entrepreneurship?
The ability to be an Entrepreneur - to take risks and to develop business ideas
What is Profit?
Difference between value of business’s revenue (from sales) and its total costs
What is a Social Enterprise?
Business set up to help society rather than to make a profit
What are objectives of an entrepreneur and reasons people become one?
Want to turn idea into a business
Spotted business opportunity and / or gap in the market
Want to be own boss
Make more money than working for somebody else / a company
Flexibility on working patter - around their lifestyle
Maybe unhappy with current job or have been made redundant
What are the Factors of Production
Resources / materials business needs to manufacture or produce goods / services
Land - all natural resources e.g. land, oil etc
Labour - human inputs - physical and mental
Capital - man made resources - buildings, machinery, vehicles
Enterprise - skills of the people establishing and managing the business’s resources to meet customer needs
What is Opportunity Cost?
What you have to give up as a consequence of making a decision.
Use savings to buy factory - don’t get interest on the savings
What are characteristics of an Entrepreneur?
Willingness to take risks - risk home and savings maybe or a good job
Hardworking and Committed - had to set up a business
Innovative - turn good idea into a business - identify customer needs - analyse the market
Organised - effective use of time and resources
Types of business and basic functions - What are the main Business Sectors?
Primary Sector - Agriculture, Mining
Secondary Sector - convert resources from primary into products - car manufacturing, construction etc
Tertiary Sector - services including education and healthcare
