1.1 What is a business? Flashcards
what are inputs?
resources needed to create a product
3 types of inputs
physical, financial, and human resources
physical inputs
raw materials or semi-finished goods (or capital goods like machinery)
(minerals, metals, goods processed but nor consumer goods)
financial inputs
funds needed to start a business
(& grow it and keep it running)
human resource inputs
people needed to run the business
(managers, employees, enterprise)
Business functions (4)
human resources management, finance and accounts, marketing, operations
human resources management function
makes sure business employs correct number of skilled employees etc.
and makes sure employees are treated ethically
finance and accounts function
ensure business has enough money to carry out business activities
marketing function
process of selling the right product, at the right time, to the right customers
operations function
how the business’s core activity is carried out (how and what quantity of goods/ services are produced)
what are goods
tangible products with physical characteristics
what are services
intangible
what is feedback
when the output of a system becomes an input to the same system
negative feedback
when output feeds back into input and drives system in the opposite direction
positive feedback
reinforces;
moves system and processes in the same direction
primary purpose of business activity
produce goods or services (that satisfy a need or demand in the market)
secondary purpose of business activity
meet needs and preferences of customers
tertiary purpose of business activity
add value to products or services
(differentiates products from competitors, create an USP, and increase customer satisfaction)
what is enterprise
a business idea & the desire to take the risk in turning it into a business idea
the primary sector
extraction or production of raw materials
(fishing, agriculture, mining etc.)
the secondary sector
manufacturing (of goods) and processing
(of raw materials)
the tertiary sector
businesses that sell a service (intangible)
(retail, education, entertainment, transportation etc.)
quaternary sector
services focused on knowledge
(collecting, processing and selling information/ data)
chain of production/ supply chain
steps involved in creating products
integrated businesses
businesses involved in 2+
sectors
relationship between value and sector
each sector adds more value than the previous
(higher added value equates to higher profits)
(however, higher value does not mean higher salaries)
relationship between economic development and sector
less developed economies are focused on the primary sector
(lower education rates and lack of infrastructure)
what is an entrepreneur
people who start a business; willing and able to create a new business idea and take risks
what do entrepreneurs do
organise resources (coordinate), make business decisions, take risks (new products)
(understand communities and their problems, plan solutions, take actions, and share and grow these actions to grow impact)
intrapreneurship
promoting entrepreneurial thinking and behaviour.
empowering employees to think and act like entrepreneurs.
encourages them to take risks, innovate, and develop new ideas,
(taps into creative potential of employees and increases copetitive advantage)
skills required by entrepreneurs
communication, team working, problem solving, organisation, numeracy, creativity, hard working, resilience, initiative, risk taking, self confidence, PERSUASIVE
reasons for starting a business
- new business idea
- passion to make change
- market need
- earn a living
- greater financial reward
- control (work & life)
- work-life balance
challenges of starting a business
- lack of funds
- strong competition
- small/ inexistent market (demand)
- unskilled employees or lack of collaboration
- poor management skills
- economic, environmental, or social shocks
steps to start a business
- refine idea
- market research
- make business plan
- choose legal structure
- register business
- find location
- hire employees
- get funding
SWOT analysis
Strengths
Weaknesses
Opportunities
Risks
(S & W: Internal –> consider human resources, finance, marketing and operations)
(O & T: External –> conditions)
STEEPLE analysis
Sociocultural: demographics, characteristics
Technological: updates/ trends
Environmental: natural environment
Economic: demand
Political: laws, parties, government
Legal: follow laws and regulations
Ethical: respect planet and humans
Business plan uses
gives credibility, reduces risks, inspires others to join
- consider purpose and audience
- describe business and functions
secondary research
gathered by others
primary research
creating new information
quantitative data
numerical
qualitative data
non-numerical
