3.1.1- Understanding the nature and the purpose of business Flashcards

3.1 What is business?

1
Q

What is a business?

A

Any organisation that makes goods or provides services to consumers.

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2
Q

What are the advantages to owning a business?

A
  • People can make a profit
  • Some own a business to be their own boss
  • Gives people the opportunity to do a job their interested in
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3
Q

What is a private sector business?

A

Privately owned- if doesnt make money it can go bankrupt

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4
Q

What is a public sector?

A

Government owned- they dont make money and are usually a service for the community.

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5
Q

Other than profit, what are some aims for a business?

A
  • To give highest quality of goods and services
  • To offer diverse range of goods or services
  • To develop new products ahead of competitors
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6
Q

What is a mission statement?

A

A businesses aim that is expressed to make it seem purposefully upbeat and motivating.

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7
Q

What are mission statement for?

A

To make all stakeholders aware of what the business does and why, and encourage employees to work towards its aims.

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8
Q

What are business objectives?

A

They are set to enable business to achieve their mission. Turning aims into specific goals to be met.

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9
Q

What are corporate objectives?

A

The goals of a business as a whole. E.g. growing bigger.

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10
Q

What are functional goals?

A

Objectives of each department. More detailed and specific to each department.

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11
Q

Why do businesses set objectives?

A

To make sure everyone is working towards a goal, and coordination between departments improve.

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12
Q

What are different types of objectives?

A
  • Profit
  • Growth
  • Survival
  • Cash flow
  • Ethical
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13
Q

What are profit objectives?

A
  • Businesses aim to become profitable
  • Established businesses might want to increase their profits. E.g. by 10% in three years
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14
Q

What are growth objectives?

A
  • Businesses aim to grow, the larger they are, the more profit made
  • Growth objectives can be based on increasing revenue, market share, or expanding a business
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15
Q

What are survival objectives?

A
  • Businesses can continue to trade, rather than running out of money
  • This is usually the main objective for new businesses.
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16
Q

What are cash flow objectives?

A
  • This helps improve their cash flow
  • Increase in cash flow results in an increase in survival
17
Q

What are the social objectives?

A

Benefiting society or people in need

18
Q

What are ethical objectives?

A

They are based on moral principles about how businesses treat others and the environment

19
Q

What are some short-term objectives?

A
  • Making short-term profit
  • Having short-term survival
20
Q

What are long-term objectives?

A

Long term growth, they tend to set direction for the business.

21
Q

What is revenue?

A

The money generated by sales of a product before deductions are made

22
Q

What are fixed costs? Give some examples.

A

Costs that dont change based on output. E.g.

  • Rent
  • Salaries
  • Utility Bills
  • Loan repayments
23
Q

What are variable costs? Give some examples.

A

Costs that rise and fall as output changes. E.g.
* Wages
* Raw material costs
* Packaging costs

24
Q

What is profit?

A

The amount you have when you deducts the total cost from the total revenue.