Chapter 1 Flashcards
What is a business?
A decision making organization in involved in the process of using inputs to produce goods or provide services.
Distinguish between goods and services
Goods are physical products. Services and intangible products.
Distinguish between customers and consumers of a business.
Customers are people or organizations that buy a product, while consumers actually use the product.
What are the four functional areas of a business?
Human resources, Finance and accounts, Marketing and Operations management - Describe each?
Describe four business sectors of the economy.
Primary - extraction, harvestation and conversion of natural resources
Secondary - manufacturing or construction of products
Tertiary - provision of services
Quaternary - intellectual, knowledge based activities that generate and share information.
What is meant by the chain of production?
The various stages involved in the production of a particular product.
What is meant by sectoral change?
As a country develops over time, it shifts the majority of its output from the primary sector, to manufacturing and then to the tertiary and quaternary sector.
Differentiate between entrepreneurs and intrapreneurs.
Entrepreneurs are someone willing to take financial risks by investing in a business idea. Usually self employed, developing products for their own benefit.
Intrapreneurs are people who develop new products or services within and organization for the benefit of the firm and its employers.
Main reason for starting up a business.
GETCASH growth earnings transference challenge autonomy security hobbies
Main steps in starting up a business.
Idea > market research > business plan > determining a business structure > meet legal requirements
Problems that new businesses face.
Planning, finance, marketing, human resources, operations management, strategic thinking
What is a business plan and what are the main elements that go into a business plan?
Executive summary, business description, business environment, product description, marketing, finance, operations, human resources
Distinguish between private and public sector.
Private sector - commercial sector of the economy, private individuals and organizations for profit
Public sector - organizations controlled by regional and/or national governments
Benefits of partnership vs sole trader
Sole trader - quick decisions, owner complete control, tax advantages, privacy, flexibility
Partnerships - Able to raise more finance, more ideas and expertise, specialization, improved continuity, silent partners.
Why is limited liability important for investors?
Limited liability is important in limiting the risk that investors will suffer from personal assets if ventures fail.
Difference between a private limited company and a public limited company.
Public - Shares can be bough by and sold to any member of the public or institution. Regulated to publish complete financial accounts
Private - shares can be transferred privately, all shareholders must agree on the transfer. Shares cannot be advertised for sale or sold via stock exchange
Distinguish between non-profit and non-governmental organizations.
NGO is not part of government or for profit business. Run by volunteer groups.
What are social enterprises?
Distinguish between cooperatives, microfinance providers and public-private partnerships.
Outline the benefits of social enterprises from society’s point of view.
Distinguish between non-governmental organizations and charities.
Difference between operational NGO and advocacy an advocacy NGO.
Difference between mission and vision statements.
Why are aims and objectives important to business organizations?
