1.1 - What is a business? Flashcards
A decision-making organisation
Adding value
The process of producing a particular good or service that is worth more than the cost of the resources used to produce it.
Business
A decision-making organisation established to produce goods and/or provide services.
Consumers
The individuals or organizations that actually use a product.
Customers
The individuals or organizations that purchase a product.
Entrepreneurs
The individuals who take Risks in overseeing a business organization or business venture, usually in pursuit of profit.
Entrepreneurship
The knowledge, skills and experiences of individuals who have the capability to manage the overall production process.
Factors of production
The collective term for the resources used in the production process, i.e. land, labour, capital and entrepreneurship.
Finance
Function of an organization responsible for ensuring that the business has sufficient funds in order to conduct its daily operations.
Goods
These are physical (tangible) products, such as cars, clothes, flowers, food, furniture, smartphones, and toys.
Services
Intangible products, such as haircuts, tourism, public transport, banking, insurance education, and healthcare.
Human resources
The business function that handles all aspects relate to the workforce, involving all aspects of a firm’s operations related to staff (personnel) within an organization.
Marketing
Business function of identifying the needs and wants of customers so that the organization can provide goods and services to meet these requirements and desires, usually in a profitable way.
Needs
The basic necessities that an individual must have in order to survive, such as food, water, and shelter.
Operations management
The business function refers to the process of making goods and providing services from the available resources of a business to meet the needs and wants of its customers.
Primary sector
Business activity involved with the extraction of natural resources, e.g. fishing, mining and agriculture.
Production
The process of creating goods and/or services using the factors of production available to the business.
Quaternary sector
Business activity involving the creation or sharing of knowledge and information. Research and Development.
Secondary sector
Business activity involved with the manufacturing or production of finished products.
Tertiary sector
Business activity that involves providing services to customers, i.e. consumers and business clients.
Value added
The numerical difference between the cost of factor inputs in the production process and the price that the final output is sold for. (final price-cost factor inputs)
Wants
These are the desires of individual customers, i.e., the goods and services that they would like to have (rather than things they need to survive), such as a new smartphone, a family holiday in an overseas location, fresh flowers, or jewellery.
Consumer goods
Products sold to the public, rather than to other businesses. Can be classified as either Consumer durables (can be used repeatedly) or non-durables (cannot be reused or need to be used shortly after their purchase because they cannot last).
Capital goods (or producer goods)
The physical products bought by businesses to produce other goods and/or services. E.g buildings, computers, machinery, tools and specialist equipment
Intrapreneurship
Intrapreneurship is simply entrepreneurship in an existing organization. In many ways, intrapreneurship is easier for an individual than entrepreneurship because it has the support of an existing organization.
