1.1 The Purpose and Nature of Business Flashcards
What is a business?
an organisation which provides products/services to customers in order to make a profit
What is a Product?
Any tangible item which the customer needs or wants
E.g. a car, a basketball, a phone
What is a service?
an act that someone does for you in exchange for money
E.g. dental treatment, haridressers, cleaning
Why is a service usually called ‘intangible’?
As it cannot be touched
What are the four factors of production?
Land
Labour
Capital
Enterprise
Why is land needed in the factors of production?
Somewhere to produce the goods, like a farm
Why is labour needed in the factors of production?
So people can work for you in the business
Why is capital needed in factors of production?
You need money for machinery and equipment to make products and provide a service
Why is enterprise needed in the factors of production?
You need drive and motivation from
the owners to start a business
What is the primary sector?
Extracting raw materials from the planet
E.g. Mining or chopping down trees
What is the secondary sector?
When the goods are manufactured from raw goods into the finished product
What is the tertiary sector?
All the support service that help the business sell their product
E.g. transportation, shops, retail
What are the reasons for starting a business?
To make money
Be your own boss
Make a change to benefit others
What is an entrepreneur?
A person who starts a business, taking on finacial risks with hope of making profit
Why might someone want to become an entrepreneur?
To be your own boss
Flexible hours
To pursue an interest/hobby
To earn more money
Doesnt like current job
Why are some businesses called dynamic?
They constantly adapt to keep up with current times and consumers’ wants and needs
What are some examples of needs?
Water
Shelter
Food
What are some examples of wants?
A phone
A car
a house
Why would a business need to be constantly changing?
Environmental expectations
Changes in Technology
Laws changing
Economic change
What does the term ‘opportunity cost’ mean?
The benefits lost by making a particular decision
What does the term ‘innovation’ mean?
When a new product idea is introduced into the market place
