Topic 1 - Business Organisation and Environment Flashcards
What is a business?
An organisation that uses resources to provide a product (tangible) or service (non-tangible) that meets the needs and wants of customers whilst adding value (the difference between the selling price and cost of materials and production).
Business Inputs?
The factors of production:
Land, Labour, Capital, Enterprise
Land
Land not only includes land itself but all of the renewable and non-renewable resources of nature, such as coal, crude oil and timber.
Labour
People who work to produce goods or services. Labour is sometimes referred to as Human Resources.
Capital
Capital is man-made resources which help to produce other goods and services. Capital includes things such as factories, machinery and delivery vehicles, power stations.
Enterprise
the entrepreneur, the person with the business idea. They take the other 3 factors of production and combine them together to start a business.
Business Functions
HR, FInance and Accounts, Marketing, Operations Management
HR
The process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating, and scheduling employees to achieve organisational objectives.
Finance and Accounts
The management of money and credit and banking and investments.
Marketing
The processes involved in creating and designing, promoting and selling and distributing a product or service.
Operations Management
The management of processes used to design, supply, produce, and deliver goods and services to customers.
Economic Sectors
Primary - Extract natural resources
Secondary - Manufacture
Tertiary - Provide Services
Quaternary - Involves service jobs concerned with R&D, management and administration, and processing and disseminating information.
Structural Change
A shift in the relative share of national output and employment that is attributed to each business sector; i.e. primary, secondary and tertiary sectors.
Advantages and Disadvantages of Industrialisation
Adv - GDP ↑, Imports ↓, Jobs ↑, Tax ↑, Value added to RM
Disadv - Migration, Recruitment, Scarce RMs, Pollution, Multinationals
Advantages and Disadvantages of Deindustrialisation
Adv - Incomes ↑, Standards of living ↑, Tertiary sector jobs ↑
Disadv - Imports ↑, Skills shortages/surplus (structural unemployment)
Entrepreneur
Risk-taking individuals who combine the other factors of production into a unit that is capable of producing goods and services. It provides a managing, decision-making and coordinating role.
Intrapreneurship
The act of behaving like an entrepreneur while working within a large organization where freedom and financial support is given to create new products, services, systems, etc.
Goods and Services
Goods are items that are usually tangible.
Services are activities provided by other people.
Both are made and/or provided by businesses
Consumer Goods
The physical and tangible goods sold to the general public.
Consumer Services
Non-tangible products that are sold to the general public and include hotel accommodation, insurance services and train journeys.
Capital Goods
Physical goods that are used by an industry to aid in the production of other goods and services, such as machines and commercial vehicles.
Durable Goods
Consumer goods such as cars, washing machines, pencils, etc.
Non-durable Goods
Consumer goods such as food, drinks and sweets that can only be used once (are perishable).
Value Added
The difference between a product’s price and the total cost of the inputs that went into making it. It is the extra worth created in the production process.
Opportunity Cost
Cost measured in terms of the next best alternative forgone when a choice is being made.
Division of Labour
The specialization of workers in the provision of goods and/or services by breaking a job down into particular roles or components that are repeated by the same workers.
Types of Organisations
Sole Trader, Patnership, Private Limited Company (Ltd), Public Limited Company (Plc)
Sole Trader
Self employed person. He or she runs the business on their own and has sole responsibility for its success or failure.
Sole Trader
Self employed person. He or she runs the business on their own and has sole responsibility for its success or failure.
Patnership
Form of private sector business owned by 1 - 20 people. They share the responsibilities and burdens of running and owning the business.
Private Limited Company (Ltd)
Business organization owned by shareholders with limited lability but whose shares cannot be bought or sold to the general public (stock exchange).
Public Limited Company (Plc)
Incorporated business organization that allows the general public to buy and sell shares in the company via stock exchange.
Private Sector
Part of the economy under the control of private individuals and businesses, rather than the government. (sole traders, partnerships, corporations).
Public Sector
Part of the economy under the control of the government.
Unlimited Liability
No limit to how much debt a sole trader is legally responsible to pay if failure.
Unincorporated
The owner is legally the same as the business (he or she is treated as a single entity) Owner is personally responsible for all debts.
