Topic 1 Purpose And Nature Of A Business Flashcards
Goods
A physical product
Service
An intangible item (something you cannot physically touch) e.g financial advice.
Customer
Someone who buys a product from a business.
Consumer
Someone who uses goods and services produced by businesses.
Social enterprise
A business that is set up, but is not meant to make profit.
Entrepeneur
Someone who takes a risk of starting their own business.
Business
An organisation set up to make profit.
What is survival?
How long the business can be maintained operated by keeping it successful.
Profit maximisation
A process which a business undergoes to ensure that they determine the best price levels and input/output levels that lead to the highest profit
Aim
A general goal of a business
Objective
A specific target that turns the aim into something that is easier to measure and assess progress
Growth
Expanding your business e.g sellingmore products, open more stores, increase business’ revenue
Domestic growth
Getting business known locally within different regions
International growth
Business being operated worldwide
Market share
This measures the sales of one product/business as a percentage of the total market sales
Customer satisfaction
When the business satisfies the customers with selling their products to them
SMART
Specific, Measurable, Achievable, Realistic, Time-bound
Internal growth
It happens when a business gets bigger by selling more of its products
External growth
Occurs when a business expands by joining or buying other businesses
Franchise
Occurs when a franchisor sells the rights of its products to a franchisee. This is usually in return for a fee and percentage of turnover
Franchisee
Buys a franchise usually in return for a fee and percentage of turnover
Franchisor
Sells a franchise usually in return for a fee and percentage of turnover
Interest rates
The cost of borrowing money or the reward for saving money, expressed as a percentage
Sole trader
Someone who sets up a business on his/her own
Profit
Measures the difference between the values of a business’ revenue (sales) and its total costs.
Unlimited liability
The personal possessions of the owners of a business are at risk if there are any problems. There is no limit to the amount of money the owners may have to pay out.
Partnership
Occurs when two or more people set up a business with a common purpose such as profit
Stakeholder
Individuals and organisations that are affected by a, and affect, the activities of a business.
Private limited company (ltd)
Cannot publicly advertise its shares for sale and is often owned by family members
Public limited company (plc)
Can advertise its shares and can be listed on the stock exchange (a market for buying and selling shares.)
In a plc it’s not possible to place restrictions on whom shares are sold to, meaning if you own some shares of a plc, then you can sell them to whoever you want and other people can buy them easily via the stock exchange
Flotation
Occurs when a private limited company decides to become a public limited company.
To do this the firm must meet the regulations of the stock exchange
