Introduction To Business

Question 1

What is a business?

Answer 1

A business is an organisation that exists to provide goods & services on a commercial basis customers

Question 2

What is a good?

Answer 2

Goods are physical or tangible products eg consumer electronics I industrial components, car

Question 3

What are services?

Answer 3

Servicesare intangible products e.g insurance dental services, cleaning

Question 4

Why do businesses exist?

Answer 4

Businesses exist because they are formed by entrepreneurs and are subsequently developed it they manage to get beyond the survival stage

Question 5

How do businesses benefit a country?

Answer 5

• Create jobs - taxes - improve economy
  Provides services to people
  Create innovative products that improve lifestyle or even save lives
  Enhance country’s reputation in certain fields

Question 6

Define a mission statement

Answer 6

Mission statement: sets out what a firm is trying to achieve eg to be the lowest cost producer in the industry_ they tend to focus on the business’ values, non-financial goals1 now they benefit the community) now they will satisfy consumers

Question 7

Example of a mission statement

Answer 7

Etsy: to keep human connection at the heart of commerce

Question 8

Benefits of a mission statement

Answer 8

Decision-making is easier as all decisions must help the overall mission be achieved
Everyone’s actions are directed towards the same thing
mission statements can motivate - give workers a sense of belonging and direction
It unrealistic / A PR exercise they are ignored

Question 9

Define aims

Answer 9

Aims: long term plans From which corporate objectives are derived - they are normally qualitative, not numerical targets eg to deliver long-term growth

Question 10

Define corporate objectives

Answer 10

Corporate objectives: a quantifiable (measurable) statement of a business’ goals which should include measurable targets eg growth profits diversification, develop innovative goods. They will be quantifiable eg 10% increase in profit over the next 4 years

Question 11

What should all objectives be?

Answer 11

Smart ( specific, measurable, agreed, realistic, time - based ) decisions within each functional area are based on corporate objectives

Question 12

Define functional objectives

Answer 12

A quantifiable statement of a departments goals which should enable it to contribute to the achievement of the business’ objective

Question 13

Why must functional objectives be coordinated?

Answer 13

Functional objectives must be coordinated so that they don’t conflict with each other this can be harder to achieve as the firm keeps growing and communication channels become more complex.

Question 14

What do common business objectives focus on?

Answer 14

-profits
-growth
-survival
-cash flow
-social/ethical issues
-diversification

Question 15

Why do businesses set objectives?

Answer 15

-state what needs to be achieved
-a focus for all activity
-targets for individuals and group achievement
-a way to measure performance

Question 16

Why do businesses set objectives?

Answer 16

-state what needs to be achieved
-a focus for all activity
-targets for individuals and group achievement
-a way to measure performance

Question 17

Benefits of corporate objectives

Answer 17

Increase market share-
Reduce unit costs
Increase cash flow
Improve customer satisfaction

Question 18

Criticisms of mission statements

Answer 18

Not always supported by business actions
Often too vague and general
Often merely statements of the obvious
Are they just PR
Sometimes regarded cynically by staff
To be effective everyone have to buy in

Question 19

What may a business want to do if it has a long term growth objective?

Answer 19

It may want to invest in training to improve skills invest in expansion into new markets and invest in development of new products all this helps achieve LR objective of growth however sr profits will fall.uk firms are often criticised for setting objectives that are too short term and don’t involve long term planning