unit 1 Flashcards
why do business exist
create employment (31.2 million people). 4% unemployed. pay income tax, claim less benefits able to purchase more goods (multiplier affect) creates economic growth
how do businesses help
pay corporation taxes meaning government can help schools and hospitals, create new products and enhance countries reputations for example France and wine
what do businesses do
provide goods and services such as physical (phones) and intangible (dental service)
wha are the four benefits of business to society
employment, pays taxes, create wealth, drive innovation to make new and developed things
what is an entrepreneur
person who sets up a business and takes financial risk
what is a start up
new business enterprise formed by entrepreneur
what is the role of an entrepreneur
spots opportunities, takes calculated risks, create growth and develop.
what is a calculated risk
research that has been done to take a risk and make company better
what does catalyst mean
think and develop and branch off multiple ideas
what is the transformation process
input turns into an out put
example of transformation process
wood turned into desk
CELL
capital, enterprise, land, labour
incorporated
legal difference between the business and owner
owners have limited liability
unincorporated
business is the owner
what is a small & medium sized enterprise
business with fewer then 250 employees
what percent of businesses are SMEs
99%
primary sectors
any business that grow goods or extracts materials from the land (mining, farming, energy extraction)
secondary sectors
take thee raw materials from the primary sector and turn them into finished goods (manufacturing, food, processing, component assembly)
tertiary sectors
providing services to consumer and businesses (personal services, retailing, household franchise, teaching)
quaternary sectors
providing information and ICT (software, financial services, data processing
what is B2C
business to consumer
what is a mission
statement of the business aims which describes the purpose of the organisation
what is a aim
a long term plan from which business objectives are derived
what is a business objective
the septic intended outcomes of business strategies
what are the main functions of objectives
clear statement of what needs to be achieved
what are the 4 functions of business
finance, opperations, marketing, HR
how can objectives be used
provide targets, reduce uncertainty, motivate employees
market capitalisation
the value of business
what a share
part ownership of a business
what is dividends
profit split between share holders
equation for reward of shares
div per share/share price x 100
equation of market capitalisation
share price x umber of shares
what is equity finance
finance from shares
CESSPIT
cashflow
ethical
social
survival
profit
increase turnover
cash flow
money coming in and out of the business
ethical business
morally right (children in companies)
social
benefit groups within society
(fair-trade, animal testing)
survival
need to have finance and able to compete (60% companies fail)
profit
financial gain after all costs have been cut from revenue
increase turnover
know as growth - this causes more profit and power but can also lead to failure
SMART objectives
specific
measurable
achievable
relevant
time bound
what does smart help with
helps management set effective objectives
specific
state would should be achieved
measurable
possible to determine wether it has been achieved
achievable
objective should be realistic given the circumstances in which it is set
relevat
objectives relevant to people responsible for achieving them
time bound
objectives set with time frame
what is finance needed for
business set-up
day to day training
growth and development
what personal source of finance is used by entrepreneurs
inheritance
cash + investment
internal sources
retained profits
working capital
why are personal sources important to a start up
cheap
keep more control over business
external sources
issue shares
bank loan
benefits of retained profits
cheap
flexible
don’t dilute company
downsides of retained profits
shareholders might prefer dividends
high profits could show debt
what are bank loans
longterm finance
interested fixed or variable
start up provide security for the loan
what are bank overdrafts
short-term finance
higher interest rates
easier to short
what can influence business objectives
competition
market conditions
size and legal status
social attitudes
types of strategic objectives
focused on long term
stretching and challenging
higher risk
hard to change
types of tactical objectives
focused on short term
low risk
realistic and achievable
easy to change
PESTLE
political
economic
social
technological
legal
environmental
market conditions
features of markets
level of sales
sales growth
levels of rivals
demand
amount of good and services that are affordable to buy
good to see how desirable the market is
income levels
will have an impact on the demand for all goods
what does inferior goods mean
when the demand for goods fall as consumers income rises
what happens when income levels rise
normal and luxury goods sales will rise
what are interest rates
the costs of borrowing money and the return for lending it
how will high interest rates affect consumers
people with loans have less disposable income
saving becomes attractive
the fall in demand for consumer and capital goods will slow down economic growth
what are demographic factors
age/gender/ethnicity/location
problems with businesses becoming environmentally friendly
becomes much more expensive
change in products (plastic bags)
what is fair trade about
ethical
better pay for suppliers
better working conditions
items more expensive
example of businesses using environmental changes to an advantage
M&S
saved £135 million
example of businesses that have gone against environmental improvement
BP
fined $18 for oil spillage
dumped in sea
companies challenged against environmental issues
lego
lots of plastic
how did lego improve environmental challenges
joined WWF
decrease of 10% in energy use
using renewable energy for all factories (wind turbine)
using sustainable resources for packaging and plastic
arguments against firms turning environmentally friendly
can change prices, so consumer prices go up
change in producing product
can’t make it efficiently due to restrictions
reduce international competition
what is green washing.
making people think your company is. more environmentally friendly then it accurately is
