Business in the real world Flashcards
Primary sector
involves extracting natural resources from the earth, such as growing crops
Secondary sector
manufacturing of goods
Tertiary sector
providing services
Division of labour
involves splitting roles up between different people., who are specialists in that particular area, to increase efficiency
Are partnerships easier to run than sole traders?
Yes - extra help from partners (division of labour, help with decisions, more capital)
No - partners can be unreliable/disagreements can occur
Depends on - type/nature of business
Is a business more likely to succeed as a partnership or sole trader?
Yes - partners may bring extra finance/expertise, so less risk for 1 person
No - sole trader is easy to manage - 1 owner so decision making is quicker
(factors like: price, quality, competition and demand will also determine success)
Explain why a charity like “WaterAid” is an example of a not-for-profit organisation?
Has clear social objectives - to help others
Raises money for good causes
Why do businesses set aims and objectives?
to motivate staff
to measure success
to help with decision making
to provide direction to the firm - a purpose
Why do businesses set aims and objectives?
to motivate staff
to measure success
to help with decision making
to provide direction to the firm
Financial aims and objectives:
maximise profit
growth/expansion
market share
survival
shareholder value
Non-financial aims and objectives:
customer satisfaction
being ethical
environmental and sustainability targets
Why would a business want to set the aim/objective of improving customer satisfaction?
helps encourage customer loyalty and create repeat purchases - increased sales
improves reputation so can have more flexibility with pricing
Stakeholders of a business:
employees - concerned with wages
suppliers
owners
customers
community - concerned with environment (e.g. noise pollution) and ethics
government - concerned with taxes to reinvest into infrastructure and services
shareholders - concerned with dividends
What effect does a business replacing 100 of its workers with machines have on its stakeholders?
customers - benefit from consistent quality, can lead to greater customer satisfaction
owners - reduce costs, can maximise profits
employees - may leave or strike, resulting in a loss of skills; extra employees may be hired that need to be trained, increased costs; motivational methods need to be used to retain remaining employees
community - may be concerned with noise pollution created by machines, can impact the reputation of the business
Competitors
rival businesses trying to attract the same customers
Supppliers
businesses that provide the raw materials or stock to a business
Market
where the buyer and seller meet
Labout
the number of workers nearby
Unemployment
the number of workers without a job
How will the supply of labour nearby influence the business location?
if location is in an area of high unemployment, can keep wages low
How will how far away raw materials are influence the business location?
if they are near, will reduce transport costs
How will how far away the market is influence the business location?
if it is near, can receive more footfall as it is more convenient for customers to buy from the business
How will the number of competitors nearby influence the business location?
if there are too many, can be difficult to attract customers, may need a USP or to lower prices
How will the cost influence the business location?
if it is expensive, it will increase the business’s costs, will have a shorter profit margin
