Understanding Business - Unit 1 Flashcards
What are the 4 sectors of industry?
- Primary - (Natural)
- Secondary - (Man-made)
- Tertiary - ( A Service)
- Quaternary - (Knowledge)
What are the 3 sectors of economy?
- Private Sector - (maximise profits)
- Public Sector - (government service)
- The Third Sector - (charities)
What are the two types of Liability a business may have?
- Limited Liability - The owners personal possessions are not at risk if the business is in debt.
- Unlimited Liability - All owners personal possessions are at risk
What methods can a business use to ensure good Corporate Social Responsibility?
- Use renewable energy, such as solar and wind energy.
- Use sustainable raw materials, e.g sustainable fish stocks or recyclable packaging.
- Fair Trade, offering fair pay to suppliers of raw materials.
- Paying fair wages to employees
- Offering fair working conditions for staff
- Avoid testing on animals
Methods of Internal Growth
- Launch new products/services
- Open new branches or expand existing branches
- Introduce e-commerce
- Hire more staff
- Increase production capacity
Methods of External Growth
- Horizontal Integration
- Forwards Vertical Integration
- Backwards vertical Integration
- Conglomerate Integration
Ways of Funding Growth
- Outsourcing
- De-merger
- Divestment
- Asset Stripping
Management Structures
- Tall Structure, many levels of management, suits large organisations.
- Flat Structure, less levels than a tall structure, suits small to medium sized organisations.
Entrepreneurial Structure - All decisions made by one or two people, used primarily by small businesses
Matrix Structure - Formed for a particular reason, for example , to work on a particular task. People come together from different departments
Objectives of a Private Sector Company
- Survive
- Make a profit
- Maximise sales
- Become a market leader
- keep shareholders happy
- meet managerial objectives
- growth
Objectives of a Public Sector Company
- Increase services
- Remain within a budget
Objectives of a Third Sector Company
- Support a cause
- make the best use of money collected
- inform and evaluate
What is a Stakeholder?
A Stakeholder is an individual or group of people who have any kind of interest in the success of an organisation
Internal Stakeholders - From within the organisation, such as owners, managers, shareholders
External Stakeholders - Out-with the organisation, such as government, customers, suppliers.
What are External factors?
External factors are the different situations that impact on the success of an organisation that arise from the outside the organisation
The organisation cant control external factors
What are the 6 main External Factors that affect an organisation (PESTEC)
P - Political (Laws by the government)
E - Economical (Interest Rates)
S - Social (Consumer Trends)
T - Technological (Technology changes)
E - Environmental (Weather, Pollution)
C - Competitive (Businesses need to change to stay ahead of their competitors
What are the three types of decisions a business can make
- Strategic Decision - Made on a long term basis, normally a big decision that takes a lot of thought and costs a lot of money
- Tactical Decision - Made on a monthly/weekly basis, made by middle management
- Operational Decision - Made on a daily/weekly basis, not normally an expensive decision and can be made by all members of staff.
