Business in the real world

What are six purposes of a business?

Producing a good

Providing a service

distribute products

benefit society

fill market gap

fulfil business opertunity

What is a good?

A tangible product which can be stored e.g. cake

What is a service?

An intangible action which is done for a consumer and cannot be stored e.g. hairdresser

What is a want?

Something that we would like but can live without e.g. mobile phone

What is a need?

Something that is necessary to survive e.g. clean water

What are the four factors of production?

Capital→machinery/equipment

Enterprise →ability to use other factors to make the business work (e.g. taking the risk to start a business and the idea needed to create it)

Land →resources/raw materials e.g. wood

Labour →Staff + their skills and qualifications

What is Opportunity Cost?

The cost of missing out on the next best alternative. It represents the missed benefits that could’ve been gained by taking the other decision. e.g. OC of spending time with family instead of working is lost wages.

What is the first business sector?

Primary → production/extraction of raw materials e.g. fishing

What is the second business sector?

Secondary → making/manufacturing goods. Turning raw materials into finished products. e.g. BMW

What is the third business sector?

Tertiary → providing services. e.g. estate agents, restaurants.

What are the four main business functions?

HR, Marketing, Operations and Finance

What is the definition of enterprise?

Finding new opportunities an taking advantage of them for profits.(or to achieve other business goals)

What is the definition of an entrepreneur?

The person who has the idea and takes the risk of staring a business.

What are four characteristics of an entrepreneur?

Hard working, Willing to take risks, Organised, Innovative (can think of new ideas to keep customers happy/interested)

What are three reasons why an entrepreneur may have started a business?

To be there own boss

Flexible working hours

Interest / Hobby

What are the two types of objectives?

Financial →to do with money/profits e.g. survival, breaking even, certain number of sales

Non-Financial - categorised as →Social objectives, Personal satisfaction, challenge, control, Independence. These are not to do with money.

What are some ways businesses can adapt to technological changes?

Technological change →Have to update advertising methods, production equipment or e-commerce (transactions via the internet) / m-commerce (transactions on a mobile device)

What are some financial changes that a business an face?

Interest rates, Inflation, GDP Change (Total value of goods and services produced by a country per year)

What are some legal changes that a business can face?

New legislation e.g. minimum wage increasing labour costs → leads to more income →leads to higher demand for products (especially luxury goods).

What are some ways that environmental expectations can affect a business?

Environmental expectations → consumers may feel strongly about ethical or environmental issues. (can affect how a business produces, packs, transports and sources goods to keep consumers happy).