Unit 1 - chapter 1 Flashcards
what benefits do businesses bring to the country, its economy and it’s inhabitants
- create employment
- create wealth
- create new products
- can enhance a country’s reputation
primary sector examples
agriculture, forestry, fishing, mining and quarrying, oil and gas extraction
secondary sector examples
manufacturing, construction and the supply of electricity, gas and water
tertiary sector examples
the supply of services, such as hotels, transport, education and health
adding value definition
value is added by transforming inputs or resources into goods and services (what a business does)
example of a mission statement
to bring inspiration and innovation to every athlete in the world
mission statement definition
sets out a business’s overall purpose to direct and stimulate the entire organisation
corporate objectives
are long-term plans of a business drove from mission statement and drives functional objectives (SMART)
functional objectives definition
they define the objectives for each department, are in more detail and are driven by the corporate objectives
what are the 4 things missions statements focus on
- organisation’s values
- non-financial goals it may pursue
- benefits of the business to the community
- how consumers are satisfied
what acronym do objectives have to be to be efffective
SMART
what does SMART stand for
- specific
- measurable
- agreed
- realistic
- time specific
what does S mean in SMART
specific - must define exactly what the form is measuring (sales or profits
What does M mean in SMART
measurable - must be a quantifiable target (10% increase in profits)
what does A mean in SMART
agreed - has to be mutually agreed so people are more likely to commit to them
what does R mean in SMART
realistic - if the objectives aren’t realistic people won’t be motivated to hit them
what does T mean in SMART
time specific - employees need to know how long they have to achieve these targets
cash flow definition
the amount of money moving into and out of a business over a time period
when can survival become a key objective for a business
-periods of recession or intense competition
- times of crisis, such as during a hostile takeover bid
what are the 6 most common business objectives
- profits and profit maximisation
- growth
- survival
- cash flow
- social and ethical objectives
- diversification
stakeholders definition
individuals or groups (such as employees, customers and local residents) who have an interest in a business
what are the 2 things that effect profits
- profit margin
- quantity sold
why have the hierarchy of objectives
- measures success
- creates co-ordination/ focus and direction between employees and managers
why is profit important for non-for-profit businesses
allows them to serve their real goal
