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Business HL > Unit 1 - 1.1 What is a Business? > Flashcards

Unit 1 - 1.1 What is a Business? Flashcards

1
Q

Stages of the production process

A

Inputs → processes → outputs

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2
Q

Types of inputs into production process

A

4 Factors of Production:
* Capital
* Enterprise
* Land
* Labour

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3
Q

4 functions / processes of a business

A
  • Human resources
  • Finance and accounts
  • Marketing
  • Operations management
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4
Q

Types of outputs

A

Goods and services

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5
Q

Human resources

A

Manages the personnel of the organisation
* their concerns, flaws
* works on hirement, promotion and lay off

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6
Q

Examples of HR work (name 3)

A
  • workforce planning
  • recruitment
  • training
  • appraisals
  • dismissals
  • rebundancies
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7
Q

Finance and accounts

A

Manages the organisations money
* record and report financial documents
* concerned with spending and saving of financial reserve

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8
Q

Why must finance and accounts record and report financial documents? (2)

A
  • to comply with legal requirements (e.g. tax)
  • to inform stakeholders such as shareholders and potential investors of the activity of the firm
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9
Q

Marketing

A

Responsible for identifying and meeting the needs and wants of customers
* works on promoting the business and attracting customers

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10
Q

The 7 Ps of marketing

A
  • Product
  • Price
  • Place
  • Promotion
  • People
  • Processes
  • Physical evidence
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11
Q

Operations management

A

Responsible for the process of converting raw materials into components and finished goods
* also applies to providing services

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12
Q

Sectors of the economy

A
  • Primary
  • Secondary
  • Tertiary
  • Quaternary
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13
Q

Primary sector (name 3 examples)

A

Involved in the extraction, harvesting and conversion of natural resources
* agriculture
* fishing
* mining
* oil extraction

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14
Q

Secondary sector (name 3 examples)

A

Businesses involved in the manufacturing and construction of products
* breweries
* bottlers
* publishing firms

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15
Q

Tertiary sector (name 3 examples)

A

Businesses specialise in providing services to the general population
* retailing
* transportation
* distribution
* healthcare

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16
Q

Quaternary sector (name 3 examples)

A

Involved in intellectual, knowledge-based activities that generate and share information
* information communications technology
* research and development
* consultancy services

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17
Q

The chain of production

A

Links all the production sectors by tracking the stages of an item’s production from the extraction of materials until it is being delivered
1. Extraction
2. Manufacturing
3. Services
4. Consumers

18
Q

Added value

A

The increased utility of a product which simultaneously increases its price

19
Q

Entrepreneurs

A

An individual who plans, organises and manages a business, taking on financial risks in doing so

20
Q

Characteristics of entrepreneurs (name 4)

A
  • Taking substantial risk
  • Having a vision for the business
  • Rewarded with profit
  • Responsibility for the employees
  • Failure may result in personal costs
21
Q

Opportunities for starting up a business

A

GETCASH
* Growth
* Earnings
* Transference and inheritance
* Challenges
* Autonomy
* Security
* Hobbies

22
Q

How is growth an opportunity for a start up business?

A

There can be an appreciation in the value of the assets of the business (such as land or buildings) known as capital growth
* this has potential to be worth more than owner’s salaries

23
Q

How are earnings an opportunity to start up businesses?

A

Owners of businesses can earn excess salaries than from any other occupation they might pursue working for someone else

24
Q

How does transference and inheritance give opportunities to start up businesses?

A

Could be cultural norm for entrepreneurs to pass business to the next generation which secures the future of this younger generation

25
Q

How is challenge an opportunity for start up businesses?

A

Many people view the setting up and running of a business to be an enjoyable challenge that motivates them

26
Q

How is autonomy an opportunity for start up businesses?

A

Autonomy allows independence, freedom of choice and flexibility to the owner which to many is highly attractive as it allows control over their work

27
Q

How is security an opportunity for a start up business?

A

Self-employment offers more job security than working for an employer
* it is easier to increase personal wealth for financial security in retirement

28
Q

How are hobbies opportunities for a start up business?

A

Some people want to pursue their passion and turn their hobby into a business

29
Q

Challenges for starting up a business? (10)

A
  • Lack of finance
  • Unestablished customer base
  • Cash flow problems
  • Marketing problems
  • People management problems
  • Production problems
  • Legalities
  • High production costs
  • Poor location
  • External influences
30
Q

How is lack of finance a challnege to starting up businesses?

A

Most owners of new or small businesses do not have the credentials to secure sufficient funcding
* may have to take loans which destabilise the security of the business in case of failure

31
Q

How does an unestablished customer base challenge a start up business?

A

It is difficult for new businesses to attract customers due to their foreignity and underdeveloped marketing in comparison to their competitors

32
Q

How do cash flow problems pose challenges to start up businesses?

A

When the amount of money going out of the business outweighs the cash coming in resulting in difficulties with liquidity

33
Q

How do marketing problems create challenges for starting up businesses?

A

The business may fail to meet consumer demand and satisfaction due to their inexperience in promotion and distribution. This can result in poor sales and profitability

34
Q

How can people management problems create challenges in start up businesses?

A

Lack of experience in hiring the correct people with the right skills can lead to poor levels of labou productivity
* they may need to retain or rehire people which can be expensive and time consuming

35
Q

How are production problems challenges to start up businesses?

A

They may not be able to accurately forecast levels of demand and can under or overproduce
* underproduce: dissatisfied customers, loss of potential sales
* overproduce: stockpiling, wastage and increased costs

36
Q

How do legalities pose challenges for start up businesses?

A

They need to comply with necessary documentation (such as business registration procedures)
* New businesses may not be familiar with such documentation and not be able to complete it

37
Q

Gymshark - case study (opportunities)

A

Made at 19 in 2017
* initially made website and did custom made products
* marketing through influencers
* made tracksuit that shot up business
* did expo with lot of ppl
* now an international business

38
Q

McDonald’s - Iceland case study (challenges)

A

As a result of financial crisis in 2008
* collapse of major banks in Iceland = economic instability
* fall in exchange rate led to huge increase in import prices
* small population (300,000) meant limited customer base
* to remain profitable = raised Big Mac prices by 20%
* mismanagement of company = highly indebted due to loans from foreign banks
* overtaken by competition from KFC

39
Q

Huda Kattan

A
  • quit job in finance to become makeup artist
  • started business with sisters when she couldn’t find false lashes
  • makes around $250 million annually from cosmetics
40
Q

Rihanna

A
  • discovered by Jay-Z as a teenager
  • starte career as a musician before starting clothing and beauty line (Fenty)
  • became a billionaire in 2021

Business HL (4 decks)

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