3.1 - What is Business? Flashcards
Business definition
An organisation that exists to provide goods and services on a commercial basis to customers.
What are goods?
Physical products - e.g food, clothes, electronics
What are services?
Intangible- e.g hairdressers, plumbing, electricians
Purposes of an existing business
1) creates employment and develop human capital
2) drive innovation through R&D
3) pay taxes on profits earned and collects tax
4) creates wealth
Start-up definition
A new business enterprise, formed by one or more entrepreneurs
Transformation Process
Describes what happens inside the business. This is where value is added to inputs to create outputs
Primary Sector
Extraction of natural resources - e.g mining, farming
Secondary Sector
Production of finishes goods and components
Tertiary Sector
Providing services to consumers and businesses
Quarternary Sector
Providing information and ICT
Mission Statement Definition
A qualitative statement of the business’ aims, core values, objectives - a strategic perspective
Aim definition
Long term plan from which business objectives are derived
Objective Definition
A target which must be achieved in order to realise the stated aim. A time assigned targets derived from the goals and set in advance of strategy.
What makes a great mission statement?
- contains a formulation of objectives that enables progress towards them to be measured
- differentiates the business from its competitors
- defines the markets of business in which the firm wants to operate
- is relevant to all major stakeholders, not just shareholders and managers
- excites, inspires, motivates and guides
Common criticisms of mission statements
- sometimes not a true reflection of reality
- often too vague and general
- often merely statements of the obvious
