Introduction To Business Management Flashcards
What is a business?
An organisation that is involved in industrial, professional or commercial activities
What does it mean for a business to have a competitive advantage?
A business is able to offer something unique, or offer a cheaper product/service than its competitors
What are products?
Items that are tangible in nature
What is a service?
An intangible activity
What is a need?
Anything needed for survival
What is a want?
Goods and services a person finds desirable.
What is buying power?
The ability to purchase a product or service
What is demand?
When a person has a need or a want and the ability to purchase something to satisfy that need or want
What is the first tier of Maslow’s hierarchy of needs?
Physiological needs
What is the second tier of Maslow’s hierarchy of needs?
Safety needs
What is the third tier of Maslow’s hierarchy of needs?
Love/belonging needs
What is the fourth tier of Maslow’s hierarchy of needs?
Esteem needs
What is the fifth tier of Maslow’s hierarchy of needs?
Self-actualisation
What is limited resources?
Restricted quantities of inputs that may be required by a business
What is scarcity?
Insufficient goods, resources or abilities to achieve the desired end
What are the 4 factors of production?
Capital
Land
Labour
Entrepreneurship
What is an economic system?
The organisations and methods used to determine what goods and services are produced, how they are produced and for whom they are produced.
What are the 4 economic systems?
Traditional
Command
Market
Mixed
What is the traditional system?
System whereby people produce only what they need for themselves, which requires people to barter with one another
What is the command system?
System whereby all factors of production are state-owned and controlled, and all supply, demand and pricing are planned by the state
What is the market system?
System whereby anyone is free to start and run a business in the way they see fit. It is characterised by the ‘invisible hand’ of market forces, i.e., supply, demand and competition
What is the mixed system?
System that includes elements of both command and market systems. Major areas are controlled by government; minor areas are controlled by individuals
What is a business sector?
The type of activity that a business predominantly performs
What does the primary sector involve?
Mostly unskilled labour attaining raw materials to be used in production
What does the secondary sector involve?
Mostly semi-skilled labour transforming raw materials into goods and services
What does the tertiary sector involve?
Mostly highly skilled labour engaging in the end-user sale of goods and services
What are the two sections of the business environment?
The internal environment and the external environment
What is the micro-environment?
The internal factors within a business that may impact its activities and success
What are the internal factors of the micro-environment?
Vision and mission
Goals and objectives
Culture
Diversity
Ethics
Manner in which it desks with change
What are the 8 functions within the micro-environment?
General management
Purchasing
Logistics
Marketing
Finances
Human resources
Public relations
Administration
What is the market environment?
The external factors that affect influence a business but that can also be included by the business
What are the 5 factors of the market environment?
Suppliers
Publics
Customers
Competitors
Market intermediaries
What are the 6 types of publics?
Media publics
Government publics
Local publics
Internal publics
Citizen-action publics
General publics
What is a public?
Any group that has an actual or potential interest in, or impact on, an organisation’s ability to achieve its objectives
What are market intermediaries?
Businesses that help a firm to promote, sell and distribute its goods to final buyers
What is the macro-environment?
General environment that can affect the working of all business enterprises. They are forces outside of a business’s control
What are the forces of the macro-environment?
Demographic forces
Economic forces
Technological forces
Natural forces
Political forces
What does environmental scanning do?
It allows businesses to observe the industry and attempt to establish and evaluate its position within it
What are 3 methods of environmental scanning?
SWOT analysis
PESTLE analysis
Porter’s Five Forces analysis
What does SWOT analysis determine?
A business’s position in relation to the market
What is a PESTLE analysis used for?
To identify opportunities and threats to a business
What are the 2 steps of a PESTLE analysis?
- Collect information about the 6 PESTLE categories
- Identify which of the factors pose threats and opportunities to the business
What is a Porter’s Five Forces analysis used for?
To determine industry profitability
What are Porter’s Five Forces?
Threat of substitutes
Threat of new entrants
Bargaining power of suppliers
Bargaining power of buyers
Rivalry among existing firms
What are the 6 barriers of entry?
Economies of scale
Product differentiation
Capital requirements
Cost advantages independent of size
Access to distribution channels
Government and legal barriers
What are economies of scale?
Situations where the more a business produces accumulatively, the cheaper its cost per unit of production
