Workbook 2 Flashcards
Mission statement
A formal summary of the businesses aims and values
Stakeholder
Anyone inside or outside the company interested in the businesses activities
Shareholder
invests in a company in shares –> owns part of the business
What is an businesses objective?
The aim that a business works towards
Why does a business need to change its objectives over time?
1 - Owner wants to work towards a higher profit
2 - There is a larger market share
3 - They are facing a serious economic problem
Common objectives for a business
- Profit
- Survival
- Growth
- Increase market share
- Quality Goods/Services
- Service to community
Most important objective of a small business
Survival
Social enterprise company’s objectives
1 - Provide jobs and support
2 -To protect the environment
3 - To make profit to invest back into the enterprise
Social enterprise sector
They operate in the private sector
Stakeholders
The objectives of each one is just common sense!
- Owners
- Workers
- Managers
- Customers
- Government
- Community
- Bank
Key objectives of a public sector
Financial - Meet profit targets for the government
Service - Quality goods/Services
Social - Create employment
Why is the public sector not expected to be profitable?
The government fund the businesses using taxes and they want the prices to be low
Multinational company
A company that manufactures goods in 2 or more countries
Host country
The country that a business manufactures in but head quarters isn’t based there
Home country
Head Quarters
Globilisation
Selling or producing products around the world
Fair Trade Agreement
When the primary sector workers get a fair price for their materials that they farmed
Protectionism
Protecting a country by not allowing imports in or taxing imports
Quota
A limit on the number of goods that are imported
Tariff barrier
Taxing imports
Non-Tariff barrier
Putting a physical limit on imports
Exchange rates
The value of one currency in relation to another currency
Currency APPRECIATION
Value of a currency goes up ^
Currency DEPRECIATION
Value of currency goes down v
Going multinational Advantages
- Cheaper labour
- Cheaper resources ( coke in India)
- Avoid tariffs
- Cheaper for customers
- Expanding profit and production
- Expand brand name
- Better customer service
- Spreading the risk
Going multinational Disadvantages
- Economic failure risk
- Affects local competition
- Unskilled employees (training cost)
- Could be more powerful than the government
- Often uses up all the resources in the area
Open Questions
Do a good and bad argument
:) :(
Inflation
The increase in the price of goods and services over time
Unemployment
When people don’t have jobs
Imports
To bring goods into the country
Exports
To send products out of the country
Interest rates
The percentage of money you get paid/charged over a year of saving/borrowing
Disposable income
Money that you can use to buy little things
E.g Wine, shoes, take-away’s, personal items
Direct tax
Tax that comes directly off your pay check to the government
Indirect tax
The price added to goods and services GST that is paid to the government
Trade barrier arguments For
- Helps protect small businesses
- They prevent ‘dumping’ (offloading goods to a country at a lower price)
- Prevents overspecializing so certain skills are still used to make products/services (Plumbers, Welders, Cabinet makers)
Trade barrier arguments Against
- Restricts customer choice
- Prevents business growth
- Protects companies that have no competition and offer poor quality goods
- Other countries will do the same so you can’t export
Business cycle (graph)
USE COMMON SENSE!
How are exchange rates determined?
Most currencies are allowed to float or vary on the foreign market according to the demand and supply of each currency
Working out currencies
Use COMMON SENSE!
