NATURE OF BUSINESS

Question 1

Which businesses get success in long-run?

Answer 1

Those business which understand the functioning of major variables influencing its growth and probability, will succeed in long-run.

Question 2

What did we learn in Nature of Business?

Answer 2

We learn key elements of understanding the nature of business such as:
1) Purpose - profit and not-for-profit
2) Vision, Mission, Goals and objectives
3) Factors of productions
4) Stakeholders- internal and external

Question 3

What is business?

Answer 3

A business is an organization that strives for profit by providing goods and services desired by its customers.

Question 4

What is an Organization?

Answer 4

Organization is a group of people associated/gathered to achieve a particular goal or task.

Question 5

What are goods?

Answer 5

Goods are tangible items, that can be held, touched, or stored, manufactured or traded by business, such as laptops.

Question 6

What are services?

Answer 6

Services are intangible offerings of business that can’t be held, touched, or stored. Physicians, lawyers, hairstylists, car washes, and airlines all provide services.

Question 7

Do businesses serve other businesses?

Answer 7

Businesses also sell or serve to other organizations, such as, hospitals, retailers, and governments, by providing machinery or goods for resale, computers, and thousands of other items.

Question 8

How businesses determine our quality of life?

Answer 8

Businesses play a key role in determining our quality of life by providing jobs and goods and services to society.

Question 9

What is Quality of life?

Answer 9

Quality of life refers to the general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, and leisure time.

Question 10

How quality of life can be built?

Answer 10

Building a high quality of life is a combined effort of businesses, government, and not-for-profit organizations. Different places are ranked and compared based on the quality of life standards.

Question 11

How profitablity of a business is measured?

Answer 11

The profitablity of a business can be measured through key variables such as revenue, costs, and profit.

Question 12

What is revenue?

Answer 12

Revenue is the money a company receives by providing services or selling goods to customers.

Question 13

What are costs?

Answer 13

Costs are expenses for rent, salaries, supplies, transportation, and many other items that a company incurs from creating and selling goods and services.
For Example:
Some of the costs incurred by Microsoft in developing it’s software include expenses for salaries, facilities, and advertising. If Microsoft has money left over after it pays all costs, it has profit.

Question 14

What is loss?

Answer 14

A company whose costs are greater than revenues incur a loss. There is always a risk that a business may incur a loss by not achieving it’s goals due to insufficient use of its resources and/or ineffective business strategies to fight against market competition.

Question 15

What is relationship between risk and profit?

Answer 15

When a company such as Microsoft uses its resources intelligently, it can often increase sales, hold costs down, and earn a profit. Not all companies earn profits, but that is the risk of being in business. There is a direct relationship between risk and profit: the greater the risks, the greater the potential for profit (or loss).

Question 16

How profitability of business can be measured?

Answer 16

The profitability of business can be measured through key variables such as revenue, costs, and profit.

Question 17

What is revenue?

Answer 17

Revenue is the money a company receives by providing services or selling goods to customers

Question 18

What are costs?

Answer 18

Costs are expenses for rent, salaries, supplies, transportation, and many other items that a company incurs from creating and selling goods and services.
For example, some of the costs incurred by Microsoft in developing its software include expenses for salaries, facilities, and advertising. If Microsoft has money left over after it pays all costs, it has a profit.

Question 19

What is loss?

Answer 19

A company whose costs are greater than revenues incur a loss.

Question 20

How business may incur loss?

Answer 20

There is always a risk that a business may incur a loss by not achieving its goals due to inefficient use of its resources and/or ineffective business strategies to fight against market competition.

Question 21

What is the relationship between risk and profit?

Answer 21

There is a direct relationship between risk and profit: the greater the risks, the greater the potential for profit (or loss)

Question 22

What is not-for-profit organization?

Answer 22

Not all organizations strive to make a profit. A not-for-profit organization is an organization that exists to achieve some goal other than the usual business goal of profit

Question 23

What are examples of not-for-profit organization?

Answer 23

Charities such as the Edhi Foundation and The Citizens Foundation are not-for-profit organizations, as are most hospitals, educational institutes, social work organizations, non-governmental organizations (NGOs), civic groups, and religious organizations.

Question 24

How not for profit organizations work?

Answer 24

Like their for-profit counterparts, these groups set goals and require resources to meet goals. However their goals are not focused on profits. For example, a not for profit organizations goal might be feeding the poor, preserving the environment or advocating for the rights of some underprivileged community.

Question 25

What’s primary goal of all businesses?

Answer 25

The primary goal of all businesses is to earn a profit.

Question 26

How businesses use profit?

Answer 26

Businesses have the right to keep and use their profits as they choose – within legal limits – because profit is the reward for risks business take in providing products (I.e. goods and services)

Question 27

What profit contributes in and How profit can be earned?

Answer 27

Earning profits contributes to society by providing employment, which in turn provides money that is reinvested in the economy. In addition, profits must be earned in an ethical and socially responsible manner

Question 28

Which skills a person or an organization needs to earn profit?

Answer 28

To earn profit, a person or an organization needs management skills to plan, organize, control and the activities of the business and to find and develop employees so that it can make products consumers will buy.

Question 29

What is the role of marketing expertise in business?

Answer 29

A business needs marketing expertise to learn what products consumers need and want and to develop, manufacture, price, promote, and distribute those products.