Unit 1- what is a business Flashcards
what are goods
physical or tangible products
what is a service
non physical items
what is business to business
it is one business selling to another business
what is business to consumer
it is one business selling directly to its consumers
what is a business
an organisation that makes good or provides services to satisfy customer needs
what is the transformation process
any activity or group of activities that takes one or more inputs, transforms and adds value to them, provides outputs for customers
what is added value
is an amount added to the value of a product or service
what is the calculation for added value
difference between its cost and the amount received when it is sold
what are the four key inputs needed by businesses
- land
- labour
- capital
- enterprise
what does the primary sector do
extracts or develops natural resources
what does the secondary sector do
make use of extracted primary materials to build, manufacture or develop finished goods
what does the tertiary sector do
provides services needed to meet the needs of the end users
what is a mission statement
short statement of a businesses purpose and focus
what is an objective
a goal to help a business achieve its mission
what are corporate objectives
those that relate to the business as a whole
what are functional objectives
set for each business function/department
what is cash flow
the movement of money in and out of the business
what are business objectives
objectives are statements of specific outcomes that are to be achieved
what are fives examples of objectives
- desired sales or profit levels
- rates of growth
- value of the business or dividends paid to shareholders
- an innovative player in the market
- a leading in the quality of customer service
what is the mission
is the overriding goal of the business and the reason for its existence.
what does the mission provide
a strategic perspective for the business and a vision for the future
what are the four things that make an effective mission statement
- differentiates the business from the competitors
- defines the markets or business in which the business wants to operate
- is relevant to all major stakeholder
- excites, inspires, motivates and guides
what is the acryonym that people believe the target should meet
SMART
what does the S stand for in SMART targets and what does it mean
Specific; the objective should be clear, precise and well defined
what does the M stand for in SMART targets and what does it mean
measurable; an objective should be capable of measurement so that is possible to determine whether it has been achieved
what does the A stand for in SMART targets and what does it mean
achievable; the objective should be possible given the circumstances in which it is set and the resources available to the business
what does the R stand for in SMART targets and what does it mean
realistic; the objective must be challenging but possible to achieve given the capabilities of people
what does the T stand for in SMART targets and what does it mean
time bound; objectives should be set with a time frame in mind. these deadlines also need to be realistic
who would suit having the objective to survive
for a small business who is just starting out
what is profit
money left once costs have been paid
what is profit maximisation
try to make the most profit possible
when does short termism arise
when a business priorities short term rather long term performance
what is profit satisficing
try to make enough profit to keep the owners comfortable
what is growth
expanding the business
what is sales growth
where the business tries to make as many sales as possible
what is cash flow
having sufficient amount of money immediately available to pay day to day debts
what is ethical
beliefs on how one should treat the environment and those who are less fortunate
what is social
the service will need to meet the needs of the less well off in society or help improve the ability of the economy to function
what is the calculation for profit
revenue - total costs
what is revenue
money received from sales
what is the calculation for revenue
number of units x price per unit
what are variable costs
costs that vary with the level of output
what is the calculation for total variable costs
number of units x variable cost per unit
what are fixed costs
costs that do no vary with the level of output
what is the calculation for total costs
fixed costs + variable costs
what are three examples of fixed costs
- salary
- rent
- insurance
what are three examples of variable costs
- wage
- raw materials
- shipping
what is the private sector
made up of business owned by individuals or group of individuals
what is the public sector
made up of businesses owned by the government
what is a sole trader
is a business is not registered and owned by one person
what is a private limited company (ltd)
is a company owned by shareholders, the shares can only be brought privately
what is a public limited company
owned by shareholders, the shares can be bought on the stock exchange
what is social enterprise
businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or community
what are mutuals
businesses that don’t have shareholders or other owners. they are owned by members
what is a key feature of a sole trader
is an unincorporated business so the business is inseparable from the business owners. the owner is responsible for the debts
what are three advantages of a sole trader
- cheap to set up
- gives the owner more freedom
- owner takes all the profit
what are three disadvantages of a sole trader
- unlimited liability
- limited capital
- limited skills
what is a key feature of a private limited company (LTD)
it is registered with companies house and has a separate identity to the owners
what are three advantages of a private limited company (LTD)
- protection from debt
- limited liability
- access to more capital
what are three disadvantages of a private limited company (LTD)
- shares less attractive
- less flexibility
- more legal formality
why is a key feature of a public limited company (PLC)
it can be registered on a public stock exchange
what are three advantages of a public limited company (PLC)
- limited liability
- easy to raise finance
- gain public positivist
what are three disadvantages of a public limited company (PLC)
- everything is public
- lots of administration expenses
- greater scrutiny of activities
what are not for profit organisations
businesses with an objective other than profit. this may be to provide a social benefit or service to society or support a cause
what are 3 examples of a not for profit organisations include
- mutuals
- charities
- social enterprises
what is the definition of a shareholder
is a person who owns a share in a company
what is a share
is an individual part of the total issued share capital of a company
what is a dividend
is a payment from the profits made by a company to shareholders
what is capital growth
an increase in the value of shares
what does market capitalisation represent
the total market value of the issued share capital of the company
what is the market capitalisation formula
number of shares issues x price of a share
how does capital growth arise
an increase in the value of the business leading to an increase in the share price
what are 3 internal factors that will influence the price per share
- company performance
- dividend policy
- leadership reputation
what are 3 external factors that will influence the price per share
- global economic factors
- competitive environment
- scandals/ rumours
what is competition
is the rivalry between companies selling similar products and services with the goal of achieving the revenue, profit, and market share growth
what are interest rates
the cost of borrowing money
what are demographics
are the characteristics of the population
what is fair trade
way of trading with suppliers that offer better prices, decent working conditions and a fairer deal for farmers and workers in developing countries
what does the P is PESTLE(C) stand for
political
what does the E is PESTLE(C) stand for
economic
what does the S is PESTLE(C) stand for
social
what does the T is PESTLE(C) stand for
technological
what does the L is PESTLE(C) stand for
legal
what does the E is PESTLE(C) stand for
ethical
what does the C is PESTLE(C) stand for
competition
