Unit 1 - What is Business

Question 1

Business definition

Answer 1

A business is an organisation that exists to provide goods and services on a commercial basis to customers.

Question 2

What is a good

Answer 2

A tangible product - physical

Question 3

What is a service

Answer 3

An intangible product

Question 4

What is B2C

Answer 4

When a Business sells straight to a Consumer

Question 5

What is B2B

Answer 5

When a Business sells their product to other Businesses

Question 6

What is B2G

Answer 6

When a Business sells to Government

Question 7

What are the 4 reasons Businesses exist

Answer 7

• Create employment - 30.61M in employment in September 2014
• Create wealth - pay workers and corporation tax
• Create new products and services - e.g medicines and environmental goods
• Can enhance a countries reputation - Uk music industry

Question 8

Transformation process definition

Answer 8

The conversion of a firm’s inputs into outputs that reach the consumer and adds value.

Question 9

Added value formula

Answer 9

selling price - the cost of bought in materials, components and services.

Question 10

Mission statement definition

Answer 10

A statement that sets out what they are trying to achieve (main purpose)

Question 11

corporate aims definition

Answer 11

The long-term statement of what the business intends to achieve

Question 12

Objectives definition

Answer 12

More precise goals that must be achieved in order to achieve the aims and mission statement.

Question 13

Example of an objective

Answer 13

To increase revenue by 15% by the end of 2023

Question 14

What does the acronym SMART mean when writing an effective objective

Answer 14

Specific
Measurable
Agreed
Realistic
Time specific

Question 15

What does S mean in SMART

Answer 15

Specific - the objective must be defined and clear what they are measuring (sales or profits)

Question 16

What does M mean in SMART

Answer 16

Measurable - The objective must include a quantifiable target - e.g 10% increase

Question 17

What does A mean in SMART

Answer 17

Agreed - Must be disgusted and mutually agreed so that more people are willing to commit

Question 18

What does R mean in SMART

Answer 18

Realistic - People have to be motivated through attainable targets

Question 19

What does T mean in SMART

Answer 19

Time specific - The objective must have a deadline

Question 20

What are 6 common business objectives

Answer 20

• Social and ethical objectives
• Cash flow
• Diversification
• Survival
• growth
• profits and profit maximization

Question 21

Why set objectives

Answer 21

-gives firms clear direction and focus
-motivate staff attainable goals giving a sense achievement and satisfaction
-Measure success

Question 22

Revenue

Answer 22

money received from sales of goods and services

Question 23

total revenue formula

Answer 23

total revenue = selling price x number of items sold

Question 24

Fixed costs definition

Answer 24

Costs that do not change directly with the level of output

Question 25

Variable costs

Answer 25

Costs that change directly with output

Question 26

total costs formula

Answer 26

total costs = total fixed costs + total variable costs

Question 27

Profit definition

Answer 27

The difference between total revenue and total costs - money that is left from sales once all costs have been deducted

Question 28

profit formula

Answer 28

profit = total revenue - total costs

Question 29

Why are profits important

Answer 29

• useful measure of progress and success
• motivate and encourage investment
• to be reinvested into the firm

Question 30

What do mission statements contain

Answer 30

• The organisations values
• Non-financial goals it may pursue
• The benefits of the business to the community
• How consumers are able to be satisfied

Question 31

What are the benefits of a mission statement

Answer 31

.

Question 32

What are the negatives of a mission statement

Answer 32

.