1.1 - Why do businesses exist? Flashcards
What does businesses create?
Creates employment
Creates wealth
Creates new products and services
Enhances a country’s reputation
Why do businesses provide?
Goods and Services for customer’s needs
What is a Product?
Physical Product
What is a Service?
Intangible items
What are Customer Needs?
Wants and desires of buyers
What is the Transformation Process?
Conversion of a firm’s inputs into outputs that reach the customer and adds value
What are the factors of production?
Capital
Enterprise
Land
Labour
Give examples for each factor of production
Capital - machinery, equipment, vehicles
Enterprise - ideas, talents, ability to find finance
Land - natural resources
Labour - physical or mental effort required
How do you calculate Added Value?
Added Value = Selling Price (£) - Cost of Transformation
What is a USP (Unique Selling Point)?
A feature of a product or service that allows it to be differentiated from other products
What is Business to Business (B2B)?
Business selling to business
What is Business to Consumer (B2C)?
Business selling to consumer
What are the Types of Businesses?
Primary
Secondary
Tertiary
What is the role of the Primary Sector?
Extract of raw materials
What is the role of the Secondary Sector?
Manufacturing
