1.1 The Purpose and Nature of Business Flashcards

1
Q

What is a business?

A

an organisation which provides products/services to customers in order to make a profit

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2
Q

What is a Product?

A

Any tangible item which the customer needs

E.g. a car, a basketball, a phone

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3
Q

What is a service?

A

an act that someone does for you in exchange for money

E.g. dental treatment, haridressers, cleaning

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4
Q

Why is a service usually called ‘intangible’?

A

As it cannot be touched

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5
Q

What are the four factors of production?

A

Land
Labour
Capital
Enterprise

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6
Q

Why is land needed in the factors of production?

A

Somewhere to produce the goods, like a farm

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7
Q

Why is labour needed in the factors of production?

A

So people can work for you in the business

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8
Q

Why is capital needed in factors of production?

A

You need money for machinery and equipment to make products and provide a service

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9
Q

Why is enterprise needed in the factors of production?

A

You need drive and motivation from
the owners to start a business

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10
Q

What is the primary sector?

A

Extracting raw materials from the planet

E.g. Mining or chopping down trees

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11
Q

What is the secondary sector?

A

When the goods are manufactured from raw goods into the finished product

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12
Q

What is the tertiary sector?

A

All the support service that help the business sell their product

E.g. transportation, shops, retail

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13
Q

What are the reasons for starting a business?

A

To make money
Be your own boss
Make a change to benefit others

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14
Q

What is an entrepreneur?

A

A person who starts a business, taking on finacial risks with hope of making profit

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15
Q

Why might someone want to become an entrepreneur?

A

To be your own boss
Flexible hours
To pursue an interest/hobby
To earn more money
Doesnt like current job

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16
Q

Why are some businesses called dynamic?

A

They constantly adapt to keep up with current times and consumers’ wants and needs

17
Q

What are some examples of needs?

A

Water
Shelter
Food

18
Q

What are some examples of wants?

A

A phone
A car
a house

19
Q

Why would a business need to be constantly changing?

A

Environmental expectations
Changes in Technology
Laws changing
Economic change

20
Q

What does the term ‘opportunity cost’ mean?

A

The benefits lost by making a particular decision

21
Q

What does the term ‘innovation’ mean?

A

When a new product idea is introduced into the market place