U1 - The Business Environment Flashcards
What is a business?
The organised effort of a singular people to produce and sell goods to make a profit and satisfy others.
What is the main aim of a business?
To make a profit (Money)
The 8 benefits of business
Profit
Employment
Incomes
Choice
Innovation
Entrepreneurship and risk
Wealth
Quality of life
What is the PIECE acronym
Production, Investment, Employment, Careers, Enterprise
Production - PIECE
Production is an activity undertaken by business combining resources to create a good or service to satisfy customer needs and wants.
Reliance on R&D
Reliance of investment
Contribution to GDP
Choice
Contribution to innovation (quality of life)
Employment - PIECE
Financial security, slowing crime and drug use allowing stronger community.
Small to medium enterprise (SME) employ a lot of people which allows more money (Disposable income) to circulate locally which creates more employment.
Careers - PIECE
Businesses provide careers and long term jobs for people within a community.
Enterprise - PIECE
Another word for business and can also mean a project undertaken or to be undertaken
Investment - PIECE
Investment occurs through private and public sources.
Business Goals and objectives need to be…
SMART objectives
Specific
Measurable
Achievable
Realistic
Timebound
Financial goals
Maximise profits
Production efficiency
Maximise growth
Improve share price
Increase market share
INCREASING REVENUE AND PROFITS
Non-financial goals
Social Goals - being socially responsible through community service and providing employment
Environmental goals - Sustainable development
Personal goals - Early retirement, personal efficiency
Conflicting goals
- Cheap place to operate may be far away.
- Sourcing environmentally friendly resources (cutlery) may not be the cheapest option.
Types of business
Size - micro, small, medium, large
Geographical spread - local, national, global
Industry sector - primary, secondary, tertiary
Legal structure - sole trader, partnership, private and public company
Classification by legal structure
Sole trader and partnership - Unincorporated
Company (private, public) - Incorporated
Limited Liability
Limits each owner’s financial liability to the amount of money he or she ahs paid for business shares.
Debt finance
relates to the short and long term borrowing from external sources by a business
Overdrafts
When the bank allows a business to overdraw their account up to an agreed limit for a specific time to overcome a temporary cash shortfall.
PESTLE External influences
Political - policy and laws on access to resources
Economic - economic cycle, demand, exchange rates
Social - Demographic features, change in interests and trends, change in habits
Technology - Leading edge and established tech as well as the growth of tools and systems (DOM pizza)
Legal - Taxation, Work health, and safety, equal employment
Environmental - Impact of weather, greenhouse gasses, climate change, sustainable business practices
Internal Influences on the business
Product
Location
Management
Resources
Business Culture
Stakeholders
Any group or individual who has interest in or is affected by the activities of a business.
Shareholders
Managers
Employees
Customers
Community and society
The environment
Internal and External stakeholders
Internal - Managers, shareholders, employees
External - Customers, consumers, community, society
Entreprenuership
Someone who starts, operates, and assumes the risk of a business venture in the hope of making a profit.
Entrepreneurship
Someone who starts, operates, and assumes the risk of a business venture in the hope of making a profit.
Why is entrepreneurship risky?
Bankrupcy, financial risk, competitive risks, economic risks
Triple Bottom Line
Financial profitability, social impact, and the environmental impact of a business.
Corporate Social Responsibility (CSR)
Open and accountable business actions based on respect for people and the community/society. Businesses doing more than just complying with the laws and regulations.
