Chapter 1- Business Environments – part1

These flashcards review key concepts from Chapter 1: Business Environments, covering sectors, economic divisions, success factors, and business objectives.

Why is money considered essential in the modern world?

Because it is required to obtain necessities such as food, clothing, education, and most recreational activities.

In what two main ways can a person enter the business world to earn money?

By finding a job in an existing business or by creating a new business as an entrepreneur.

What is the primary funding source for public-sector businesses?

Taxes collected from individuals and private-sector businesses.

Who owns businesses that operate in the public sector?

The government.

Give three examples of collective goods provided by the public sector.

Government hospitals, public schools, and the police force.

What is the main aim of private-sector businesses?

To satisfy customers’ needs and wants while generating a profit.

How do private-sector businesses typically obtain the capital they need?

Through the entrepreneur’s own money or by borrowing from financial institutions.

Why is competition important in the private sector?

It forces businesses to offer the best value for money to succeed.

Name the two sub-sectors of the private sector.

Formal sector and informal sector.

What key legal requirement distinguishes formal-sector businesses from informal-sector businesses?

Formal-sector businesses pay taxes and comply with government regulations; informal-sector businesses do not.

How do formal-sector businesses contribute to the economy?

They pay taxes and add to the country’s Gross Domestic Product (GDP).

Where are formal-sector businesses typically located?

At fixed premises such as shopping malls, petrol stations, or schools.

Why are informal-sector businesses excluded from GDP calculations?

Because they do not pay taxes and are not officially recorded by the government.

List two common examples of informal-sector activities.

Hawking goods at traffic lights and making beaded jewellery or carved wooden animals.

Give two indirect ways the informal sector contributes to the formal economy.

Buying raw materials from formal businesses and potentially growing into formal-sector enterprises.

Which economic sector involves extracting raw materials from the earth?

The primary sector.

What type of activities occur in the secondary sector?

Manufacturing and construction that turn raw materials into finished goods.

Where are goods and services sold within the economic-sector model?

The tertiary sector.

Which sector focuses on knowledge-based activities such as scientific research and consulting?

The quaternary sector.

Decisions at the highest levels of government and large organizations belong to which sector?

The quinary sector.

Define the term “business” as used in the notes.

Specific processes that add value to an economy by providing goods and services and creating employment.

Name the four factors of production a successful business must use sustainably.

Raw materials, financial capital, human capital, and entrepreneurship.

State two characteristics of a successful business related to leadership and customers.

Strong leadership and the ability to satisfy the needs and wants of its target market.

Why is transparency important for corporate citizenship?

Because stakeholders expect businesses to be responsible, accountable, and open about their actions.

What is the long-term dream of a business called?

Its vision.

How does a mission statement differ from a vision?

The mission explains what must be done now to achieve the long-term vision.

What do feasibility studies evaluate?

Whether an idea or opportunity is workable and can be practically implemented.

What does viability focus on in a business idea?

Whether it can generate sustainable profits and a return on investment.

Define productivity in a business context.

Achieving maximum output from minimum input.

Define efficiency in a business context.

Satisfying customers’ needs at the right time, price, and place.

List four bases on which a competitive advantage can be built.

Quality, price, technology use, and service levels (location and resource use are also acceptable).

Why is employee development crucial for maintaining competitive advantage?

Skilled, motivated employees increase productivity and drive innovation.

Give two ways managers can foster functional relationships among employees.

Encouraging constructive communication and training employees to be tolerant of differences.

How can technological development help a business gain customer loyalty?

By providing quick, user-friendly access such as online shopping platforms and mobile apps.

Explain why social responsibility is particularly important in South Africa.

Because of historical inequalities, high unemployment, and health challenges like HIV/AIDS, businesses can help uplift communities and improve living standards.