Chapter 1- Small Businesses Flashcards
For profit business
Provide goods and services to fulfil our wants and needs in order to make a profit.
Net profit
Income - expenses
Not for profit organisation
Provide social, educational or religious benefits rather than only aiming for a profit.
Similarities b/w profit and NFP
- must have finances available to pay bills
- be accountable for their actions
- maintain high ethical standards
Employees in small, medium and large business
Small- under 20
Medium- 20-199
Large- 200 or more
Financial objectives ( for-profit)
- Profit
- Product sales and market share ( increase profitability )
- Growth relating to market share and profit
Financial objectives ( not for profit )
- Have enough money to meet social goals
- Ensure sufficient donations, sponsorship or support and not lose market share to other organisations
- Deciding if they are the best organisation to offer assistance or if they should re direct to another organisation
Social objectives
Goals that benefit employees and community.
Personal objectives
- Are not normally made public
- motivate the business owner
- can complement the business objectives
GDP
Gross domestic product ( the final value of goods and services at the end of a time period )
How so SB’s contribute to the economy?
- important generator of jobs
- contribute to govt revenue through taxes
- contribute to economic growth as measured by GDP
Economic growth
When the real value of goods and services increases over a set period of time
- nurture, promote and develop entrepreneurs
What are the 3 environments of a business?
Internal, operating and macro
Employees ( internal )
Important to recruit and select appropriate employees.
Employee satisfaction increases productivity.
Board of management and managers ( internal )
Every business needs effective managers to succeed
Management style ( internal )
Affect employees participation and production levels
Corporate culture
The shared views and beliefs of the people in an organisation
Company policies
Broad guidelines that must be followed when dealing with important areas of decision making
Customers ( operating)
Customer satisfaction is central to a business success
Suppliers (operating)
Businesses buy inputs from other businesses
- need reliable suppliers
- prefer to have multiple for variety, prices, back up
Competitors (operating)
Rivalry among businesses that seek to satisfy a market.
- they are a stakeholder
Interest groups
Groups of people who attempt to influence or persuade an organisation to adopt particular policies.
Inputs
Resources necessary for production eg. Material, equipment, finance, info
Trade unions
Employees join in an attempt to improve pay and conditions
Consumer groups
Lobby groups that monitor a business performance in terms of product safety, packaging, pricing and advertising.
Macro environment
Made up of broad conditions and trends in the economy and society within which a business operates.
PELTS
Political forces Economic forces Legal forces Technological forces Social forces
Economic factors
Things thay influence a business capacity to compete and consumer willingness and ability to spend
Examples of economic factors
- consumer spending
- unemployment levels
- inflation levels
- interest rates
Legal influences
Businesses have to comply with all govt legislations and regulations
Technological forces
New technology is driving change at a global level
Social forces
Attitudes both constrain business activities and give new business opportunities.
