Business & Its environment Flashcards
What are the 4 factors of production?
Capital, Enterprise, land, labour (CELL)
What are factors of production?
The inputs into the transformation process of a business
What is the transformation process?
It involves converting inputs into outputs
What are business objectives?
Business objectives are measurable targets set by the business, such as sales or profits that have to be achieved within a given time period.
Define primary sector
The primary sector is the first stage of production and includes extracting or growing resources. Farming, mining and fishing are all part of the primary sector.
Define ‘Adding value’
Adding value occurs in a transformation process when outputs are produced that are worth more than the inputs brought in to provide them.
What is a Brand
A brand is a name, design, logo, symbol or indeed anything that makes a product recognisable and distinguishes it from the competition in the eyes of the customer.
What are market forces?
Market forces are the forces of supply and demand which determine the price of a product and the quantity bought and sold in a market.
What is opportunity cost?
Opportunity cost measures the sacrifice made by choosing one option in terms of the next best alternative foregone.
What is an entrepreneur?
An entrepreneur is someone who is willing to take a risk to start a new project or a new business
What is enterprise?
Enterprise is the skill needed to make a new idea work.
What is an intrapreneur?
An Intrapreneur is someone within an established business who thinks and acts like an entrepreneur.
What is the secondary sector?
This is the part of the economy that manufactures and assembles products using raw materials
What is the tertiary sector?
This is made up of businesses that provide services. These services are intangible
What is the Quaternary sector?
This is a subset of the tertiary sector which represents organisations that are based on knowledge and the skills of employees; for example, information service businesses, such as management consultancies, and research and development businesses.
What is a business plan?
A business plan is a written document that sets out key aspects of a business idea. A business plan is often produced by entrepreneurs when setting up a business to try and anticipate any potential problems and opportunities, and to put in place appropriate actions.
What is a sole trader?
When individuals run a business on their own, they are known as ‘sole traders’.
Define Unlimited liability
Unlimited liability occurs when an individual or groups of individuals are personally responsible for all the actions of their business. With sole traders, there is no distinction in law between the individuals and the business, and so they could lose their personal assets if the business has financial problems.
What are International businesses?
Businesses that operate around the world- they export products to other countries
What are multinational businesses?
If businesses have bases abroad (for example, they have shops or factories in other countries) they are known as a multinational.
What is a partnership?
A business owned and ran by two or more people
What is a company?
A company is a business organisation which has its own legal identity and which has limited liability.
What are shareholders?
Shareholders are persons or organisations that own a part of a company
What is limited liability?
Limited liability means that investors can lose the money they have invested into the business but their personal possessions are safe. There is a limit to their risk.
What is a franchise?
A franchise occurs when a franchisor sells the rights to use or sell their products to a franchisee.
What are private limited companies?
They are owned by shareholders and the owners can place restrictions on who the shares are sold to in the future.
What are public limited companies?
Once again, they are owned by shareholders but, unlike private companies, restrictions cannot be placed on the sale of these shares.
What are cooperatives?
Co-operative businesses are owned and run by and for their members, whether they are customers, employees or residents. The members of a co-operative have one vote each and so it is a democracy.
What are employee cooperatives?
These occur when the business is owned equally by all the employees who work there.
What are community cooperatives?
These are owned by members of a community to provide a local service, such as a post office.
What is a joint venture?
A joint venture occurs when businesses collaborate on a project but do not formally join together all their activities.
What are social enterprises?
Social enterprises are businesses that have social aims and which trade in order to benefit the community or society
in general.
What is a niche
A niche is a small segment of a market.
What is external growth?
External growth occurs when a business expands by buying up another business or joining with another business. This is known as integration
What is a merger
In a merger, two or more businesses mutually agree to join together to form one new one
What is a takeover?
One business may unilaterally decide to acquire another; this is known as a takeover. one business buys control of another one by gaining the majority of its shares.
What is internal/organic growth?
One way to grow is to expand your existing operations. This is called internal or organic growth
What is horizontal integration
This occurs when one business joins with another at the same stage of the same production process; for example, a car manufacturer acquires another car manufacturer.
What is vertical integration?
This occurs when a business acquires another business at a different stage of the same production process.
What is backward vertical integration?
Backward vertical integration occurs when the business joins with a supplier;
What is forward vertical integration?
forward vertical integration occurs when a business joins with a business closer to the customer, such as a distributor or retailer.
What is Conglomerate diversification?
This occurs when a business joins with another business operating in a different sector; for example, a car manufacturer joins with a confectionery business.
What is an objective?
An objective is a target that is measurable and has a given
timescale.
What is Labour productivity?
Labour productivity measures the output per time period of an employee.
What is a cooperate objective?
A corporate objective is a target set for the business as a whole.
What is the private sector?
Businesses owned by individuals
What is market share?
The market share of a business measures its sales as a percentage of the total market sales.
Define cash flow
Cash flow is the movement of cash into and out of a business over a time period.
Define ethics
Ethics are moral principles that can shape the way a business behaves
What is social responsibility?
Social responsibility is a philosophy under which businesses consider the interests of all groups in society as a central part of their decision-making.
What is diversification?
Diversification is an objective where a firm produces an increased range of unrelated goods and services.
What are public sector businesses?
Businesses owned by the government
What is the triple bottom line?
Profit, Planet, People - it encourages sustainable production, allowing it to continue in the long term without damaging the environment
What is a mission statement?
A mission statement sets out the overall purpose of a business.
What is an aim?
An aim is a long-term goal that determines the objectives that an organisation sets itself.
What is strategy?
Strategy is the long-term plan to achieve the objective of a business.
What are tactics?
Tactics are the short-term actions needed to implement the strategy
What is a target?
A target is a goal pursued by a business, such as achieving a particular market share or rate of growth of sales.
What are budgets?
Budgets are financial plans setting out a business’ future revenues and expenditure.
What is ethical behaviour?
Ethical behaviour is behaviour that is thought to be morally correct and not necessarily the most profitable
What are the SMART objectives?
Specific, measurable, agreed, realistic, time specific
What are stakeholders?
Stakeholders are groups or individuals who have an interest in a business.
What are internal stakeholders?
Internal stakeholders are individuals and groups within a business; for example, employees.
What are external stakeholders?
External stakeholders are groups outside a business; for example, people who live near to the business’ premises.
What are dividends?
Dividends are money that is paid out of profits to shareholders. It is a reward to the owners of the business
What is the shareholder concept?
This view believes that it is better in the long term to treat stakeholders well. (Rewarding shareholders the businesses key objective)
