unit 1 Flashcards
What are needs?
are essential for use to live e.g. water, food and clothing
What are wants?
things we would like to have but could live without e.g. mobile phone and television
What are goods?
things we can see, touch and pick up. Some goods are durable and some are non-durable
What are services?
things we can’t see, pick up or touch. This means they are intangible e.g. a hairdresser
the business cycle
1) people have needs and wants
2) businesses identify these needs and wants
3) businesses produces goods and services to satisfy customers
4) customers buy the goods and services
Factors Of Production
Land - the natural resources
Labour - the people employed by a business
Capital - the man-made resources needed to make a product
Enterprise - combining all factors of production
Entrepreneurs
Jeff bezos - Amazon
James Dyson - Dyson
Wealth Creation
1) cotton harvested
2) cotton cleaned
3) indigo turns cotton blue
4) cotton weaved into denim
5) workers sew denim into jeans
6) jeans are packaged and sold
value is being added
Sectors Of Industry
Primary (extract raw materials)
Secondary (manufacturing products with the raw materials)
Tertiary (selling the products)
Sectors Of Economy
Private - sole traders, partnerships, private limited companies
Public - national government, local government organisations
Third - non-profit making organisations, social enterprise
Describe A Sole Trader
owned and run by one person
ADVANTAGES
- easy to set up
- owner keeps all profit
- owner chooses holiday and working hours
- all decisions made by the owner
DISADVANTAGES
- cannot share workload
- raising start up capital is difficult
- unlimited liability, responsible for all debts
- difficult to obtain economy of scale
Describe A Partnership
A business run and owned by 2-20 partners
ADVANTAGES
- workload shared
- varied skill set
- finances raised more easily
- suppliers see partnerships as less risky to work with
DISADVANTAGES
- shared profit
- unlimited liability
- arguments may occur
- lengthy legal process
Describe A Private Limited Company
owned by shareholders and run by board of directors
ADVANTAGES
- limited liability
- finance can be raised by selling more shares
- shareholders and board of directors have varied skills
DISADVANTAGES
- lengthy legal process
- rules laid out by law
- financial accounts are published
- setting up an LTD is expensive
Public Sector Organisation
- owned by the government on behalf of taxpayers
- local government organisations get funding from the government to deliver services
1) UK parliament
2) Scottish government
3) local government organisations
Local Government Organisations
taxpayer money goes towards:
- schools
- medical care
- recycling
Third Sector
(non profits and social enterprise)
NON PROFIT
- set up to support specific causes
- regulated by the government
- RSPCA
- youth clubs
SOCIAL ENTERPRISE
they have a main social or environmental aim other than making profit but they run like a normal business
- at least half of the profit goes to the cause
How Businesses Ensure Customer Satisfaction
- provide the highest quality product
- make sure employees are trained
- have a customer care strategy
- have an after sales service
Business Objectives
- survival
- profit
- provision of a service
- customer satisfaction
- enterprise
- social responsibility
- market share
What Are The External Factors
Political
Economic
Social
Technological
Environmental
Competitive
Politcal
- the government can issue laws which makes a business have to change (health and safety)
- change the amount of tax
- local government organisations can refuse planning permission
Economic
levels of employment- when unemployment is high people are more wary of their money
recession- the amount of money being sent and the products being sold decreases
interest rates- when interest is high it’s more expensive to borrow money from the bank
Social
- trends can change quickly
- growing number of working practices offered to employees
Environmental
the weather (ice cream shops are more popular in summer)
- increase in recycling
- reduce carbon footprint
- environmentally friendly products
- decrease pollution
Technological
- tablet computer
- wireless
- web 2.0
- cloud computing
Competitive
- more choice where to purchase
- goods may be priced cheaper
- more special offers given
- higher quality service
Internal Stakeholders
-owners/shareholders
-managers
-employees
External Stakeholders
-banks
-suppliers
-customers
-community
-government
How Do Internal Stakeholders Have Influence On Businesses?
-Owners/Shareholder - changing management, investing into the business
-Managers - hiring and firing, creating company policies, making day-to-day decisions
-employees - increase/decrease productivity, providing good/bad customer service, striking
How Do External Stakeholders Have An Influence On A Business?
-Customers - whether they purchase from a business, word of mouth
-Banks - permitting or denying loans, changing interest rates, changing repayment lengths
-Government - changing tax rate, introducing laws, offering grants
-Suppliers - raising/lowering prices, changing delivery times, increasing/decreasing quality of raw materials
-Community - protesting or petitioning
