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.
