Unit 1 (I.T.B.M) Topic 1 "what is a business" Flashcards
4 Business subject Key Concepts
1)Change: essential for businesses to achieve their desired aims.
Nothing happens until something moves
Eg: As customer buying patterns change businesses will modify their products.
2)Creative: Business planning can lead to organizational success.
Eg: New products can lead to high sales.
3)Ethical: Business behavior improves a business’s image as well as customer loyalty.
Eg: Some shoppers will be conscious of the environmental impact of their buys.
4)Sustainable: Sustainable Business practices can enhance a business’s existence.
Eg: Being sustainable can reduce costs.
What is business
The organised efforts and activities of individuals to produce and sell goods and services for profit or to achieve a given target.
What is Business Transformation process? name the main components of inputs and outputs. Define a product
B.T.P is converting inputs into outputs.
Inputs (Factors of Production) main components:
Land: location.
Labor: staff.
Capital: equipment or money used by businesses.
Enterprise(the will to take risks, make decisions and lead): skills that develop new ways of doing things or new things to do. ex: having entrepreneurship skills.
The Quality and cost of the business inputs will effect the overall quality of the products and the margin rate.
Outputs: Product (goods), Service, or both. Profit.
A product is an item or service which is offered for sale.
Define Business objectives
measurable targets set by the business such as sales or profits that have to be achieved within a given time period.
Define Wants and Needs
Wants: Desires for goods and services we would like to have but do not need.
Needs: These are a special kind of want, and refer to things we must have to survive, such as food, water, and shelter.
Ex: To satisfy hunger you can eat anything in your fridge but you choose fast food.
What are the Factors of Production (inputs)
The factors of production are The inputs into the transformation process of a business mainly: land, labor, capital, and enterprise.
Business Functions/Departments
Mostly, The owner carries all of the functions or most of them in small businesses.
Departments with their own targets are set to carry each function in large businesses.
Main functions:
1)Human resources (HR):
organising, managing and developing all of the human resources.
Responsible for selecting the needed quantity and skills of the workers.
Staff development.
career development.
Salaries, and Benefits.
2)Marketing:
Promoting the products and brand to attract more customers. developing and implementing appropriate marketing strategies (4Ps): Promotion, price, place, product (design and packaging).
building a strong brand image and recognition, creating an emotional connection with the audience, making them more likely to choose the brand repeatedly.
3)Finance and accounts:
Manages Financial resources ensuring financial stability. accurate records, budgeting, collecting and making payments.
4)Operations:
Efficient management of the core activities and production process. Managing production, sourcing materials, managing stock, Quality control, transportation.
some larger or specific companies may include: Administration department
IT Support department
Legal Services department
Cigars and Milk marketing campaigns examples: (not in curriculum)
Cigarettes: By the 1950s, around 45% of American adults were regular smokers, driven by aggressive marketing associating smoking with success and glamour. Cigarette smoking peaked in the 1960s with 42-45% of adults smoking.
Milk (Got Milk? Campaign): Launched in 1993, the “Got Milk?” campaign reversed a decline in milk sales, resulting in a 7% increase in the first year, promoting milk as a health and lifestyle product through celebrity endorsements.
Define Adding Value and how it can be done
Occurs in a transformation process when outputs that are produced are worth more than the inputs brought in to provide them.
This is true for all types of businesses. that I know.
This can be done by increasing the product’s perceived benefit in the customer’s eyes. We achieve this through building the brand or developing a unique selling proposition (USP).
Define brand and USP, and Chain of Operations/Production
Brand: A name, design, logo, symbol or indeed anything that makes a product recognizable and distinguishes it from the competition in the eyes of the customer.
a USP: Unique Selling Proposition is a feature of a product that makes it different from competitors for the customer.
Chain of production: The series of steps taken to turn raw materials into a finished product that can be marketed and sold.
Define The term economic sector, stating the 4 main Business Sectors under it and defining them as well.
The term economic sector refers to the categories of the economy that include related businesses and activities. the economy has 4 main sectors:
1)Primary Sector: The extraction of raw materials from land, sea, or air. Ex: Farming, Fishing or Mining
2)Secondary Sector: The Processing of raw materials, such as oil refinement or the manufacturing of different products.
3)Tertiary Sector: The provision of services for clients. Ex: Banking, Hospitality, or Barbering.
4)Quaternary Sector: Knowledge-based services such as working with tech, consultancy, or research and development.
We classify those 4 sectors as a simplified way to categorize and compare different businesses.
Business effect on the economy and the market forces and opportunity cost meaning.
Business plays an important part in any economy. They employ people and provide goods and services. They provide employees with money to buy products from businesses improving the quality of lives and allowing the economy to improve.
Sometimes business success is linked to the the level of economic activity around it.
Market forces are the forces of supply and demand (people wanting something) that determine the price of a product and the quantity bought and sold in a market.
Opportunity cost: The measure of the sacrifice made by choosing one option in terms of the next best alternative.
ex: If a business decides to increase the output of soft drinks then the opportunity cost is what could have been produced if the force had been used to produce something else.
The dynamic business environment + STEEPLE analysis and what external factors affect
the dynamic business environment means that a business can’t operate in isolation. any external factor like the economy, social issues, or pandemics can affect them directly.
STEEPLE analysis:
Any change in STEEPLE can be used as an opportunity for starting up a business.
S) Social issues: An increase in population size or average age can affect the type and level of demand for products.
T) Technological issues: internet availability or speed can make it easier to find suppliers and do tasks. AI changed the business industry.
E) Economic issues: The income in an economy can change the demand and determine how much can the customer spend.
E) Environmental factors: Sustainability of production may affect how a business produces and what resources it uses.
P) Political factors: A global agreement can make it easier for businesses to expand globally.
L) Legal factors: Laws can prevent the promotion of some products like cigarettes. effects the way employees are treated and the hours they work. affects production and quality.
E) Ethical factors: concerned clients may punish a business if it behaves badly. ex: a client may decide not to buy from a certain brand because of their employee’s poor working conditions. other Ex: Starbucks Boycutt
external factors can affect:
1) The demand for products.
2) The costs and availability of products.
3) The nature of the transformation process.
The challenges of starting up a business.
1) Lack of experience in different business aspects: A businessman can be good at 1 aspect such as production, however, he needs marketing and financing to succeed.
2) Difficulties raising money to set up and expand: Businesses are at high risk in their early stages. Limits development.
3) The difficulties in building brand awareness: new products competing with well-established brands can be hard to compete. this makes it difficult to attract customers and gain profit.
4) Lack of market power because the business is small: Problems getting paid quickly or in payment terms, production costs, and may require advanced payments.
