CH2 - Foundation of Business Flashcards
What is revenue and what is profit?
Revenue is a total amount of money a business generates over a business calendar year.
The funds an enterprise receives in exchange for its goods or services.
Profit is what remains after the company pays out all its expenses.
What is a business?
A business is an organization or a company that sells goods or services in order to generate profit.
Who are the main participants in a businss
Owners
Employees
Customers
Who is an entrepreneur?
An entrepreneur is someone who find new business opportunities and assumes the risk of organizing and managing a business around that business opportunity.
What is a stakeholder?
A stakeholder is any natural or legal person with interest in the success or failure of a business.
What are some examples of stakeholders that you can think of?
Internal: Shareholders, owners, employees.
External: The government, customers, vendors, Environment.
Can you always satisfy all stakeholders?
No, since different stakeholders in a company have different interests sometimes these interests are placed exactly the opposite of one another.
Example would be that it is in the interest of the shareholders for the company to generate more profit at a cost of raising the prices of goods sold which directly correlates with the interest of customers who prefer to spend less on the goods.
What are some of the areas of the business function?
- HR
- Marketing
- Sales
- Operations
- Accounting
- Finance
- IT
- Legal
What are the 2 division of business environment?
- Micro Environment
- Macro Environment
What is Micro Environment?
The micro environment is specific to each business and relates to the elements that interact directly with the business. Ex. Suppliers
What is Macro Environment?
The Macro Environment is the general context within which a specific industry operates.
E.g. the laws relating to the industry.
