Unit 1 - What is a business Flashcards
Whats the missions of a business
- its overall purpose or main corporate aims
- intended to make all stakeholders aware of what the business does an why, and to encourage all employees to work towards its aim
What are objectvies
turn overall aims into specific goals that must be met
-corporate or fictional level
What are Corporate Objectives
goals of the business as a whole.
it would depend on the size of the business as a small business would focus on surviving whilst a big international one would want tog row bigger and diversify its product range
What are Functional Objectives (departments objectives)
- Objectives of each department -more detailed+specific
- when a corporate objective is set managers of each department will set functional objectives that will contribute to achieve the overall corporate objective
What are the advantages of setting objectives
- Everyone is working towards a goal and coordination <> dept should improve
- Working towards a goal would be motivating
- Useful for decision making-easier to see what the business is trying to achieve
- managers can compare performance w. their objectives to measure the success of the business and review their decisions
What does SMART stand for
Specific - more likely to achieve
Measurable - know if its achieved or not
Agreed - ppl invl needs to agree
Realistic - impossible obj will demotivate
Timely - no specific time frame=won’t see s urgent/won’t worry about it
What are the different types of Obj
PROFIT Obj
-may set functional obj to minimise cost or increase sales
GROWTH Obj
-based on increasing revenue, ms, expanding business
SURVIVAL Obj
-key obj during periods of strong competition and when economy is declining/in recession
CASH FLOW Obj
-increasing cf =greater chance of survival
What are Social and Ethical Obj
SOCIAL -benefits people/society
ETHICAL -based on moral principles ab how business treat ppl and the environment
What are important to non-profit and profit businesses
NON-PROFIT eg charities - set to achieve social or ethical obj
PROFIT - focus on making profit
-however s/e obj become increasingly more important as ins on how businesses operate become widely avaliable
How do you work out revenue and what is it
Value of sales- am money generated by sales before any deductions are made
Selling price x quantity sold
affected by both sales vol and price
Whats Fixed cost? what Variable costs? whats semi-variable costs?
- FIXED COSTS doesnt change with output eg Rent
- VARIABLE COSTS vary with output
- SEMI-VARIABLE have fixed and variable parts eg telephone bills
What can businesses do with profit
- Give to shareholders as dividends
- Reinvest into business
Why is profit important
-Can motivate people
ppl in business who own shares will receive a proportion of the profit as a dividend payment
some businesses offer a profit sharing scheme where employees are given bonuses from a share of the total profits
-A good source of finance
can be retained and used for investment - no interest nor does it have to be paid back unlike loans
-Can be used to attract investors
ppl more likely to invest if a business is making large profit as they’ll expect a good dividend payment
Whats a private sector and whats a public sector
PUBLIC SECTOR
- owned and run by Gov
- aim to provide services to public rather than make a profit eg NHS
- funded by UK Tax System
PRIVATE SECTOR
-run by private individuals
What are the types of non profit bsuinesses
Charities
Social enterprises
Mutual Organisations
