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Business Management - Nat 5 > Understanding Business > Flashcards

Understanding Business Flashcards

1
Q

What is an Entrepreneur?

A

Someone who comes up with a business idea and takes risks to create a product or service to meet the needs/wants of consumers and make a profit.

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2
Q

Goods are ‘tangible’. What does this mean?

A

This means that they can be seen and touched

eg. Clothes, food

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3
Q

Services are ‘intangible’. What does this mean?

A

This means they can not be seen (as in a physical object) or touched

eg. Haircut, going to the cinema

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4
Q

What does it mean if something is ‘durable’?

A

It can be used more than once.

Eg. Clothing, mobile phone

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5
Q

State the 4 factors of production

A

Land, labour, capital and enterprise

A business will use these to create a product/ service to satisfy its customers.

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6
Q

What is land?

A

The natural resources (raw materials) that the business uses

Eg. Plot of land, coal, diamonds, wood, oil

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7
Q

What is labour?

A

The workforce of the business

Eg. HR, the employees

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8
Q

What is capital?

A

The man-made resources/assets of the business

Eg. Machinery, tools, finance

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9
Q

What is enterprise?

A

This is where the entrepreneur will combine land, labour and capital to achieve their business idea producing goods or services

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10
Q

What is GDP (Gross Domestic Product)?

A

The GDP of a country is the monetary value of all the finished goods and services produced within that country in a specific time

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11
Q

What is the economic activity in a business cycle?

A

The economic activity is the amount of production taking place. This tends to move up and down in a business cycle

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12
Q

What will happen when the country is experiencing a boom/upturn? (Business cycle)

A
  • Employment rates will be high
  • People have more disposable income to spend on luxuries
  • Higher demand for products
  • Higher demand = more labour, meaning higher employment rates

The country experiences ‘economic growth’

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13
Q

What will happen when a country is experiencing a slump/downturn? (Business cycle)

A
  • Less disposable income
  • Lower demand for products
  • Businesses do not need as much labour as production levels will be low
  • Businesses suffer as people cannot afford to spend their income on unneeded products

Leads to a recovery and the cycle continues

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14
Q

How is wealth created?

A

Wealth is created by businesses adding value to a product as it goes down the production line

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15
Q

What is the purpose of ‘support organisations’?

A

Support organisations are usually set up by national or local governments to offer businesses financial (funding) and non-financial (advice) support.

Eg. PSYBT (Princes Scottish Youth Business Trust)

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16
Q

What do ‘support organisations’ offer?

A

Non-financial:

  • Legal advice
  • Mentoring
  • Financial advice
  • Start-up advice
  • Offices

Financial:

  • Grants
  • Soft loans (loans with low interest rates)
17
Q

What are the Sectors Of Industry/Activity?

A

There are 3 main sectors of industry in which a company can operate:

  • Primary
  • Secondary
  • Tertiary
18
Q

What is the primary sector? (Sectors Of Industry)

A

The primary sector are businesses who are involved in extracting raw materials

Eg. Agriculture, mining, farming

19
Q

What is the secondary sector? (Sectors Of Industry)

A

The secondary sector are businesses involved in manufacturing and construction

Eg. Baker, builder, car manufacturer

20
Q

What is the tertiary sector? (Sectors Of Industry)

A

Businesses which provide a service

Eg. Fitness instructor, hotel, hairdresser, supermarket

21
Q

What are the Sectors Of Economy?

A

The economy is divided into 3 sectors:

  • Private
  • Public
  • Third

Within each sector of the economy there are different businesses with different aims/objectives

22
Q

What is the private sector? (Sectors Of Economy)

A

Private sector organisations (such as supermarkets, shops) are owned and controlled by private individuals.

Their main aim is to make a profit.

The type of organisations that would be in the private sector are:

  • Sole Trader
  • Partnership
  • Private Limited Company (ltd)
23
Q

What is the public sector? (Sectors Of Economy)

A

Public sector organisations are owned and controlled by the Government and financed through taxes.

They aim to provide a service to the public.

Eg. NHS

24
Q

What is the third (voluntary) sector? (Sectors Of Economy)

A

Types of organisations in the third sector include charities, voluntary organisations and social enterprises.

They aim to raise money/ increase awareness of a good cause.

Eg. Oxfam, local youth club

Business Management - Nat 5 (1 decks)

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