Introduction to Business Flashcards
What is an organisation?
A social arrangement for the controlled performance of collective goals, which has a boundary separating it from its environment
What are common characteristics between organisations?
- Social Arrangement- individuals gathered together for a purpose
- Collective Goals- working towards the organisations objectives
- Controlled Performance- performance is measured and relevant action is taken
- Boundary- organisation is distinct from its environment such as physical and social
What are the differences between organisations?
- Owners- private or public?
- Control- by owners or people working for them
- Activity
- Profit or not-for profit
- Size
- Legal Status
- Access to Finance
- Technology
What is the difference between a business and a not-for profit organisation
-Business primary objective is to make a profit to maximise owners wealth whereas organisations primary objective is to maximise benefits to beneficiaries
-Business owned by shareholder, sole trader or partnership where as NFP isn’t
Identify the primary and secondary stakeholders of a business
- Primary stakeholders in a business are the shareholders (company) or owners
- Have interest in the business and has responsibilities which puts them under pressure (management, lenders, customers, employees)
Why do managers of a business may not always make decisions that maximise the wealth of its owners?
a manager may have no personal interest in creating wealth beyond his or her accountability to the shareholders. A lack of competitive pressure in the market may provide little incentive to reduce costs and further increase profit.
give examples of objectives at each level of a hierarchy of objectives for a business
- Profit satisficing- doing what isn’t the optimal solution but the quickest easiest and cheapest
- Revenue maximisation
- Multiple Objectives- balance a variety of needs & goals
- Business constraints- decisions aren’t taken with the idea of wealth maximisation
-ESG- treating people, connection to politics
What is the definition of mission?
The business ‘basic function in society’ expressed in terms of how it satisfies various stakeholders
what is the mission statement? and what elements should it contain
-the written communication of the mission to internal and external stakeholders
- purpose
- strategy
- policies
- values
what are objectives?
quantitative operational goals which should be SMART
What does sustainability mean?
The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs
What is meant by a sustainable business?
One which offers products and services with equal emphasis on people,planet and profit
State the three types of sustainability and explain them
- Social- involves meeting needs of a wider group of stakeholders and society as a whole. Fair treatment of employees
- Environmental- not harming nature or biodiversity on the planet
- Economical - remain profitable whilst also being social and environmental
How can the triple bottom line reporting be explained?
People, Planet and Profit
measures more than just the profit of the business. Made business pay more attention to the ethical standards of their suppliers
What are the effects of organisations on climate change
EFFECTS
- emission of greenhouse gases
- using non-sustainable materials
- use of fossil fuels
- transporting goods in petrol and diesel trucks
- sending waste to landfill sites
