Business Studies – Chapter 01: Business

These flashcards cover key definitions, concepts, classifications, evolutionary stages, functions, environmental forces, stakeholders, and examples presented in Chapter 01 of Business Studies on the topic of Business.

What is the definition of a human "need" in business studies?

A physical or mental condition that is essential for human survival, common to all, and limited in nature.

Give three examples of human needs.

Food, clothing, shelter (others include education, health, communication, transport, safety).

How are "wants" defined?

Different ways of satisfying needs

State two characteristics that distinguish wants from needs.

Wants are unlimited and vary from person to person, whereas needs are limited and common to all.

What term describes anything offered to the market that satisfies needs and wants?

Product.

Into what two main categories are products divided?

Goods and services.

Give one key difference between goods and services.

Goods are tangible and can be stored; services are intangible and consumed at the point of delivery.

Define "market" in the context of business.

Any situation where buyers and sellers meet or connect to exchange goods and services.

List the seven core characteristics of a business.

Exchange/selling takes place, transactions of goods/services, continuity, profit motivation, risk, creation of wants, and economic activity.

Why is a single sale of a used scooter not considered a business?

Because business requires continuous transactions over time, not a one-off exchange.

What is the basic goal of most businesses?

To earn profit or benefits that exceed expenses.

Name three common sources of business risk.

Changes in consumer tastes, scarcity of raw materials, and employee strikes (others include technological change, competition, fire/theft, management errors).

Explain "value addition" in business.

The increase in value of resources when their nature is changed during production of goods or services.

State four typical goals a business might pursue besides profit.

Survival, sales maximisation, increasing market share, and enhancing customer satisfaction (others: employee welfare, community welfare, personal satisfaction).

Give two ways business contributes to an economy.

Generating employment and fostering national economic development (others: satisfying changing wants, innovation).

What was the first stage in the historical evolution of business?

The barter system.

What stage of business evolution introduced large-scale industry and support services?

The Industrial Revolution (third stage).

Define electronic commerce (e-commerce).

Buying and selling activities conducted through the internet.

What distinguishes electronic business (e-business) from e-commerce?

E-business covers ALL business activities performed via the internet, not just buying and selling.

List four reasons for the popularity of e-commerce.

Speeding up business activities, reducing operational costs, creating a global market space, and saving customers' time and energy (others: paperless info exchange, improved quality, rising computer literacy).

Name the four key stages of business evolution.

Barter system, use of money, Industrial Revolution, and information era.

Under "nature of production," into what three sectors are businesses classified?

Primary, secondary, and tertiary sectors.

What activities fall under the primary sector?

Extraction of natural resources such as agriculture, forestry, fishing, mining, and quarrying.

Give two examples of secondary-sector activities.

Manufacturing industries and construction industries.

Provide three examples of tertiary-sector services.

Banking, insurance, and electricity/gas provision (others: water distribution, real estate).

How are businesses classified according to ownership?

As private sector businesses or public (government) sector businesses.

What classification is based on a firm's objectives?

Profit-motive businesses vs. non-profit-motive (benefit-motive) businesses.

According to scale, how can businesses be categorised?

Small and medium-scale businesses vs. large-scale businesses.

List the six traditional factors of production (inputs).

Land, labour, capital, entrepreneurship, information, and time (knowledge is sometimes listed separately).

Give two examples of capital in a garment factory.

Sewing machines and distribution vehicles (others: building, materials).

Who is the entrepreneur in a business context?

The individual or entity that combines resources, makes decisions, undertakes risk, and enjoys profits.

What are the six basic functions of a business?

Administration, production (operations), marketing, finance, human resource management, and research & development.

Describe the role of marketing within a business.

Identifying customer needs and wants and satisfying them through product, price, promotion, and distribution activities.

What is included in business "administration" activities?

Maintaining documents, record-keeping, and communication related to business operations.

Name three common research & development (R&D) tasks.

Conducting surveys, researching to improve product quality, and innovating new products.

Who are the primary stakeholders of a business?

Owners/shareholders, managers, employees, creditors, customers, suppliers, potential investors, government, community, and other interested parties.

Why are creditors interested in a business's performance?

To assess the firm's ability to repay loans and protect the safety of their lending.

State two reasons why customers are stakeholders.

They seek quality goods/services and want assurance of the business's continued existence.

How can a business benefit from satisfying employees?

Improved efficiency, retention of skilled staff, and enhanced employee attraction.

Define "business environment."

The totality of internal and external factors that influence a business's operations.

Differentiate between internal and external environment.

Internal factors exist within the organisation (e.g., owners, culture), whereas external factors lie outside it (e.g., customers, regulations).

What is the task (immediate) environment?

Specific external groups that directly affect a firm, such as customers, suppliers, competitors, substitute producers, and potential entrants.

Name five forces in the task environment.

Customers, suppliers, competitors, producers of substitutes, and potential new entrants.

List the eight major macro-environmental forces.

Economic, political, legal, technological, demographic, natural, social & cultural, and global environments.

Give one opportunity and one threat from the demographic environment.

Opportunity: population growth increases demand; Threat: population decline reduces demand.

How can changes in interest rates affect businesses?

Lower interest rates encourage borrowing and create opportunities; higher rates restrict borrowing and pose threats.

What is meant by "organisational culture"?

Shared beliefs, values, norms, and behaviours within an organisation that are passed to future generations.

Explain how technology can create both opportunities and threats.

New inventions can improve efficiency (opportunity) but rapid tech change can render products obsolete (threat).

Why must businesses monitor the legal environment?

To comply with acts, rules, and regulations (e.g., labour laws, consumer protection) and avoid penalties.

What is the global environment in business?

International forces such as trade agreements, global competition, and worldwide regulations that influence a firm.

Provide two examples of natural-environment factors impacting business.

Weather/climate changes and natural disasters (others: discovery of new resources, land location).

Why is analysing the business environment useful to managers?

It helps identify strengths, weaknesses, opportunities, and threats (SWOT) for strategic decision-making.

What is a "substitute product"?

An alternative good or service that can satisfy the same need or want as the firm's offering.

How can suppliers create both opportunities and threats?

On-time quality deliveries create opportunities; delays or poor quality create threats.

Name two internal strengths a business might possess.

Skilled workforce and strong organisational culture (others: abundant resources, effective leadership).

Identify two internal weaknesses.

Outdated technology and insufficient capital (others: poor morale, weak structure).

What does "resource" encompass in internal analysis?

All inputs used to produce goods and services, including land, labour, capital, information, and knowledge.

How can potential new entrants influence an existing business?

They increase competition, which can reduce market share (threat) but may also stimulate innovation (opportunity).

Give two examples of economic indicators relevant to businesses.

Inflation rate and Gross National Product (others: interest rates, employment levels).

Why do governments matter to businesses?

They collect taxes, set regulations, provide infrastructure, and influence employment and economic development.

What impact did the Industrial Revolution have on auxiliary services?

It spurred the growth of banking, transport, insurance, communication, and warehousing.

Which business function is responsible for obtaining and investing funds?

Finance.

What activities are included in human resource management?

Attraction, selection, recruitment, training, welfare, and promotion of employees.

In a bakery's input-output process, name two key pieces of capital.

Ovens and baking trays.

What is the role of "information" as a business input?

Provides designs, market data, and technological knowledge essential for decision-making.

How does "time" function as a resource in production?

It includes working hours of employees and machines, and the time taken to make decisions.

Define "knowledge" in the production context.

Skills, expertise, and patents held by employees and managers that enhance product quality and innovation.

Why might community stakeholders care about a business?

For environmental protection and job opportunities in the local area.

How do macro-environmental forces often affect businesses indirectly?

They influence task-environment forces (e.g., inflation raises supplier prices, impacting the firm).