Content Flashcards
Describe the role of money.
money is the means people use to make payments, money is used as a medium of exchange
What are the functions of money?
There are 4 functions of money (MUSS)
1) to be used as a Medium of exchange
2) A unit of account
- places value on goods and services
3) a Store of value
- can be kept in the form of long term deposits and used only when needed in the future
4) Standard of deferred payment
- purchases of goods and services on credit and paying later.
Characteristics of money
There are 7 characteristics of money (DADPURR)
1) Divisible
2) Acceptable
3) Durable
4) Portable
5) Uniform
6) Relatively scarce in value
7) Relatively stable in value
Problems with Barter
6 problems with barter were: (RDDPPS)
1) Rate of exchange
2) Double coincidence of wants
3) Divisibility
4) Portability
5) Perishability
5) Storage
Gold standard
A monetary system where the standard unit of currency is a fixed quantity of gold or is kept at a fixed quantity of gold.
Types of Economic systems
There are 4 types (TPFM)
1) Traditional (Subsistence)
2) Planned/Command(Socialist)
3) Free Market/ Capitalist
4) Mixed (Public and Private)
Traditional Economies
Subsistence
A traditional economy is one that doesn’t operate under a profit motive.
It is based on culture and rituals.
Command/ Planned Economy
Socialist
An economic system controlled by the government, where the means of production are publically owned and they rely on the government to make decisions
Free Market/ Capitalist
The free market is an economic system based on supply and demand with little or no government control.
Mixed market (Private and public)
An economic system with little government involvement and some free market concepts
Functional areas of a business
There are 5 functional areas of a business.(PMFHR)
1) Production
2) Marketing
3) Finance
4) Human resource
5) Research development
Production
Production is the process of using raw materials(inputs) and transforming them in some way into product goods and services (outputs)
Functions of production
There are 7: PSM C MEW
1) Purchasing of raw materials
2) Scheduling the production process
3) Making the product
4) Controlling the production process
5) Maintaining an adequate inventory system
6) Establishing quality control procedures
7) Warehousing finished goods
Marketing
to identify, anticipate and satisfy the customers’ wants
Functions of Marketing
There are 7: MDPP SDA
1) Market research
2) Designing the product
3) Pricing
4) Publicising
5) Sales promotion
6) Distribution of the product
7) After-sales service, repairs and refunds
Financial Function/Accounting
Responsible for financial planning and organising financial transactions
Functions of Accounting
There are 4: PAME
1)Producing the final accounts
(Trading P&L, Bal sheet)
2)Advising management on all financial matters
3)Making all payments on behalf of the company
4)Establishing hire purchase and credit control measures
Human resources(Personnel Function)
concerned with employees’ welfare
Human resources function
There are 8:
Root The Problem, My Dear Work, Many Carry
1)Recruit staff
2)Train staff
3)Promotion of workers
4)Maintaining a good industrial climate
5)Discipline workers
6)Welfare of workers (sick leave, wages…)
7)Maintaining staff employment records
8)Carrying out a social role (providing canteen facilities, healthy environment, forming credit unions…etc)
Research and developmemt
responsible for developing new products (important for research-based industries such as pharmaceuticals and technology) It works closely with Production and Marketing
Research and development function
There are 3: CFC
1) Conducting customer research
2) Financial research
3) Conducting feasibility studies and piloting projects
Internal Stakeholders of a business
1) Owners/shareholders
2) Board of directors
3) Managers
4) Employees
Internal Stakeholders of a business
1) Owners/shareholders
2) Board of directors
3) Managers
4) Employees
1)Owners/shareholders
roles:
- to provide financial capital
- to ensure managers are fulfilling the objectives of the business and effectively using the resources.
2)Board of directors
- to develop strategies for targets
- make decisions on profit and capital investments
- ensure management objectives are in sync with the business’ overall objectives
- ensure that the activities of the business and its financial statements are in accordance with the government
3)Managers
- ensure that the business’ goals are achieved
- To maximise profit /make maximum returns on investments
- ensure that the employees are productive and treated fairly
4)Employees
-to perform duties to ensure that the business continues to maximise profit and that their jobs remain secure.
External Stakeholders of a business
1) Government
2) Customers
3) Suppliers
4) Competitors
5) Lending institutions
6) Potential investors
7) The community
