Chapter 1 Flashcards
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What is a business?
A business is an organization or entity that works in an organized way to achieve specific goals, such as generating profit, creating goods/services, or solving problems. Businesses can range from sole proprietorships to large multinational corporations.
What is the business transformation process?
The process of converting raw materials (inputs) into finished products or services (outputs). For example, a car manufacturer transforms metal, glass, and electronics into vehicles.
What are the factors of production (business inputs)?
- Land: Natural resources (e.g., minerals, forests, farmland).
- Labour: Workers (e.g., blue-collar workers in factories or white-collar professionals in offices).
- Capital: Physical assets (e.g., machinery, tools, buildings) and financial resources.
- Enterprise: Entrepreneurs and managers who organize and coordinate the other factors to create value.
What are business outputs?
- Consumer Goods: Physical products like clothing, electronics.
- Consumer Services: Intangible offerings like hotel stays, insurance.
- Capital Goods: Goods sold to businesses, like factory equipment or tools, to aid production.
Differentiate between customers and consumers.
Customer: Purchases goods or services (e.g., a retailer buying products).
Consumer: Uses the goods or services (e.g., a shopper eating purchased food). A person can be both a customer and a consumer.
Classify the following goods: Laptop computer
Capital Goods (used for work or production).
Classify the following goods: Mobile phone
Consumer Goods (used by individuals).
Classify the following goods: Washing machine
Consumer Goods (used by households).
Classify the following goods: Toolbox
Capital Goods (used for production or work).
Classify the following goods: Drinking glass
Capital Goods if used in a restaurant or Consumer Goods if used at home.
What are the four key business functions?
- Human Resources: Workforce planning, recruitment, training.
- Finance: Budgeting, managing cash flow, and funding operations.
- Marketing: Pricing, promotion, product development, market research.
- Operations Management: Overseeing production, ensuring efficiency, managing inventory.
What are the sectors of the economy?
- Primary Sector: Extracting raw materials (e.g., farming, mining).
- Secondary Sector: Manufacturing and construction (e.g., factories producing goods).
- Tertiary Sector: Providing services (e.g., retail, banking).
- Quaternary Sector: Knowledge-based services (e.g., IT, education).
Define the chain of production.
The process of tracking production stages from raw material extraction to delivering finished goods or services to the consumer. Value is added at each stage, such as refining crude oil into gasoline and selling it at gas stations.
What is sectorial change?
Industrialisation is a process of economic and social change whereas deindustrilisation is a process of reduced economic and social change due to economic and social hardship
What is industrialization?
The shift towards a focus on the secondary sector in developing countries.
Benefits: Increased GDP, job creation, improved living standards, more tax revenue.
Problems: Overcrowding in cities, pollution, reliance on raw material imports.
What is deindustrialization?
The decline of manufacturing (secondary sector) and the rise of services (tertiary sector).
Impact: Growth in sectors like tourism, but challenges such as job losses for factory workers and skill mismatches.
What is a business plan?
A formal report outlining how a business will achieve its goals and objectives. It typically includes details on marketing, finance, operations, and human resources.
Key elements of a business plan.
- Marketing: Strategies for reaching customers.
- Product: Description of goods/services.
- Market: Analysis of target audience.
- Personnel: Workforce requirements.
- Finance: Budgets, funding, and revenue projections.
Advantages and disadvantages of business plans.
Advantages: Clear focus, improved resource allocation, preparation for risks.
Disadvantages: Time-consuming, costly, may not anticipate all challenges.
What are aims, objectives, and their types?
- Aims: Long-term aspirations (e.g., to be a market leader).
- Strategic Objectives: Medium to long-term goals (e.g., increase revenue by 20% in 5 years).
- Tactical Objectives: Short-term, specific actions (e.g., launch a new product).
- Operational Objectives: Daily tasks (e.g., train 10 employees this month).
Differentiate between the private and public sectors.
Private Sector: Owned by individuals, profit-driven (e.g., Apple, McDonald’s).
Public Sector: Government-controlled, focused on public welfare (e.g., public hospitals, schools).
What are the types of economic systems?
- Command Economy: Government controls resources (e.g., North Korea).
- Free-Market Economy: Private sector controls resources (e.g., USA).
- Mixed Economy: Blend of private and government ownership (e.g., France).
Evaluate economic systems.
Free Market: Efficient but can lead to inequality and lack of regulation.
Command: Reduces inequality but stifles innovation and consumer choice.
Mixed: Balances welfare and efficiency but is complex to manage.
