Business and its Environment (AS & A Level)

This set of flashcards covers the essential concepts related to business and its environment, providing definitions and explanations essential for understanding the material for an AS & A Level exam.

What is the primary purpose of business activity?

To produce goods and services needed by people to meet their basic needs and to earn profit.

What are the four factors of production?

Land, Labour, Capital, and Enterprise.

What is the reward for land as a factor of production?

Rent.

What does intellectual capital refer to?

The intelligence and ability of the workforce to develop new ideas and solutions.

What is division of labour?

The splitting of the production process into different tasks, each performed by a different person or machine.

What is the main production method currently used in businesses due to limited resources?

Specialization or division of labour.

What are consumer goods?

Tangible goods sold to the general public, including durable and non-durable goods.

What are capital goods?

Physical products manufactured specifically to be sold to other industries for the production of other goods and services.

What are the categories of basic human needs?

Social, Physical, Status, and Security.

What is the economic problem regarding needs and wants?

There are unlimited needs and wants but limited resources to satisfy them.

What is opportunity cost?

The next best alternative that is given up when a choice is made.

What does it mean to add value to a product?

Increasing the difference between the cost of buying materials and the price at which the finished goods are sold.

What is a benefit of adding value for a business?

It allows the business to charge more and can lead to increased profitability.

What are the two environments in which a business operates?

Internal environment and external environment.

What is meant by the external environment in business?

Factors outside the business that can affect its operation, such as economic, political, and social factors.

What is one reason why many small businesses fail?

Lack of experience and poor management.

What is an entrepreneur?

An individual who organizes and operates a business, taking on financial risk.

What is the definition of a Social Enterprise?

A business with primarily social objectives that reinvests most of its profits into benefiting society.

What is the triple bottom line in social enterprises?

Economic (Profit), Social (People), and Environmental (Planet).

What do primary sector businesses involve?

Extraction of raw materials from nature, such as mining, fishing, and farming.

What do secondary sector businesses do?

They manufacture and process raw materials into finished goods.

What is the tertiary sector?

Businesses that provide services to assist both primary and secondary sectors.

What is a sole trader?

A business owned by one person who provides permanent finance and has full control.

What is the main feature of a partnership?

A business owned by at least two but no more than twenty people sharing responsibility and profits.

What distinguishes limited companies from sole traders or partnerships?

Limited companies have separate legal identities and limited liability for their shareholders.

What is a public limited company?

A large business that has the right to sell shares to the general public.

What is a co-operative?

An association of people who voluntarily work together to meet common economic, social, and cultural needs.

What is franchising?

An agreement where one party (the franchisor) grants another party (the franchisee) the right to use its trademark and business systems.

What is a joint venture?

An agreement between two or more businesses to work closely together on a project and share resources.

What are strategic alliances?

Agreements between companies to share resources for specific, mutually beneficial projects.

How does the government influence business activity?

Through regulations, laws, and providing infrastructure and services.

What is the role of macroeconomic policies in business?

To regulate economic factors such as inflation, growth, and unemployment that affect businesses.

What are the advantages of a mixed economy?

Combines the benefits of free markets with government regulation to address social needs.

What is stakeholders theory?

The idea that businesses should consider the interests of all stakeholders, not just shareholders.