1.1 Understanding The Nature And Purpose Of Business Flashcards
What does a business do?
Production - the process resources are converted into a product which is intended to satisfy customers.
What is adding value?
The process increasing worth of resources by modifying them (USP).
What is a mission statement?
A qualitative statement of an organisations aims which describes the general purpose of the organisation.
What is an example of a mission statement?
Coca Cola - ‘To refresh the world - in mind, body and spirit’
What is a corporate aim?
The long term statement of which the business intends to achieve.
What is an objective?
More precise and detailed goals or targets which must be met to to achieve the corporate aims and mission.
What does a SMART objective mean?
Specific Measurable Agreed Realistic Time
What is a corporate vision?
What the company aspires to be.
What is variable costs? And an example?
Costs that change directly with output. E.g. Raw materials.
What’s the first factor of production?
Capital - goods that are made in order to produce other goods and services e.g. Machinery, shops etc.
What’s the second factor of production?
Enterprise - bringing other factors of production together e.g. Making decisions and providing finance.
What is the third factor of production?
Land - all natural resources that can be used for production e.g. Coal, oil, livestock.
What’s the fourth factor of production?
Labour - the physical and mental effort involved in production e.g. Manual effort - accountant.
What are some common business objectives?
.Survival (during early years) .Break-even .Sales growth and maximisation .Reducing risk .Expansion .Improving cash flow
What is revenue?
Money received from sales.
What is the calculation for revenue?
Selling price X number of items sold
What is profit?
The money that is left from the sales once all the costs have been paid.
What is the calculation for profit?
Total revenue - total costs
Why set objectives?
Sets clear guidelines for workers to follow direction, to motivate workers, co-ordinate business actively.
Whats the first reason why businesses exist? And example/statistics?
Business create employment - 30.61 million people were in employment in September 2014. Unemployment was at 2.02 million.
What is the second reason why business exist?
Business create wealth - businesses pay workers, pay corporation tax which are used to pay for health service and schools.
What is the third reason why businesses exist?
Create new products and services - pharmaceuticals to cure illness or green technology to solve environmental issues.
What is the fourth reason why businesses exist?
Can enhance a country’s reputation - e.g. The UK’s music industry and film industry or French wine industry.
