Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

a level business > 3.1 what is business? > Flashcards

3.1 what is business? Flashcards

1
Q

what is the purpose of all businesses

A

to meet the needs of people

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

how does the incentive to meet peoples needs vary between businesses

A

vary from one business to another depending on the industry, sector and motives of the owners

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

how do businesses meet peoples needs

A

through a transformation process that creates a product (goods or service)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

how does added value affect competitiveness

A

more value a business can add to products the more competitive it is

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

how can added value be achieved

A

through branding, quality, convenience and service

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

inputs into the transformation process (added value)

A

labour (people)
capital (finance)
land (natural resources and materials)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

outputs of the transformation process (added value)

A

goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

role of business and how they meet needs and reward owners

A

business creates goods and services -
to meet the needs of customers-
business sells products to generate revenue-
if revenue is greater than total costs-
profit (reward of owners)-
reinvested for business growth- back to first stage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

why do businesses exist

A

create wealth
create jobs
develop new products to benefit society
support other businesses in the country such as purchasing materials
provide a source of tax revenue for the government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

how does mcdonalds ad value to its products

A

strong global brand
golden arches
value also added through convenience and speed of service

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

what do aims and missions do

A

act as targets and give the business direction
they also give clarity to the decision making process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

whats a mission statement

A

sets out a business’s overall purpose to direct and stimulate the entire organisation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what does a mission statement focus on

A

the organisations values
non financial goals
the benefits of the business to the community or stakeholder
how consumers are to be satisfied

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what is oxfams mission statement

A

to create lasting solutions to poverty, hunger and social injustice

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

how does the mission statement help employees

A

acts as a set of guiding principles for employees
brings employees together with a shared purpose and communicates the values that underpin the business
a mission statement can have significant influence on corporate culture- ‘the way we do things around here’

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

effect of a mission statement on owners and directors

A

directors need to see the bigger picture and think strategically
the mission statement helps the directors form and align the business strategy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

how does the mission statement help investors

A

many shareholders will want assurances that their money is being invested in an ethical business with strong values
a mission will also communicate the ambition of the business to potential stakeholders and its desire to grow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

how does the mission statement affect customers

A

many organisations use their mission statement as a promise to their customers
it lays down what they can expect from the goods and services they consume

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

what does the objectives hierarchy show

A

shows the relationship between the aims, mission and objectives thrughout a business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

what is the objectives hierarchy

A

aims
mission statement
corporate objectives
functional objectives- finance, marketibg, operations, people

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

what is the relationship between missions and objectives

A

the objectives of a business will flow from the mission and aims
whereas a mission outlines the vision of the business in broad terms, the objectives will be SMART
whereas a mission statement will be communicated to all stakeholders, some objectives may only be shared with managers and employees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

what are objectives

A

medium to long term plans established to coordinate the business and act as targets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

what are corporate objectives

A

those set by the owners or directors of the business
these will influence the functional objectives set at department level

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

why do businesses set objectives

A

provide quantifiable steps to achieve aims
clarify direction of the business
measure success against targets
provide targets to motivate and reward employees
influence potential leaders/investors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
how is the appropriatness of an objective analysed
using SMART
26
what does SMART stand for
specific measurable agreed realistic time related
27
what are the two types of objectives
financial non financial
28
financial objectives
survival profitability growth market share shareholder value
29
non financial objectives
personal satisfaction brand recognition sustainability customer satisfaction
30
what objectives are more appropriate for small businesses
survival personal satisfaction of the owner
31
what factors influence business objectives
size sector market ownership owner consumer satisfaction
32
how does the size of a business influence objectives
objectives may change as a business grows and becomes more successful most businesses when starting up will aim to survive
33
how does sector influence business objectives
unlike most private sector businesses public sector organisations are driven by meeting customer needs not profit
34
how does market influence business objectives
some markets are more competitive than others and this will determine objectives such as targeting market share
35
how does ownership influence business objectives
a PLC must satisfy shareholders therefore will set objectives around shareholder value
36
how does the owner influence business objectives
the owner may run the business for love of the job
37
how does consumer satisfaction influence business objectives
how to achieve consumer satisfaction
38
what is one of the main incentives of running a business
profit
39
what does the wealth created through profit allow owners to do
allow owners to reinvest the money into new projects and stimulate eonomic activity
40
why is profit important
secures long term success of a businesss
41
why may profits be reinvested
help the business grow and keep up with the demands of the ever changing business environment
42
what is profit
what is left after all costs have been deducted from revenue
43
what is revenue
the value of sales made during a trading period it also includes products sold on credit as well as those sold for cash
44
how can a business increase revenue
by increasing the price of its products and by stimulating more demand
45
what are the two types of costs
variable costs fixed costs
46
variable costs
those that change directly with the level of output or sales such as the meterials used to make a product
47
fixed costs
those that do not change with the level of output or sales such as rent
48
what can calculating fixed and variable costs help with
when making decisions about profit margins, average costs and pricing decisions
49
how can a business improve profit
by reducing fixed or variable costs whilst maintaining value in their productss
50
what is revenue
the value of sales made during a trading period it also includes products sold on credit as well as those sold for cash
51
how can a business increase revenue
by increasing the price of their products and by stimulating demand
52
total revenue formula
price x quantity sold
53
total costs formula
total variable costs + total fixed costs
54
profit formula
total revenue - total costs
55
what does achieving high revenue demonstrate
that the business has been able to produce a product that is desirable and at the right price for consumers so revenue is an important measure of success for most businesses
56
what is revenue
the value of sales made during a trading period it also includes products sold on credit as well as those sold for cash
57
how can a business increase revenue
increasing the price of their products and by stimulating more demand
58
total revenue formula
price x quantity sold
59
total costs formula
total variable costs + total fixed costs
60
profit formula
total rvenue - total costs
61
why is it important to consider profit margins when analysing sales revenue
it is difficult to analyse the success of a business without being able to compare revenue and profit
62
what determines what the most appropriate form of ownership for a business is
nature and size of each business
63
private businesses are
owned by shareholders and private individuals most businesses in the uk driven by profit motive (most) determined by market forces
64
50/50 private and public businesses
some industries and business feature aspects of both the private and public sector such as the MHS
65
pubic businesses are
owned and funded by national or local government account for approximately 19% of UK employment are driven by public interest are made up of public corporations, public services and municipal services
66
what is privatisation
selling of public owned industries to raise capital and improve efficiency
67
how may a business change its form as it grows
sole traders private limited company public limited company non profit organisations size- as businesses grow they gain access to more capital
68
sole traders
easy to start up- no registration requires wide range of skills and flexibility own boss but long hours keep all profits unlimited liability
69
private limited company
must go through process of incorporation limited liability customers may trust a limited company more than a sole trader wider access to capital- easier to borrow money as a limited company
70
who are sole traders owned by
individuals self employed
71
who are private limited company owned by
owned by shareholders seperate legal entity
72
public limited company
can raise capital through selling shares to the public size measured by market capitalisation ability to take over other businesses can lose control of the business pressure to pay dividends to its shareholders
73
who owns public limited companys
large publically owned companies
74
non profit organisations
a business may also be set up as a charity- a not for profit business a charity may be exempt from tax on most forms of income alternatively a business may take the form of a mutual a mutual can take any legal foprm but is distinguished by the fact that it is run for the benefit of its members (employees, customers or community)
75
incorporation
involves the registry of a business with Companies House and includes documents such as a Memorandum of association and articles of association
76
limited liability
where the liability of the owners is detached from the company shateholders lose their investment in the event of financial difficulties but their personal belongings are safe unlike with unlimited liability where there is no distinction in law between the individual and the business
77
what are the aims and objectives of a business influenced by
the type of ownership its size the external environment in which it operates
78
aims and objectives of public limited companies
has external shareholders due to stock market floatation as a result the aims and objectives of the business are likely to relate to increasing shareholder value private limited companies and sole traders do not have this pressure to satisfy external shareholders as a plc is more likely to operate in internnational markets its objectives may alos refer to how it intends to operate in these markets
79
aims and objectives of a private limited company
many businesses can be formed as a private limited company although the limited status does not necessarily influence aims and objectives the business may have ambitions to become a plc objectives are likely to involve growth and expansion
80
aims and objectives for sole traders
typically small businesses and owned by one person if the business is newly formed the objectives are likely to focus on survival establishing a loyal customer base or building reputation objectives may only extend to providing the owner with a comfortable income
81
aims and objectives of a charity
a charity is a not for profit organisation so its aims and objectives will not focus on the incentive of profit a charity may set a unique way to measure its success such as the number of donors, the number of people it has supported or the awareness of the cause it promotes
82
what happened in 2013 when twitter floated itself on the New York stock exchange
initial public offering was valued at $14.2 billion and the share price for its first day of trading settled at around $44 per share
83
what is a shareholder
an individual or an institution that owns a percentage of a company shareholders invest in companies to make a profit (return) on their investment shareholders can influence the decision making in companies and often have a vote in key company policy
84
the two ways shareholders gain from shares
therough profits returned in the form of dividends and the appreciation of share value when they come to sell them
85
what are share prices affected by
the companys performance and the business enviornment in which it trades a companies share price could fall even if it is performing well if there are fears for its future
86
when share prices rise
managers recieve a bonus the company fimds it easier to raise capital consumers with shares feel more confident the business may recieve posotive publicity
87
when share prices fall
the company may become vulnerable to a takeover price fall gives an indication of poor performance the company finds it harder to raise capital consumers with shares feel less confident to spend
88
external factors for businesses
competition market conditions demographic factors such as birth rates, migration, consumer tastes market conditions such as consumer incomes, competition, growth in demand environmental issues such as consumer preference for fair trade products and green business practices economic factors such as consumer incomes, interest rate changes
89
what might determine how attractive or changeable a market is
range of factors they may determine how responsive and flixible a business needs to be to succees within its market
90
what factors affect market conditions and competition
the growth rate of the market the typical profit margin that businesses can generate the number and size of competitors in the market the pace of innovation and new product development the bargaining power of suppliers and customers the level of differentiation between competitors the seasonality of the product the volaitility of costs during incurred by businesses such as commodity prices
91
what is a key market factor in thr mobile phone industry
the pace of technology and new product development most smartphone manufacturers launch a new product every 6-8 months sales growth for smartphones in western europe and the usa is declining whilst africa amnd asia pacific offer considerable growth opportunities for manufacturers and network providers
92
economic factors in the external environment
income of consumers incomes are determined by the gross domestic product (GDP)
93
what is GDP a measure of
the output of an economy in terms of the goods and services it produces over a year
94
how will high DGP affect incomes
will increase the incomes of consumers leading to increased spending on a range of goods and services
95
how will consumer spending on luxuries/neccesities respond to a change in incomes
will respond differently consumers may purchase more luxury items as their incomes rise but there may be little change in demand for necessities as incomes fall
96
how will low GDP affect incomes
may result in unemployment and falling incomes spending will fall for certain goods and services
97
what is an interest rate
the cost of borrowing money or the reward for saving interest rates are closely linked to the level of inflation and the exchange rate
98
high interest rates
cost of existing loans may increase consumers may have less disposable income (consequence of increased mortgage payments) demand for products bought on credit may fall consumers more likely to save their money
99
low interest rates
cost of existing loans may fall demand for products bought on credit may rise eg luxury goods consumers more likely to spend disposable income rises savers lose out on earnings from investments
100
what is demography
the study of the human population
101
what demographic factors affect the uk
UK population is growing leading to an increase in demand for most goods and services migration to the uk from eastern european countries is growing, fuelling growth in the labour market the uk population is getting older, changing the demand for different products and services
102
what two key stakeholder groups does the population form
changes in the population will impacy the size of a potential market and their wants and needs changes in the population will impact the size of the labour market and the skills of those workers
103
what do the government try to get businesses to do
ensure businesses pay for the total cost of production including the external costs such as pollution which ultimately has to be paid for by society
104
benefits for a business of being environmentally friendly
avoid negative publicity from the media opportunity for differentiation avoids fines or penalties imported through environmental legislation opportunity for government incentives such as tax relief creates a sustainable business
105
limitations for a business of being environmentally friendly
increased cost of raw materials increased cost of waste disposal lower profit margin on fair trade goods
106
uk environmental legislation includes
the environmental protection act 1990 the environment act 1995 the climate change act 2008
107
eg of enviornmentally friendly practices for businesses
global retail sales of fairtrade products such as coffee,sugar and bananas increased by 15% in 2014 the uk is currently the worlds largest market for fairtrade products
108

a level business (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions