Unit 1.1- Understanding the nature and purpose of business Flashcards
Why do businesses exist?
To satisfy wants and needs, where a need is something essential for survival and a want is something desired to improve life.
What is a good?
a physical product
What is a service?
an intangible item
What is a product?
a more general term which includes goods and services
Why are businesses so important for a country?
Create employment
Create wealth
Create new products
Enhance a country’s reputation
What is a primary business?
Obtains raw materials
What is a secondary business?
uses the raw materials to produce something
What is a tertiary business?
concerned with the supply of services
What is an aim?
long term plans of the business from which its corporate objectives are derived.
What is an objective?
sets out clearly what has to be achieved
What is the equation for Total costs?
FIXED COSTS + VARIABLE COSTS
What is the average cost?
the cost of producing a single unit
What are some common business objectives?
Growth Survival profit and profit maximisation cash flow social and ethical diversification
