3.1.1 Flashcards
What is a non-profit organisation?
Businesses that are operated commercially but with social welfare and environmental aims in mind, Profits are usually re-invested.
What is a firm?
Business organisation such as a corporation that produces and sells goods and services in markets
What is a public sector organisation?
They are owned and controlled by the state
What is a private sector organsiation?
Organisations that are owned by private invetseros
What are different types of firms?
-Private limited companies
-Co-operative producers
-Social enterprise
What are private limited companies?
Companies whose share are not listed of a public exchange
What are co-operative producers?
Owned and run by their members such as john lewis/waitrose
What are social enterprises?
Profit is re-invested for social purposes rather than for gain of private investors.
Why do smaller firms survive and thrive?
-Act as a supplier/ sub-contractor to larger enterprises
-low PED and high price elasticity of income for products
-Internal diseconomies of scale.
-Innovative, flexible
-External economies of scale
What are smaller firms business objectives?
-Business survival
-Revenue maximisation
-Profit maximisation
-Cost efficiency and scale
-Customer service
What are the key reasons why some firms stay small?
-Product differentation and USP
-Flexibility in meeting customers needs
-Deliver high standard of customer service
-Exploit opportunities from e-commerce
What is a stake holder?
Any individual or organisation who has a vested interest in the activities and decision making of a business
What are shareholders?
Own the business and interest in profit growth and price growth
What is product differentiation and USP for smaller firms?
Being seen as ‘small’ can help differentiate against larger competitors
Perception of better product
-Adding value through provision of specialist expertise
What is flexibility in meeting customer needs for smaller firms?
-Talk to customers regularly
-Often communicate to customers’ language which give the impression that they are in tune with their need.
-Easy to get customer feedback
What is delivering higher standards of customer service for smaller firms?
Most ‘small’ business operate the service sector so it is a competitive advantage.
-Employees are likely to treat customer service as a priority
What is exploiting opportunities from E-commerce for smaller firms?
-Reach broader customer base
-Easy for small firms to target niche segments domestically and overseas with e-commerce
-Can gain significant traction with customers using social media
What are banks and other lenders main interest in a business?
Interest and principle to be repaid, maintain credit rating
What are directors and managers main interest in a bsuienss?
Salary, share options, job satisafaction, status
What are employees main interets in a business?
Salaries/wages, job security, job satisfaction and motivation
What are suppliers main interests in a business?
Long term contracts, prompt payment, growth of purchasing
What are customers main interest in a business?
Reliable quality, value for money, product avaliability, customer service
What is a community’s main interest in a business?
Environment, local jobs, total impact
What is the governments main interest in businesses?
Operate legally, tax recepits, jobs
What are shareholders power and influence?
Election of directors
What are banks and other lenders power and influence in a business?
Enforce loan coveants and withdraw banking facilities
What are directors and managers power and influence in a business?
Make decisions and have detailed information
What are employees power and influence in a business?
Staff turnover, industrial action, service quality
What are customers power and influence in a business?
Revenue/ repeat business
word pf mouth reccommendation
What is a community’s power and influence in a business?
Indirect via local planning and opinion leaders.
What is a governments power and influence in a business?
Regulation, subsisdies, taxation, planning
What are ways to overcome the principle-agent problem?
-Employee share ownership schemes
-Long-term employment contracts for senior management
-Long-term stock commitment
