unit 1 - What is business? Flashcards
purpose of a business, objectives, mission, profit,
three reasons why businesses exist?
- fulfil needs/wants
-fill gaps in the market
-make a profit
how do businesses benefit society?
-provides jobs
-create wealth
-pay gov. taxes
-make life easier
-charities
why do businesses set objectives?
-stay on track to achieve aims
-motivate employees
-measure progress and success
-better team spirit
what are some common objectives?
-maximise profits
-survival
-growth
-social and ethical objectives
-increase market share
what are functional/departmental objectives?
objectives which are specific to each areas in the business
what are corporate objectives?
objectives for the business as a whole
what are SMART objectives?
Specific
Measurable
Achievable
Relevant
Time bound/specific
what is a mission?
an organisation’s overall aim or long-term goals
what is a mission statement?
a qualitative statement of an organisation’s aims that uses language intended to motivate employees and convince customers
what makes a good mission?
-formulation of key objectives
-differentiates a business from competitors
-defines the market a firm wants to compete in
-relevant to all stakeholders
-motivates, inspires
what are some common criticisms of mission statements?
-vague
-may not be supported by employees
-may be seen as cynical
-not always a reflection of reality
-must be supported throughout an organisation for it to have any significance
what is the equation for profit?
profit = total revenue - total costs
what is the equation for revenue?
revenue = quantity sold x selling price
what is a variable cost?
a cost that changes with output
what is the equation for variable costs?
variable costs = price per unit x number of units
