Exam 1-introduction to business Flashcards
What is the meaning of a business?
> The name given to firms which produce and distribute goods and services
ONE common objective- TO PRODUCE GOODS AND SEVICES AND TO SELL THEM IN ORDER TO EARN A PROFIT
what is production?
Production id the activities that blend economic resources to create goods and service
What are the four factors of production?
- Natural resources
- Labour resources
- Capital resources
- Enterprise resources
What are natural resources?
Raw materials supplied by nature
e.g. water, trees, fruit and vegetables
What are labour resources?
Human skill and effort
e.g. Farmers, construction workers, doctors
What are capital resources?
Machinery and technology
e.g. factories, computers
What are enterprise resources?
New ideas
e.g. innovation, creation, inventions
What is a private business sector?
These are businesses owned by the government.
e.g. Ergon Energy, Queensland Rail.
What is a public business sector?
These businesses are owned by individuals or by other businesses
What is a good?
A good is an item we can see and touch, it is TANGIBLE and it can be a need or a want.
e.g. milk, television
What is a service?
A service is a task that people perform for others, is INTANGIBLE.
e.g. getting your haircut at the hairdressers
What is a consumer?
A person who purchases goods and services to satisfy their needs and wants.
e.g. Me when I go to Coles
What is a producer?
A person or business that makes goods and services.
e.g. a farmer produces milk and meat
What is a substitute good?
A good that we purchase as an alternative to what we would really like.
e.g. Nike instead of Asics
What is a complementary good?
A good that we purchase to more satisfy the first good or service produced.
e.g. getting a cake WITH a coffee
What is a need?
An item that we cannot live without, it is essential for our survival.
e.g. food, water, shelter.
What is want?
A good or service we can live without, we would just LIKE to have.
e.g. new pair of shoes
What are various factors that influence a consumers needs and wants?
Factors that influence a consumers needs and wants include their social status, their income, where they live, their education and their religion. In wealthy countries people may believe their WANTS are their NEEDS. But, a person in a poor country may WANT clean water, this is really a NEED.
What is transportation?
Is a service or tertiary industry involved in the movement of both people and goods from one place to another.
What are the four main methods of transport?
- Road
- Rail
- Sea
- Air
What are advantages of road transport?
> Speed of delivery
Less handling and labour costs
Door-to-door delivery
Less risk of theft or damage
What are disadvantages of road transport?
> Expensive over long distances
Can be held up by the weather
Requires licenses, permits and fees
What are advantages of rail transport?
> Fast over long distances
> Relatively cheap
What are disadvantages of rail transport?
> double-handling
> Not all places are on a railway line
What are advantages of sea transport?
> Good for heavy or bulky items
Transports bulk items over long distances
Relatively cheap
What are disadvantages of sea transport?
> It is slow
Limited number of ports
Service is infrequent to most ports
What are advantages of air transport?
> Speed of delivery
Safe and reliable
Convenient
What are disadvantages of air transport?
> Expensive
Double-handling
Lack of airports
What is the distribution chain?
Producer > wholesaler > retailer > consumer
What is a wholesaler?
They buy in very large quantities, they then supply them in smaller quantities to retailers
What is a retailer?
Firms that retail or sell goods to the public.
What are the six types of outlets?
- A corner store
- A supermarket
- A department store
- A chain store
- A hypermarket
- A specialty store
What is a corner store?
They sell wide variety of convenience goods, after normal trading hours in local areas.
What is a supermarket?
A larger store which sells groceries and some inexpensive home wares, independently owned and operated, serve a particular local area.
e.g. IGA, Spar
What is a department store?
Sells many different type of merchandise of different departments.
e.g. Myers, David Jones
What is a chain store?
May operate as a super market selling mainly groceries or a variety of inexpensive items. All centrally owned and controlled.
e.g. Coles, Woolworths
What is a hypermarket?
A larger version of a chain store. Sells a wide range of goods.
e.g. Bunnings, Big W
What is specialty store?
Specialises in selling a single line of goods.
e.g. Lorna Jane, Rebel
what are the different types of business ownership?
- Sole trader
- Partnership
- Private company
- Public company
What are characteristics of a sole trader?
> Owned and operated by an individual > Often have others working for them > Unlimited liability > Very common type of business e.g. pure and simple home wares, Tarlie B Designs
What are characteristics of a partnership?
> A business owned by between 2 and 20 people
unlimited liability
Relatively cheap to set up
e.g. K & R plumbing supplies, K & K electrical
What are characteristics of a private company?
> Owned by between 2 and 50 shareholders
Have limited liability
Must have ‘Pty Ltd’ in name
e.g. Heritage, Hanna’s
What are characteristics of a public company?
> Owned by an unlimited amount of shareholders > limited liability > very large > have to have 'Ltd' after company name e.g. Woolworths, Heritage
What are the stages of the production cycle?
- Primary stage: e.g. cotton bud
- Secondary stage: e.g. clothes manufacturers
- Tertiary stage: e.g. clothes outlets (Cotton On)
How would a person invest in a Public Company?
Invest by buying and selling shares on the stock exchange
