3.1.1 Flashcards
What is a good?
A tangible object
What is a Service?
An intangible object
What is a product?
A general term that includes a good and service
What 4 benefits do businesses bring?
Create employment
Create wealth
Create new products
Can enhance a country’s reputation
4 Examples of an input
People
Finance
Resources
Capital requirements
3 Examples of an output
Goods
Services
Waste products
3 Examples of primary sectors
Agriculture
Mining
Gas extraction
3 Examples of secondary sectors
Manufacturing
Construction
Supply of electricity, gas and water
Examples of tertiary sectors
The supply of services
What does GDP stand for?
Gross Domestic Product
What does GDP mean?
Measures total value of the production of an economy, over a period of time.
What is a mission statement?
Sets out a businesses overall purpose to direct and stimulate the organisation
What is an aim?
Long term plans of a business
What is an objective?
Medium to long term goals established to coordinate the business
What is the Hierarchy of Objectives in order of most to least? 6
Mission Statement Corporate Aim Corporate Objectives Corporate Strategy Functional Objectives Functional Tactics
What are the SMART Objectives?
Specific Measurable Agreed Realistic Time specific
What are the six common business objectives?
Profit Cash flow Growth Survival Social, Ethical and Environmental Diversification
What are Profit Objectives?
When the total revenue exceeds the total costs.
What are Growth Objectives?
May include getting a larger market share, it can then exploit its market position and get more profit.
What are Survival Objectives?
Helps the business to continue to trading rather then being forced to stop.
What are Cash Flow Objectives?
The amount of money going in and our of the business. The business being able to pay debts on time and Get enough revenue to have a substantial profit.
What are Social, Ethical, Environment Objectives?
Social: Targets relating to employment and improving working conditions.
Ethical: Targets based on moral principles
Environmental: Targets protecting the environment through the use of sustainable production techniques.
What are Diversification Objectives?
Where a firm produces an increased range of unrelated goods and services
How do you calculate profit?
Profit = Total Revenue - Total Cost
What are business costs?
The expenditures of the business
What are Fixed costs?
Expenditures that do not change when the level of output changes.
What are variable costs?
Expenditures that change as a result of the changing output levels.
How do you calculate variable costs?
Variable Costs = Variable Cost per Unit x Number of Units Sold
What are semi-variable costs?
Costs that have Fixed and variable elements
What are total costs?
The sum of all costs
How to calculate Total Costs?
Total Costs = Variable Costs + Fixed Costs
What is business revenue?
The income over a period of time
How do you calculate Revenue?
Revenue = Cost per Unit x Number of Units Sold
What does the businesses profit depend on?
Profit Margin and Quantity of Sales
What is a Profit Margin?
Amount of the final selling price that is profit
What does the quantity sold effect?
The amount of profit the business earns
What benefits can profit bring to the business?: Customers
A profitable business can attract customers they may think the business are selling desirable quality of products.
What benefits can profit bring to the business?: Investments
With high profits, the business can persuade individuals and institutions, like banks, to invest.
What benefits can profit bring to the business?: Larger Rivals
Larger rivals could buy the business with a high profit
What benefits can profit bring to the business?: Suppliers
Likely to have more confidence of its suppliers.
