Unit 1 - Understanding Business Flashcards
What is a need?
A need is something that is essential for survival
What is a want?
A want is a luxury item that makes life more enjoyable
What is a good?
Goods are items that we can see and touch
What are types of goods?
Non durable goods - food
Durable goods - cars
Consumer goods - magazines
Capital goods - robot used to make car
What is a service?
Services are types of products that you can’t hold or touch e.g. public transport, hair cut, visit to the cinema
What are the four factors of production?
Land - natural resources of earth
Labour - human effort and skills needed to produce the product/service
Capital - the money needed to start up and run a business
Enterprise - the person who comes up with the idea and makes it happen
What are the sectors of industry?
Primary - extraction of raw materials
Secondary - the making of goods
Tertiary- services
What is customer service?
•Meeting customers needs and wants
•Being polite, honest and helpful
•After sales service, customers care line and product demonstrations
What are benefits of customer service?
•Customer loyalty - they are more likely to return
•Improved reputation- recommend the company to family and friends
What are the consequences of poor customer service?
•Decrease in profits
•Bad reputation
•Loss of market share
• Loss of competitiveness edge
•Low staff morale
How do you measure customer satisfaction?
•Ask customers opinions/interview customers
•Post a survey/questionnaire
•Set up a focus group
•Feedback form
How do you maximise customer satisfaction?
•Market research
•Staff training
•After sales service
•Customer complaints
•Quality products
What is an entrepreneur?
An entrepreneur is a person who develops starts and runs their own business
What skills do entrepreneurs need to have?
•Determination/leadership
•Communication skills
•Finance skills
•Organisation skills
•Decision making
What is a private sector business?
The private sector benefits private individuals (shareholders)
What are the private sector businesses aims?
•To make a profit
•To provide goods/services
•To grow
•Keep customers happy
•To survive agains competitors
What is a sole trader?
A one owner business
What is a partnership?
Is owned and controlled by 2-20 people
What are advantages and disadvantages of a sole trader?
Advantage - the owner keeps all profits
Disadvantage - long hours and many skills required
What are advantages and disadvantages of a partnership?
Advantage - work can be shared, partners can specialise in certain areas of the business, easy to take time off
Disadvantage - unlimited liability, may have arguments and disagreements
What is unlimited liability and limited liability?
Unlimited liability - being personally liable for all of your debts
Limited liability - you only lose what you have invested into the business
What is a private limited company?
The ownership of a limited company is decided up into equal parts called shares. Whoever owns one or more of these is called a shareholder. A limited company is private when its shares are not abating the public by being bought and sold on the stock exchange.
What are advantages and disadvantages of a private limited company?
Advantage - able to raise money by borrowing and through the shares issue of ordinary shares, limited liability
Disadvantages - must be registered with the register of companies, legal set up costs are expensive
What is the public sector?
Benefits the public (all of us) and not private individuals
What are the aims of the public sector?
-Provide essential services such as schools or hospitals
-Treat everyone equally
-Cover costs by sticking to a budget
Name examples of the public sector
Police, fire service, NHS, councils
What are the third sectors aims?
To raise awareness of an issue, be socially responsible and to provide support for those in need
What are the two main groups of the third sector?
Non profit organisations and Social enterprises
What is a non profit organisation?
Charities supporting specific causes
What is a social enterprise?
A business that trade to improve communities, peoples lives or the environment.
They don’t exist to make a profit
What is the purpose of a business plan?
-To present the objectives of the business
-To reduce the risk of the business failing
-To present to the bank when applying for a loan
What is the content of a business plan?
-General details (name, location)
-Human resources (staff, wage)
-Product/Service (production levels, whats bring sold)
-Market (target market, research)
-Assets (costs, premises, equipment and machinery required)
-Cash flow (source of finance and expected use, forecast of sales, costs and profits)
-Equality (money invested by owner)
What is a stakeholder?
Is a person, group or organisation that has an interest in how an organisation is run
What are customers influence and interest in a business?
Interest - Want good service, good choice, quality, value for money
Influence - Can decide to go back or not, reviews
What are suppliers influence and interest in a business?
Interest - Want to be paid on time
Influence - Can decide to supply or not
What are staffs influence and interest in a business?
Interest - Want good pay and working conditions
Influence - Can decide to work hard or go on strike
What are banks influence and interest in a business?
Interest - Want their loan paid back at agreed interest rate
Influence - Can increase or decrease interest rates, loan again or not
What are managers influence and interest in a business?
Interest - Want status/power, bonus for meeting targets
Influence - Make decisions, hire staff, make policies
What are the local communities influence and interest in a business?
Interest - Want the business to be a good neighbour (no inconvenience)
Influence - Can support growth plans or not, complain
What are pressure groups influence and interest in a business?
Interest - Want business to maintain ethical/environment stance
Influence - Can endorse or not, protest or go to media
What are the governments influence and interest in a business?
Interest - Want business to provide jobs, pay corporation tax
Influence - Can introduce new laws that affect business operation, raise/lower taxes
What is an external factor?
Things that a business cannot directly control, these factors can negatively affect the performance and success of a business so they must react and change to the effects of these factors.
What are the 6 main external factors?
-Political (laws,taxes)
-Economic (value of money)
-Social (changes in society)
-Technology (keep up with IT)
-Environmental (weather)
-Competitive (more than one business)
What are political external factors?
-Governments can raise and lower taxes
-Laws can be introduced that restrict the sale of certain products
-National minimum wage increases each year
What are economic external factors?
-Interest rates
-Inflation (cost of living)
-Rate of unemployment
What are social external factors?
-Lifestyles changing, healthy living and consumer information
-Population is ageing, birthrate falling
-Tastes and trends changing constantly
What are technology external factors?
-More films are online
-Automation is reducing the number of staff required for repetitive jobs
What are environmental external factors?
-Physical credentials - Weather and climate change
-Green credentials - Demand for environmentally friendly products
What are competitive external factors?
-Imitators copy well known products
-Price wars cause rival businesses to lower prices
-Product differentiation required to make businesses stand out
What are the 3 main internal factors?
Human resources, finance and technology
What is an internal factor?
Things that a business can directly control
What are human resources internal factors?
-Manages can influence a business with decision making, hiring an firing of employees
-Employees can influence a business with productivity and absenteeism
What are finance internal factors?
-Developing new products
-Advertising campaign for a product
-Need adequate funds in place in order for a business to survive and grow
What are technology internal factors?
Businesses rely on specialist software, access and control of social media, apps for selling online and machines for producing products.
