The Purpose and Nature of a Business: Flashcards
What is a business?
An organisation that produces and supplies goods or services.
What is a product?
What is a good?
What is a service?
1) A general term for goods and services.
2) A physical product e.g. a car.
3) An intangible product e.g. financial advice.
What is a consumer?
What is a customer?
1) Someone who uses a product.
2) Someone who buys a product.
What is a want?
What is a need?
1) Things that people would like but is not necessary to survival.
2) Things people require for their survival.
What is an entrepreneur?
Someone who is willing to take a risk involved in starting a business.
What is a social enterprise?
A business that is set up to help society rather than to make a profit.
What are the objectives/ reasons for becoming an entrepreneur?
1) A person may have an interest, idea or hobby which they want to turn into a business.
2) A person may have spotted a gap in the market and want to respond to it.
3) A person may like the idea of being their own boss.
4) A person may want to make more money than they are able to as an employee in another business - they will be able to keep the profits a business makes-.
What is profit?
Measures the difference between the value of a business’s revenue (from sales) and it’s total costs.
What is factors of production?
It’s the inputs that are used to provide goods and services.
What are the 4 factors of production?
1) Land: refers to all natural resources used in production, including the physical land itself and the site on which the business is located, as well as plants and mineral products such as oil.
2) Labour: includes all inputs into productions by humans, whether physical or mental.
3) Capital: refers to man made resources used in production such as buildings, machinery and vehicles.
4) Enterprise: refers to the skills of the people establishing and managing the business’s resources to meet the needs of customers.
What is opportunity cost?
What is given up as a consequence of a particular decision or choice.
What is another way of describing enterprise?
It also refers to the skills of people in creating and managing businesses.
What are the characteristics of an entrepreneurs?
1) Willingness to take risks.
2) Hardworking and committed.
3) Innovative:
4) Organised: An entrepreneur should be able to manage their business efficiently.
What are the three business sectors?
1) Primary sector: Businesses that extract produce raw materials.
2) Secondary sector: Organisations that use raw materials to manufacture goods or to construct items.
3) Tertiary sector: Organisations that provide services to consumers or to other organisations.
What are the four functions of a business?
1) Operations: This involves producing a good or service.
2) Marketing: This involves researching customers’ needs, designing suitable products, informing customers about them, setting suitable prices and making the products available to customers.
3) Human resources: This involves managing employees so they are as effective as possible is an important part of a successful business.
4) Finance: This involves raising money to start trading or to expand the business and must have enough to pay debts as they become due. A successful business will also make a profit at the end of a trading period.
