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business management 2 > understanding business > Flashcards

understanding business Flashcards

1
Q

What are goods and services?

A

GOODS - Goods (or products) and tangible. This means they can be seen and touched. eg. car, iPhone, magazine

SERVICES - Services are intangible. This means they cannot be seen or touched after they are provided. Often they are something that an organisation does for it’s customers. eg. hairdresser, teacher, bank, plumber, taxi

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2
Q

What are different types of goods that a business can provide?

A

DURABLE - these goods and services last for a long period of time. They will eventually wear out or break. eg. car, computer, toothbrush

NON DURABLE - These goods and services DO NOT last for a long period of time. They are goods which can only be used once. eg. biscuit, cinema ticket, meal

CONSUMER - These goods and services are consumed by individual private PEOPLE to satisfy their needs and wants. eg. food, clothing, DVD’s

CAPITAL - These goods and services are consumed by BUSINESSES so that they can provide other goods and sevices. eg. machinery, vehicles, tools

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3
Q

Businesses need to satisfy the needs and wants of the customers. Describe what needs and wants are.

A

NEEDS - Needs are the basic requirements for survival. These needs can be satisfied for the vast majority of people. eg food, shelter, clothing.

WANTS - wants are required to make life pleasant for us and include luxuries and other non-essential items. They cannot ever be fully satisfied - people are always looking for other things to make them happy. eg. holidays, mobile phone, new car, PS3

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4
Q

what are buyers, sellers and consumers?

A

BUYER - (or customers) are people who spend money on goods or services

SELLERS - people who offer goods or services in exchange for moeny

CONSUMER - the people who use up a product or service, even if they don’t actually pay for it

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5
Q

give examples to show how the consumer and buyer can be different.

A

product/service - children’s shoes, houses, car repairs, baby milk

consumer/user - children, adults and children, drivers, babies

buyer (pays) - mum/dad/carer, adults, drivers, adults/parents

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6
Q

why is satisfaction of needs and wants important?

A

As a consumer, we buy goods and services offered by a range of businesses. We buy these to satisfy our needs and wants. What we need or want depends on what we already have and what we would like in the future.

However, it may be impossible to achieve everything that we want. This is due to SCARCITY. Scarcity forces us to make CHOICES.

Whichever choice you make, you then forgot (give up) something else. The thing you give up is called OPPORTUNITY COST. When you buy something it therefore has a FINANCIAL COST and an OPPORTUNITY COST.

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7
Q

What is the production chain?

A

The production of a good starts with its raw materials and ends with the finished goods being sold to a customer. The stages that is passes through is called the PRODUCTION CHAIN ( or chain of production). The chain is split into three parts; INPUTS, PROCESS, OUTPUTS.

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8
Q

Describe what creation of wealth is.

A

As a good passes though each stage of the production chain, value is added to the good.

For example:
trees in wood (input) in the forestry industry are bought for nothing and sold for £100,000, they are then made into planks in a sawmill and sold again for £500,000. They are then sold to a factory, turned into chairs and sold for £1,000,000.

This adding of value is called CREATION OF WEALTH.

CREATION OF WEALTH IS ADDING VALUE TO EACH STAGE OF THE PRODUCTION PROCESS.

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9
Q

What are 5 regarded areas of customer service/customer satisfaction?

A
  • Politeness to staff
  • Replacement of faulty goods
  • Reaction to problems or complaints
  • Time taken to be served
  • Quality of goods sold
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10
Q

How to organisations ensure that customer service is a high priority?

A

To ensure that customer service is a high priority to an organisation, they will often have a customer care strategy/policy. This is a written statement which species standards a customer can expect from the organisation, on the 5 regarded areas.

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11
Q

What are some benefits of good customer service?

A
  • motivated and highly performing staff
  • satisfied and loyal customers
  • customers return to the organisation
  • customers recommend the organisation to friends
  • organisation gets a good reputation
  • organisation may gain a competitive edge
  • market share may increase
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12
Q

State the effects of poor customer service

A
  • demotivated staff due to complaints
  • dissatisfied customers don’t return
  • dissatisfied customers don’t recommend the organisation
  • poor reputations are hard to turn around
  • may need to spend more money on advertising to change image
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13
Q

How would an organisation measure how satisfied customers are?

A

In order to measure how satisfied customers are with the goods or service being offered, organisation may conduct some research. This can involve getting FEEDBACK FROM CUSTOMERS, which can be done in several ways.

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14
Q

How do businesses get feedback from customers? Describe these methods.

A
  • QUESTIONS FROM STAFF: Employees will ask customers their opinion on the product and or service purchased.
  • MYSTERY SHOPPER: Someone is employed to pretend to be a customer and visits the store to find out what kind of treatment he/she would receive as a customer. They then record their experience and feed this back to head office.
  • CONSUMER PANEL: Regular meetings with members of the company and consumers to discuss new products, ideas etc.
  • CUSTOMER QUESTIONNAIRES: Written questions to fin out what its customers think of the product/service.
  • COMMENT CARDS: Placed in rooms, on tables etc asking customers to rate the service and place in a box on leaving.
  • ONLINE SURVEYS: An online questionnaire is completed when visiting a website. This is now a very popular method.
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15
Q

Why do people set up their own businesses?

A
  • they want to be their own boss
  • they have been made redundant and decide to use their redundancy money to help start up their own business
  • they have an idea for a new product or service
  • they have a hobby which would be a good basis for a business eg a keen gardener might decide to sell his/her own plants
  • they have skills but can’t find a job and decide to set up on their own eg a trained electrician or painter and decorator
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16
Q

Where do people get ‘ideas’ for starting up in business?

A

All businesses start out from an original idea. Marks and Spencer started by having a market stall in Leeds which sold a wide variety of items all priced at one penny. Richard Branson created a magazine when he was a student.

17
Q

Where do other ideas come from?

A
  • Spotting a gap in the market (no-one else making product/providing service)
  • Improving on an existing product or service
  • Listening to people and finding out what they want or need
  • Using special skills or talent that you have
  • Developing a hobby
  • combining 2 or more existing or more existing products or services
  • setting out to solve a particular problem
18
Q

What is and entrepreneur?

A

an ENTREPRENEUR is someone who has a business idea, or is prepared to take someone else’s idea and develop it in order to produce or provide a service

The entrepreneur brings together the resources needed to run his/her business - these are called FACTORS OF PRODUCTION.

They initially make all the decisions from raising finance to hiring staff, so they have to be good at decision-making.

19
Q

What must an entrepreneur do?

A
  • TAKE RISKS - setting up a business is risky. Even if the entrepreneur has fully researched the market, there’s still chance that customers won’t want the product and a loss will be made.
  • SHOW INITIATIVE AND ‘MAKE THINGS HAPPEN’ - the entrepreneur must have the drive and determination to overcome problems and launch the new business.
  • UNDERTAKE NEW VENTURES - an entrepreneur must have the imagination to spot gaps in the market and spot business opportunities to fill them.
20
Q

what skills make a good entrepreneur?

A
  • communicate well with people
  • make good decisions
  • selling
  • negotiating
  • marketing
  • problem solving
  • ICT skills
  • good at dealing with finances
  • planning
  • coordinating
  • delegating
  • controlling
21
Q

what qualities make a good entrepreneur?

A
  • confidence
  • determination
  • enthusiasm
  • leadership
  • organised
  • persuader
  • problem solver
  • creative
  • good at coming up with ideas
  • enterprising
  • risk taker
  • self confident
22
Q

what are the factors of production?

A 
(CELL)
CAPITAL
ENTERPRISE
LAND
LABOUR
23
Q

describe capital

A

capital means the machinery, tools, equipment that a business controls.
It also includes the finance (money) that the owner has invested in the business.
The return to capital is interest.
eg. money, buildings, equipment, machinery

24
Q

describe enterprise

A

the entrepreneur him/herself.
Enterprise means the business idea that an entrepreneur has on how to use land, labour and capital in his/her business. They have the new ideas and take the risks.
They bring together the other 3 factors to make a successful business.
The return to enterprise is profit.
eg. entrepreneur’s own ideas

25
Q

describe land

A

land means the natural resources which businesses use.
Natural resources (including water, trees, fields and things produced from them such as oil, fish, fruit and vegetables).
the return to land is rent.
eg. plot of land, coal, diamonds, forests, water, wood

26
Q

describe labour

A

labour means the workforce of a business - human workers of all kinds.
The return to labour is wages.
eg. employees

27
Q

what are the risks of starting a business?

A
  • no one buying the product or service
  • losing all the money invested
  • not being able to pay expenses
  • losing personal assets (eg house, car)
28
Q

how can a business reduce risks?

A
  • finding out what the customer wants ie effective market research
  • predicting cash flow problems and arranging suitable finance
  • analysing accounts for comparison and trends using ratio analysis
  • accurately predicting the success of future ventures by break even analysis
  • producing a detailed business plan
29
Q

what is a business plan?

A

if a business is to achieve its goals plans must be made to ensure targets are met. A business plan is needed.

30
Q

what is a business plan needed for?

A
  • when starting out in business for the first time
  • to show potential investors (eg banks) that ideas have been well thought out
  • when planning for expansion
31
Q

what should a detailed business plan include?

A
  • introduction
  • description of business/staff
  • the product or service
  • the market
  • competition
  • marketing plan
  • operations plan
  • financial information

a business plan should contain all the vital information necessary for a potential

business management 2 (2 decks)

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