Introduction To Business Flashcards
Entrepreneur
This is someone who’s always been interested in starting their own business.
- there prepared for the risks
- see opportunities others don’t
- organize resources
- play a critical role in driving economic development through creating jobs and introducing innovation
- they identify a market need
- develop a business plan
- secure funding and resources
- contribute to local and national economy.
Factors of production
This is the inputs that are used for the output of a product or service
- land:natural resources
- labour:Human Resources
-capital:buildings, machinery, tools,money
-enterprise: the entrepreneur who organizes the other 3 factors
Adding value
When a business can sell a product higher than the cost of producing it and the difference between the cost of producing and selling is known as value added
Constraints on a business
This is a restraining factor on a business limiting how a business can operate
- competition
- environment
- legislation
- economy
Evaluate the importance of entrepreneurial activity for stakeholders
Employees
Importance-entrenpenrurs create jobs contributing to economic development and job creation
Impact- employees gain employment leading to job security skill development and career advancement opportunities
Local communities
Importance- entrepreneurs contribute to local economic growth by paying taxes and employing people
Impact- communities benefit from new businesses that offer goods and services, support local infrastructure and enhances the standard of living
Government-
Importance- entrepreneurs contribute to tax revenues and stimulate the economy
Impact- government can benefit from job creation and increased economic activity leading to greater tax revenues and improved public services
Distinguish between primary secondary and tertiary organization
Primary- concerned with extractive industries such as farming
Secondary- concerned with manufacturing, turning raw materials into semi finished finished products such as building projects
Tertiary- concerned with the output of services for such as healthcare or education
Distinguish between private, public and third sector organsiaitons
Private sector- owned and run by individuals particularly for profit e.g. private hospitals
Public sector- owned and run by government aiming to produce a service to the public e.g. public schools
Third sector- not private or public, they want to achieve social, environmental and cultural goals such as doing work for charities
Distinguish between local,national and international markets
Local-within a countries geographical area
National- operating within the countries borders
International- operating across multiple counties
Distinguish between national and multinational businessses
National- business that operates within a counties borders such as a clothing retailer in the Uk
International- operates across many countries e.g. Coca Cola
Functions of a business
Accounting and finance- this department monitors and controls the businesses financial resources, ensure costs are all kept under control and that there are sufficient funds available to pay all the day to day running costs of the business, sets budgets too
Operations management and production- looks at how resources leave as final outputs/products. Designing and controlling the process of production as efficient asd possible
Marketing and support services- ascertain the needs of consumers by conducting market reach in an attempt to satisfy the consumers in order to make a profit.
Human Resources- responsible for the wellbeing of employees
Evaluate the factors affecting the choice of legal structure to a business
- Size and nature of the business
- Financial requirements
- Risk
- Control and decision making
Evaluate their importance and impact of legal structure for the stakeholders of a business
Employees- legal structure affects job security, benefits, opportunities and working conditions
Customers- the longevity and reputation of the business depends on the legal structure impacting the customers trust
Government- the businesses legal structure influence tax obligations, regulatory requirements,ents and contribution to economy
Evaluate the factors affecting the use of franchises to a business
Brand recognition- a well established brand can reduce the risks for franchisees
Support and training- franchisors offer support and training making it easier for franchisees to succeed
Control and autonomy- franchisees often have to follow strict guidelines and standards which are set by the franchisor limiting autonomy
Evaluate the impact and importance of franchising to the stakeholders of a business
Franchisees-they are under the benefit of working and dealing with a well known brand, have support and training but they have ongoing payments
Franchisors- allows a rapid expansion and don’t have to pay large capital expenses but need to ensure the reputation of the business is carrying on
Consumers- they already have good okowslege on the business so consumer confidence remains high. The business already has a strong reputation so they know what there in for
Evaluate the impact and importance of a co-operative structure to the stakeholders of a business
Members-they benefit from shared profits and a say in decision making but will bear risks and responsibilities
Consumers-they benefit from lower prices as cooperatives focus on member benefits rather than maximizing profits
Employees- they have a greater job security and a say in decision making fostering a collaborate workplace environment
How the size of a business is measured
- number of employees
- number of factories, shops, offices
- turnover/profit levels
- stock market value
- capital employed
Evaluate the factors affecting the size of a business
Market size
Nature of the product
Personal preference
Ability to access resources for expansion
Evaluate the impact and importance of the size of business to the stakeholders of a business
Employees
-larger businesses ay offer more jobs meaning further job security, development of skills, benefits and career progression
Customers
- large enterprises may provide consistent quality and variety while smaller businesses may only offer personalized services
Suppliers
- bigger companies will demand higher volumes and negotiate more prices
Government
- large businesses contribute more to tax revenue
Joint venture
Formal business arrangement between 2 or more businesses that commit to work together on a particular project. They both invest time money and effort in the project.
It’s different to a merger as there’s no change of ownership for either firm.
It can often result in the creation of a new business to implement the venture
Strategic alliance
Where companies work together for mutual benefit but choose to remain independent
Starbucks, Barnes and noble collaborating to offer coffee in bookstores
Mergers
Where 2 companies come together to form a larger business. A takeover requires acquiring control of another company by buying its shares. If this is successful the target company will continue to exist as an independent legal entity
Evaluate the impact and importance of joint ventures to a business and its stakeholders
Impact on Stakeholders:
• Businesses: Share risks and resources, access new markets.
• Employees: Potential for skills exchange and job opportunities.
• Customers: Access to enhanced products/services.
• Investors: Potential for higher returns due to combined strengths.
Importance:
• Joint ventures allow businesses to reduce financial risk, share expertise, and expand their market presence without fully merging.
Evaluate the impact and importance of a strategic alliance to a business and its stakeholders
Impact on Stakeholders:
• Businesses: Share resources and market access without merging.
• Employees: Potential for exposure to different business practices.
• Customers: Enhanced product or service offerings.
• Investors: Reduced risk and potential for steady growth.
Importance:
• Strategic alliances are crucial for entering new markets, sharing technology, and maintaining competitiveness without the commitment of a merger.
