Chapter 1 / Nature and Purpose of a business Flashcards
What is a Business?
A business is an organisation that exists to provide goods and services on a commercial basis to customers
Why do Businesses exist?
Businesses exist to provide goods and services on a commercial basis to customers
What are the benefits of a Business to Society?
Create employment, Drive Innovation, Create wealth
What is a start-up?
A start-up is a new Business, formed by one or more entrepreneurs.
What is the role of an entrepreneur?
Spots business opportunities, takes risks to gain future returns, Trigger for creation of growth of new business enterprises.
What is the transformation process ?
Describes what happens inside the business. value is added to inputs to create outputs.
What are the inputs to the transformation process?
Land,Labour,Capital,Enterprise
What is B2B and B2C?
Business to business, Business to customer
What are the business sectors?
Primary (mining), Secondary (manufacturing), Tertiary (retailing), Quaternary (software development)
What is a mission?
A qualitative statement of the business’s aims
What is the aim?
The aim is a long-term plan from which business objectives are derived.
What is the objective?
The specific intended outcomes of business strategy, medium to long term targets established to co-ordinate the business.
How does the objective hierarchy work?
The objectives move down from the mission getting more specific. Overal objectives become more specific.
What is a mission statement?
A mission statement sets out what the firm is trying to achieve, this stimulates and directs the organisation.
What makes a good mission?
Has a way to measure progress, differentiating the business from competitors, and defines the markets that the firm wants to operate within.
What are the criticisms of mission statements?
Arent always backed up by actions, vague and general, state the obvious, not reality.
What are Smart Objectives?
Specific - exact details of what to be achieved.
Measurable - Capable of measurement - to see progress
Achievable - Realistic to the resources of the business
Relevant - Objectives should be relevant to the people responsible for achieving them.
Time Bound - Realistic time constraints
What influences business objectives?
Business age, ownership, market conditions ,competition
Why do businesses set objectives?
Managers can ensure everyone is working towards the same goal, employee motivation, managers can evaluate the success of the business.
