Nature and purpose of business Flashcards
what is a business?
an organisation that exists to provide goods and services on a commercial basis to customers.
public sector vs private businesses
public sector organisations exist to provide services to the population such as education or healthcare. Private sector businesses exist to make a profit however they may also exist for the benefit of others
what does smart stand for?
specific, measurable, achievable, relevant, time bound
primary, secondary, tertiary and quatenary sectors?
primary = extraction of natural resources
secondary = production of finished goods + components
tertiary = providing services to consumers + businesses
quaternary = providing information and ICT.
missions, aims and objectives?
mission = a qualitative/broad statement of the businesses aims
aim = a long term plan from which the businesses objectives come from
objective = a target which must be achieved in order to realise the stated aim
examples of corporate objectives?
profit
return on investment
growth
market share
cash flow
sales revenue
shareholder value
corporate image and rep
why is profit so important?
measures success
encourages investment
larger return for investors
attract customers (desirable products)
profitable businesses may be bought out
earns owners money
revenue formula
selling price x units sold
variable costs formula
unit cost x unit sold
fixed cost formula
all fixed costs added together
total cost formula
variable + fixed
profit formula
revenue - total costs
what is a share?
an individual part of the issued share capital of a company
most shares are…?
ordinary shares
a company is a seperate…?
