# Taking Risks and Making Profits in a Dynamic Business Environment Flashcards
What is required for a business to be profitable?
Profitability requires not just earning revenue but also managing costs efficiently by balancing cash inflows and outflows.
What are the two types of products businesses can provide?
Goods (tangible products like cars or electronics) and services (intangible products like consulting or healthcare).
What is revenue in a business?
Revenue is the total money a business earns from selling goods or services over a specific period.
How is profit calculated in a business?
Profit is the money remaining after all expenses have been subtracted from revenue.
What is the difference between profit and loss?
Profit occurs when revenue exceeds expenses, while loss happens when expenses are greater than revenue.
What is cash flow, and how does it differ from profit?
Cash flow refers to the movement of money in and out of the business. Positive cash flow does not always indicate profitability, and negative cash flow does not necessarily mean a loss.
Who are stakeholders in a business?
Stakeholders are individuals or groups affected by a business’s operations, such as customers, employees, investors, suppliers, media, and financial institutions.
Why is it important for businesses to consider their stakeholders?
Addressing stakeholder needs is essential for long-term business success and helps maintain positive relationships with groups like customers, investors, and employees.
What is outsourcing, and why do companies use it?
Outsourcing is contracting a business function or process to external suppliers, often to reduce costs or improve efficiency.
What are the five core factors of production?
- Land (Natural Resources), 2. Labor, 3. Capital, 4. Entrepreneurship, and 5. Knowledge.
How does the economic and legal environment influence business?
Governments can support business growth by allowing private ownership, reducing regulations, creating enforceable contracts, and maintaining a stable currency.
How does the technological environment benefit businesses?
Technological advancements like AI, automation, and digital marketing improve productivity and efficiency, giving businesses a competitive edge.
Why is understanding the competitive environment important for businesses?
Businesses need to meet or exceed customer expectations and offer competitive prices to gain market share.
What is the impact of the social environment on business?
Changes in demographics and societal trends influence consumer behavior, helping businesses adapt their products to meet evolving needs.
How has the global business environment changed markets?
Globalization has created opportunities for international expansion but also introduced challenges like differing regulations and cultural differences.
