What is a Business? Flashcards
Economy is divided into
2 marks
Different business sectors and the businesses within them exist to provide goods or services.
All businesses have
2 marks
Inputs and outputs
Businesses must add
1 mark
value during production.
Types of business
4 marks
- Small firms; owned/run by 1 self- employed individual.
- Large companies; employ thousands of staff all over the world.
Businesses exist to
1 mark
Provide goods or services
Amount of businesses that start up each year
1 mark
Nearly half a million.
Majority of businesses are
2 marks
Small and operate in the service sector.
Business production and distribution (in order).
5 marks
Inputs, Production, Outputs, Customer, Consumer
Added value increases during
4 marks
Inputs, production, outputs and distribution in a grocery store.
Sell businesses the products they need
1 mark
Suppliers
Buy products
1 mark
Customers
Individual who uses a product
1 mark
Consumer
Example of when a customer and consumer are different people
(3 marks)
Parent (customer) buys a pen for their child (consumer) to use at school.
Sell to their customers in markets
1 mark
Businesses
Examples of Markets
2 marks
- High street shop
- Website
Businesses are likely to be in competition with
1 mark
Other firms offering similar products
Businesses buy the products they need from
2 marks
Suppliers (and then sell to customers)
Suppliers
1 mark
Firms selling products to other businesses.
Consumer
2 marks
The individual who uses the product sold by a business.
Businesses sell to customers in
1 mark
Markets
In order to create goods and services
3 marks
a business buys or hires inputs which are transformed into outputs called products.
These are the goods and services used by consumers.
Examples of Inputs such as
4 marks
Raw materials, equipment, buildings and staff.
These inputs are transformed into
1 mark
Outputs called products.
A business adds value when
2 marks
The selling price of an item produced is higher than the cost of all the resources used to make it.
Example of Adding Value
4 marks
Pair of designer sunglasses sell for £100.
If the cost of the materials, employees, marketing and all other inputs used in making one set of sunglasses is just £20 - £80 worth of value has been added by the firm during production.
3 main types of industry in which firms operate
3 marks
Primary production, secondary production and tertiary production
These sectors (the types of industry in the firm) form
2 marks
A chain of production which provides customers with finished goods or services.
Primary production
2 marks
Involves acquiring raw materials.
Eg - metals and coal have to be mined
Examples of Primary Production
6 marks
Metals and coal are mined, oil drilled from the ground, rubber tapped from trees, foodstuffs farmed and fish trawled (Extractive Production)
Secondary Production
2 marks
The manufacturing and assembly process.
Involves converting raw materials into components and assembling the product.
Example of Secondary Production: Converting raw materials into components
(1 mark)
Making plastics from oil.
Example of Secondary Production: Assembling the product
1 mark
Building houses, bridges and roads.
Tertiary production
2 marks
Refers to the commercial services that support the production and distribution process.
Example of Tertiary Production
3 marks
Insurance, transport, advertising, warehousing and other services such as teaching and health care.
Chain of production shows
1 mark
Interdependence
