Chapter 2 Flashcards
A business/Enterprise
-An independent institution, established by an entrepreneur to make a profit by producing goods and providing services that satisfy customer needs
-Entrepreneurs identify a customer need and create a business to produce goods/services to satisfy that need. Their motive is to make a profit
The establishment
The place where inputs such as raw materials and other components are processed to produce a product/service
-Production takes place in the establishment
Branch of industry
All the businesses that produce more or less the same product or provide the same service
E.g: Gold mines produce the same product, namely gold
Production branch
All the businesses that use more or less the same production processes
Eg. All mines form part of the mining production branch because they all use the same production process
Different sectors in which a business can operate
-Primary sector
-Secondary sector
-Tertiary sector
Primary sector
Responsible for the exploitation of natural resources in their raw form
Secondary sector
The exploited natural resources are processed and transformed into products
Tertiary sector
Responsible for distributing the final products from manufacturers to customers
Industrial column
The course that a product takes from its unprocessed, natural resource state, to the final form in which it is supplied to the customer, including all the processes and transactions that take place from the primary sector to tertiary sector
Business environment
The sum of all the factors and variables that influence creation, growth and continued existence of the business either positively or negatively, thereby promoting or hindering the achievement of its objectives
Characteristics of the business environment
-Interrelatedness of environmental factors or variables
-Increasing inability
-Environmental uncertainty
-Complexity of the environment
-Unpredictability of the environment
The micro environment
The business itself.
-It is the sum of factors and variables which occur internally in the business, and are influenced directly/ indirectly by management decisions
Variables of the micro environment
-The mission statement and objectives of the business
-The functions of the business
-The production factors of the business
The market environment
It surrounds the business and is part of the external environment
-It is the sum total of all the factors and/or variables which exist externally, that can’t be controlled but can sometimes be influenced so that’ll have a positive or negative effect on the growth and existence of the business
Main variables of the market environment/Variables peculiar to the market environment
-The market
-The competitors
-The suppliers of resources and services
The macro environment
It surrounds the market environment and the business
Sub-environments/Variables of the macro environment
-Economic conditions
-Social environment
-Technological environment
-Physical environment
-Political and statutory environment
-International environment
The market
=The concerns of the customers and his or her needs rather than the physical place
-It includes all individuals, groups or institutions who have specific needs for goods and services and who are prepared to use their available financial means to acquire them
Rights of customers
The right to :
-Be informed
-Exercise personal growth
-Be heard
-Have protection
Segments of the market
-The customer market
-The industrial market
-The resale market
-The international market
-The government market
