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Business > Unit 1- What Is Business? > Flashcards

Unit 1- What Is Business? Flashcards

1
Q

What is a service?

A

An intangible item

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2
Q

What do businesses do?

A

Transform inputs or resources into goods or services

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3
Q

Gross Domestic Product (GDP)

A

Measures the total value of the production of an economy over a period of time, usually a year

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4
Q

Primary business

A

Extraction of natural resources

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5
Q

Secondary business

A

Production of finished goods or components

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6
Q

Tertiary business

A

Providing services to consumers and businesses

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7
Q

Inputs

A

Capital
Enterprise
Land
Labour

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8
Q

Added value

A

The process of increasing the worth of products by modifying them

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9
Q

Added value equation

A

Selling price - cost of bought in materials, components and services

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10
Q

Mission statement

A

Sets out a businesses overall purpose to direct and stimulate the entire organisation

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11
Q

Aims

A

Long-term plans of a business from which its corporate objectives are derived

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12
Q

Objectives

A

Medium to long-term goals established to coordinate the business

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13
Q

SMART objectives

A 
To be effective, objectives should be SMART
Specific
Measurable
Agreed
Realistic
Time specific
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14
Q

Common business objectives

A 
Profits and Profit Maximisation
Growth
Survival 
Cash Flow
Social and Ethical
Diversification
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15
Q

Profit

A

Measures the extent to which revenues from selling a product exceed the costs incurred from producing it over a time period

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16
Q

Cash flow

A

The amount of money moving into and out of a business,mover a time period

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17
Q

Stakeholders

A

Individuals or groups that have an interest in a business (eg, employees, shareholders, customers, local residents)

18
Q

Revenues

A

The earnings or income generated by a firm as a result of its trading activities

19
Q

Fixed costs

A

Costs that do not alter when the business alters it’s level of output (eg, rent, wages)

20
Q

Variable costs

A

Alter directly with the businesses level of outputs (eg, fuel costs, raw materials)

21
Q

Total costs

A

Fixed costs + variable costs

22
Q

Unit costs/Average costs

A

Total costs divided by level of production or output to give the cost of producing a single unit

23
Q

What is a good?

A

A physical product

24
Q

Private sector

A

When a business is owned by shareholders or by private individuals

25
Q

Sole trader

A

A business owned and managed by one person, but may employ other people

26
Q

Advantages of sole trader

A

Making key decisions can be motivating
Decisions can be made quickly so can react rapidly to changes in market
Have direct contact with market
Straightforward to setup

27
Q

Disadvantages of sole trader

A

Sources of finance are limited
Rely heavily on ability of making decisions
Entail long hours, limited holiday and stress
Unlimited liability

28
Q

Unlimited liability

A

An individual or group of individuals are personally responsible for the actions of their business. This means they could lose all their assets if the business had financial problems

29
Q

Company

A

A business or organisation that has its own identity and has limited liability

30
Q

Incorporation

A

The process of establishing a business as a separate legal identity that allows it to benefit from limited liability

31
Q

Shareholder

A

An investor in and one of the owners of a company

32
Q

Limited liability

A

Means in the event of financial difficulties the personal belongings of shareholders are safe

33
Q

Dividends

A

A share in the profits of a company that are distributed to the holders of certain types of company shares

34
Q

Public sector business

A

Organisations that are owned by national and local government

35
Q

Market capitalisation

A

Total value of issued shares of a PLC

36
Q

Takeover

A

When a company acquires control of another company by buying more than 50% of its shares

37
Q

Privatisation

A

The process under which the state sells businesses that are previously owned and managed to private individuals and businesses

38
Q

External factors influencing a business

A

Demographics
Economic
Ethics/environment
Market conditions

39
Q

Fair trade

A

A social movement that exists to promote improved trading terms and living conditions for producers of products in less developed countries

40
Q

Sustainable production

A

When the supply of a product does not impose costs on a future generations by, for example, depleting non-renewable resources

Business (4 decks)

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