Section 1-What is a business? Flashcards
Why set a missions statement?
- Motivates staff
- provides focus
- makes decision making easier
What is a corporate objective?
The goals the business has as a whole,depend on size of business
What’s a functional objective?
The objectives that each department has specifically for them,each manager of the department looks at how they can help meet the corporate objective
What should functional objectives be in order to be affective?
SMART
What does SMART mean?
Specific Measurable Agreed Realistic Timely
What is a profit objective?
An objective set by a business that may be currently making a loss
-Functional objectives may be set to minimise costs or increase sales
What is a growth objective?
May be based on increasing revenue or expanding the business
What’s a not for profit organisation?
A shop e.g charity that are set to achieve social do ethical objectives
What’s a for profit organisation?
A business that focus’ on making a profit,however social and ethical objectives are becoming more important as more people are now able to view them
What is a missions statement?
A qualitative statement of an organisations aims that describes the general purpose of an organisation
What is revenue?
The money a business makes from sales before any deductions are made
Difference between fixed and variable costs?
Fixed DONT change with output e.g new machinery
Variable DO change as output changes e.g costs of raw materials
Characteristics of a publicly owned business?
Owned&run by the government and aims to provide services to the public rather than make a profit
Private business characteristics?
Owned and run by private individuals & most aim to make a profit
What is unlimited liability?
- When a business and owner are seems as one
- the debts become personal of the owner
- high financial risk
What is limited liability?
-Owners aren’t personally
responsible for any debts
-wonders of a private+public limited company have limited liability as it has a spectate legal identity from its owners
What are the four external environments that affect costs and demand?
1) political factors
2) labour supply
3) incomes and economic factors
5) seasonal demand & supply
What are involved in the political factors that affect cost and demand?
- if demand is low them governments try increase it by cutting taxes so people have more money to spend
- governments try to reduce demand if it’s too high,so people have less money to spend
- government can also influence demand for certain products e.g to reduce carbon emissions,tax on low emission cars is reduced
What effect does labour supply have on cost and demand?
- the business’ costs
- when unemployment is high it easy to employ people and high wages don’t have to be paid,compared to if unemployment rate was low which mean a shortage of skilled workers
How do Incomes and economic factors effects cost and demand?
- in a recession businesses need to reduce costs e.g through cutting wages,this then leads to lower incomes so people have less to spend on products
- in a economic boom,wages rise and more people are employed,may lead to higher costs as higher wages + people have more money to spend
- changing incomes affects demand for some products more than others e.g holidays
How does seasonal demand effects demand and supply?
-weather and holidays such as Christmas produce variations in demand e.g Christmas produces high demand for toys
-variations in supply e.g more strawbs available in summer
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-food producers can cope with seasonally in supply by preserving food
What products are sensitive to changes in interest rates & why?
Products that require borrowing e.g cars,houses,kitchens and high end consumers and when interest rates go up it becomes more expensive to borrow
How can environmental factors increase a business cost?
As businesses pollute the environment through production processes the government has to put legislation forces in place to force a business to deal with their environment issues by putting control and measures in place
-IF NOT FOLLOWED FINES MAY BE GIVEN
