The Purpose Of A Business Flashcards
What is a business?
Organisation that produces and supplies goods and services
Factors of production
Land - all natural resources used in production
Labor - all inputs into production by humans
Capital - man made resources used in production eg buildings machinery
Enterprise - the final factor and refers to the skills of people in creating and managing a business.
Objectives of entrepreneur
- entrepreneur have an idea, interest or hobby they wanna turn into business
- spotted an opportunity- gap in the market and wanna respond
- like the idea of being own boss, not being answerable to others
- make more money
- fit working lives around other commitments
- may be unhappy with current job
Goods, services needs and wants
Goods - a physical product
Service - intangible product - haircut
Want - a person would like to buy
Need - a necessity which person requires
Opportunity cost
What is given up as a consequence of a particular choice or decision
Social enterprise
A business that is set up to help society rather then make a profit
Primary, secondary and tertiary sectors
Primary - first stage of production extracts earths natural resources. Agriculture
Secondary - use raw materials to manufacture goods or construct items - manufacturing
Tertiary - provide services to consumers or other organizations- education
Entrepreneur and enterprise
Entrepreneur- someone willing to take a risk involved in starting a new business
Enterprise - another word for a business. Also refers to the skills of people creating and managing a business.
Characteristics of an entrepreneur
Willingness to take risk
Hardworking and committed- have a desire to succeed
Innovative - good ideas
Organized - manage business efficiently
The dynamic nature of a business
Business space a constantly changing business environment due to
Technological change - new products and methods of production
Economic change - interests rates and exchange rates, inflation, GDP
- legal change - range of laws and regulations - affects production
Environmental expectations- produce goods without damaging environment
Reasons for starting a business
- Producing goods
- supplying services
- distributing services
- Distributing products
- Fulfilling a business opportunity
- Providing goods and services which will benefit others