3.1.1- Understanding the nature and the purpose of business Flashcards
3.1 What is business?
What is a business?
Any organisation that makes goods or provides services to consumers.
What are the advantages to owning a business?
- 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
What is a private sector business?
Privately owned- if doesnt make money it can go bankrupt
What is a public sector?
Government owned- they dont make money and are usually a service for the community.
Other than profit, what are some aims for a business?
- To give highest quality of goods and services
- To offer diverse range of goods or services
- To develop new products ahead of competitors
What is a mission statement?
A businesses aim that is expressed to make it seem purposefully upbeat and motivating.
What are mission statement for?
To make all stakeholders aware of what the business does and why, and encourage employees to work towards its aims.
What are business objectives?
They are set to enable business to achieve their mission. Turning aims into specific goals to be met.
What are corporate objectives?
The goals of a business as a whole. E.g. growing bigger.
What are functional goals?
Objectives of each department. More detailed and specific to each department.
Why do businesses set objectives?
To make sure everyone is working towards a goal, and coordination between departments improve.
What are different types of objectives?
- Profit
- Growth
- Survival
- Cash flow
- Ethical
What are profit objectives?
- Businesses aim to become profitable
- Established businesses might want to increase their profits. E.g. by 10% in three years
What are growth objectives?
- 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
What are survival objectives?
- Businesses can continue to trade, rather than running out of money
- This is usually the main objective for new businesses.