Chapter 1 - Intro to business Flashcards
What is the aim of an organisation?
Bring people together to increase productivity
What is an organisation?
A social arrangement for the controlled performance of collective goals, which has a boundary separating it from its environment
What are the 2 types of business?
Profit and Non-Profit
What is a business?
Organisation oriented towards making a profit (wealth maximisation)
How are non-profit organisations structured?
Structured to benefit from the economy, efficiency and effectiveness in using resources that profit orientation brings.
What is a stakeholder?
Person/group who has a stake in the organisation
What is a businesses’ primary objective?
Profit maximisation so as to increase shareholder wealth
What is a businesses’ secondary objective?
Support the primary objective
What is Simon’s theory of profit satisficing?
Managers choose to achieve satisfactory profits
What is Baumol’s theory of revenue maximisation?
Business acts to maximise revenue in order to maintain/increase market share, ensure survival and discourage competition
What is Drucker’s theory of multiple objectives?
Objectives needed in 8 key areas:
1. Market standing
2. Innovation
3. Productivity
4. Physical and financial resources
5. Profitability
6. Manager performance and development
7. Worker performance and attitude
8. Social responsibility
What is Simon’s constraints theory?
Profit not the most important constraint
What is a businesses’ mission?
The business’s basic function in society
What are the 4 elements to mission?
Purpose
Strategy
Policies and standards of behaviour
Values
What is a vision?
Future state of the industry/business
