3.1.1 Nature and purpose of a business

Question 1

your doing great

Answer 1

thanks !

Question 2

why businesses exist

Answer 2

Businesses exist to provide goods and services on a commercial basis to customers

Question 3

2 areas a business can sell in

Answer 3

good or services

Question 4

benefits that business give to society

Answer 4

Create Employment & Develop Human Capital
Drive Innovation through R&D and New Products
Pay Taxes on profits earned & collect taxes for Govt.
Create Wealth by providing returns on investment

Question 5

whats a start up

Answer 5

A start-up is a new business enterprise, formed by one or more entrepreneurs

Question 6

The Role of the Entrepreneur

Answer 6

Spots business opportunities
Takes (calculated) risks in order to gain possible future returns
Acts a catalyst for the creation & growth of new business enterprises

Question 7

What Happens in a Business?

Answer 7

The transformation process
this describes what happens inside the business. This is where value is added to inputs to create outputs

Question 8

factors of production (Key Inputs into the Transformation Process)

Answer 8

capital (money )
land (where )
labour (workers , how )
enterprise (bring all together)

Question 9

the main Business Sectors

Answer 9

Primary (Extraction of natural resources)
secondary (Production of finished goods and components)
tertiary (Providing services to consumers and businesses)
Quaternary (Providing information & ICT)

Question 10

wtf is a business Mission

Answer 10

The business mission refers to the organisation’s long-term intentions and details its overall purpose.

Question 11

how should objectives be set.

Answer 11

Should be SMART and out how the aims of the organisation will be achieved.

Question 12

What are Business Objectives?

Answer 12

The specific intended outcomes of business strategy
The anticipated end results of a programme of activities
Targets which the business adopts in order to achieve its primary aims

Question 13

why have objectives

Answer 13

A clear statement of what needs to be achieved
A focus for all activity
Targets for individual and group achievement
A means of measuring performance

Question 14

The Hierarchy of Objectives in Business

Answer 14

Mission
Corporate /
Strategic
Functional
Team
Individual
(in order, more strategic at the top
more specif at the bottom)

Question 15

How objectives can be used

Answer 15

Implement the mission
Provide a clear focus for decision making
Provide a target
Motivate employees
Facilitate control of actual performance
Provide a criteria for evaluating performance
Reduce uncertainty
Provide a sense of unity

Question 16

NAAAAAAAAAA,
explain these mf’s
Mission…aim…objective

Answer 16

Mission
A qualitative statement of the business’s aims
Aim
A long term plan from which business objectives are derived
Objective
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

Question 17

Typical Business Objectives (9 total)

Answer 17

Cash Flow:
To ensure sufficient cash is available to meet day to day expenses
Cash flow is the flow of cash into and out of a business over a period of time

Social:
To behave in a way which benefits society
This could include to create employment, support the local community or improve educational standards

Ethical:
To behave in a way which is considered to be morally correct
This could include treating key stakeholders including suppliers and employees in a fair manner or reducing negative impacts on the environment

Growth:
To increase in size either by value of sales or volume of sales (or both!)
This may be organically i.e. opening new stores, launching new products or externally i.e. by joining with other businesses or taking them over

Survival:
To continue to exist as a business
This may be the primary objective of a start-up business or one experiencing difficult trading conditions

Profit Optimisation:
Achieving a balance between a profit surplus that does not risk exploiting consumers against a level that might be so low as to threaten a firms viability in the medium to long term.

Profit Maximisation:
Whereby a firm seeks to make as much profit as possible.

Profit:
To achieve sales revenue that is higher than total costs. Why is profit such an important objective?
Profit = Sales Revenue – Total Costs

costs,
lower them

Question 18

corporate objectives (typical)

Answer 18

Profit (value, margin)
Return on investment (ROCE) (roi)
Growth (profit, earnings per share)
Market share
Cash flow
Sales revenue
Shareholder value
Corporate image & reputation

Question 19

acronym helps management set effective objectives

Answer 19

SMART

specific
measurable
achivable
relevant
time bound

Question 20

Factors Can Influence Business Objectives

Answer 20

State of the economy
Competition
Risk and attitude to risk
Corporate culture
Political factors
Social attitudes
Age of the business
Size and legal status
Ownership
Views of owners and managers
Market conditions
Legislation

Question 21

a good mission statement contains

Answer 21

clear outlimes of the business
Differentiates the business from its competitors
Is relevant to all major stakeholders

Question 22

Common Criticisms of Mission Statements

Answer 22

Not always supported by actions of the business
Often too vague and general
Often merely statements of the obvious
Often seen as a PR exercise
Sometimes regarded cynically by staff
Sometimes not a true reflection of reality
To mean anything they must be supported wholeheartedly by senior management

Question 23

strategic objectives features

Answer 23

focused long term
setby owners
higher risk
hella investment
hard to change
sretching and challenging (fcking hard)

Question 24

Tactical objectives

Answer 24

short term
set by line management
lower risk
limited resources
easy and cheap to change
realistic and achivable (simple)

Question 25

your doing great hot stuff

Answer 25

your a lengers