Nature of Business

Question 1

Free Enterprise

Answer 1

Business are in a competitive marketplace with minimum government intervention and regulation.

Question 2

Stakeholders

Answer 2

Groups in society that have an interest or stake in the performance and activities of a business because it has an impact on them.

Question 3

The Economic System

Answer 3

Business supply consumers with goods and services and gain profit. The government regulates and monitors the economy and business.

Question 4

Large Scale Organisation (3 Main Types)

Answer 4

Corporations (or companies), Government Departments, Charities and foundations.

Question 5

Corporations (or companies)

Answer 5

• Aim to make profit
• Manufacture goods and services
• Private (owned up to > 50 shareholders)
• Public (numerous shareholders)
• Government owned

Question 6

Government Departments

Answer 6

• Aim to provide a high level of service within a specified field.
• Exists in 3 levels of government; local, state and federal
• Implementation of social and political objectives

Question 7

Charities and Foundations

Answer 7

• Referred to as NGOs (non-government organisations)
• Aim to provide goods, services or funds of specific social problems or to benefit the community
• Seek to promote public profile to attract funds for their work.

Question 8

Economies of Scale

Answer 8

• A competitive advantage that large entities have over smaller entities.
• The cost per unit of output decreases with increasing scale as the fixed costs are spread out over more units of output.
  (the larger the business, the lower its cost)

Question 9

Business Goals are communicated through

Answer 9

Mission Statements
Vision Statements
Values of the business

Question 10

Values

Answer 10

• Intangible things that a business regards as important

E.g Quality, Customer Service, Teamwork, Environmental Responsibility

Question 11

Who develops strategies and why?

Answer 11

Employees and management develop strategies to achieve the business goals.

Question 12

Vision Statement

Answer 12

• Outlines the broad direction of the future
• Aspiring to become
• States where the organisation will be in 3-5 years

Question 13

Mission Statement

Answer 13

Summaries what the company does

• Reason for existence
• What the business does and how it works
• Purpose and business’ list of values

Question 14

Goals

Answer 14

Statements of direction that spell out how the vision will be achieved.

Question 15

Objectives

Answer 15

Break down the goal into more detailed statements of intent of what the business is going to do.

Question 16

Strategies

Answer 16

Identify the action that will be taken to achieve the objectives.

Question 17

Key Performance Indicators (KPI)

Answer 17

Provide more precise and measurable data to evaluate performance and improvement.

Question 18

Benchmarking

Answer 18

A process in which an organisation compares its own work outcomes with a similar work in other organisations.

Question 19

Effective & Efficiency

Answer 19

To be successful in achieving a desired result

Working in a well-organised way

Question 20

Organisational Effectiveness

Answer 20

The degree to which an organisation satisfies the demands of its stakeholders - achieving objectives, measuring success

Question 21

Organisational Efficiency

Answer 21

Measures the degree to which the organisation produces outputs using minimum resources and creating minimum waste - use of resources, measuring success