1.1 what is business Flashcards
Purpose of a business
To generate added value (profit) by creating costumer and satisfying their needs by providing good/service
Goods
Goods are tangible physical items capable of being stored, such as cars or gaming consoles.
Services
Services are intangible, cannot be stored and are provided to customers when they are needed, such as insurance or hairdressing.
Types of products
Consmer Goods
Capital goods/ producer goods
Services
Consumer goods
-sold to general public
- Consuemr dourables (products that last long)
- non durables (consumed shortly after bought)
Capital/ producer goods
Physical goods bough by firm to produce other goods(building, computers, machines, etc)
The main functions of business
Humand resources
Marketing
fiance/accounting
operations managment
Human resources
Managing personel of organisation
- rolse such as HR planing, organisation, structures, management, and leadership, motivation, dealing with industrial employee relationships.
Finance and accounting
Managing money compliance with legal requirements(corporate taxes)
- informs interested financial positions(shareholders/ potential investors)
Marketing
Indetifys and statisfys needs and wants of customer
-ensures products sell through market research, promotion, pricing, branding, and distribution.
operations managment
Converts raw materials and components into finished goods, ready for sale and delivery to customer.
- extraction of crude oil, car manufacturing and provision of travel and tourism services.
Entrapenur
individual that plans, organises, and manages business and its operations
- takes on financial risks in doing so.
Industry sectors in business
Primary sector
- Extraction of natural resources
Secondary sector
- manufacturing or construction
Tertiary sector
- service industry(providing)
- banking, finance, insurance healthcare.
Quatenery secrotr
- intellectual/ knowledge based activities
- communication technology, research development.
It is important to conduct business in correct sector depending on where business is.
Challenges of starting a business
Lack of finance
- Need money to buy fixed assets
Unestablished customer base
- It will be difficult to attract new costmers to product
Cash flow problems
- money available for daily running of business
marketing problems
- business fails to meet customer needs
people management problems
-lack of experience in hiring the right staff with neccesarry skills
Production problems
- trouble forecasting levels of demand (over/under producing)
legalities
- trouble with doing all paperwork/legal requirements
High production costs
- high set up costs and running costs due to large amount of money needed to purchase/pay capital equipment, stock, rent, etc.
Poor location
- location in bad for the selling of product
- rent can depend on location
External influences
- global crisis
-war
-external shock
Opportunities to starting a business
Growth
- entrapenurs benefit when there is appreciation in value of business, especially since property value increased over time.
Earnings
- “you can never get rich working for someone else”-chinese saying
- Starting business easily outweigh costs even though risks are high
Transfer and inheritage
- passing assers (passing business to family)
Challange
- successful business boosts self esteem
Autonomy
- Being self employed you have more freedom of choice and flexibility
Security
- Greater job security being own boss (won’t get fires)
- easier to create personal wealth (financial security) to provide higher funds for early retirement.
Hobbies
- turn passion into source of income
- can have more success in business by it relating to personal intrests
