3.1.1 Nature and Purpose of business

Define 'Mission'

Overall purpose of the business

Define 'Mission Statement'

The means of communicating to key stakeholders

Define 'Vision'

The Overall aspiration of the business

Define 'Aims'

General statements of what you want to achieve for your business

Define 'Objectives'

Describing precise statements of how you want to achieve the aim/goal.

What is the relationship between Corporate and Functional Objectives?

Functional Objectives are there to Serve the Corporate Objectives

Define 'Corporate Objectives'

Goals of the whole organisation set to co-ordinate the actions of the whole organisation

Define 'Functional Objectives'

Goals of each functional areas of a business (e.g marketing, HR) to achieve corporate objectives

What are some common business objectives?

Profit

Growth

Survival

Cash Flow

Social and Ethical objectives

What are the 2 types of aims a business would have?

Financial

Non-Financial

What are the Financial aims a business could have?

Profit

Market share

Maximise sales

Survival

Return to shareholders

What are the Non-Financial aims a business could have?

Be ethical

Independence

Challenge

Personal satisfaction

What are the 2 types of objectives a business has?

Strategic

Tactical

What are the characteristics of Strategic objectives?

Focused on long-term

Involve higher risk & uncertainty

Likely to involve significant investment / business resources

Stretching & challenging

What are the characteristics of Tactical objectives?

Focused on short-term

Relatively low-risk

Limited resources invested

Realistic & achievable

Why do businesses set objectives?

To co-ordinate business activity, and guide the actions of an organisation

What does SMART stand for?

Specific

Measurable

Achievable

Realistic

Time-Bound

What does the S in SMART stand for?

Specific - clearly and easily defined

What does the M in SMART stand for?

Measurable - Quantifiable (e.g to increase the market share from 15% to 20% within the next 2 years)

What does the A in SMART stand for?

Achievable - The objective should be realistic given the situation and available resources.

What does the R in SMART stand for?

Realistic - achievable and not in conflict with other objectives

What does the T in SMART stand for?

Time-Bound - based on an explicit timescale (e.g to open 20 new stores within the next year)

Define 'Revenue'

Revenue (also known as turnover) is money that businesses make from the sales services and products. It's money you have before you pay a single bill (cost).

Define 'Profit'

Profit is what is left after bills (cost of goods and expenses) have been paid

What is a business?

A business provides goods and services. on a commercial basis to customers.

Why do businesses exist?

Businesses are made to solve problems people generally have. and to serve the general problems.

What do they want to achieve?

To make profit from serving the general public. and growth

Define Goods

Physical services. e.g. consumer electronics

Define Services

Intangible products e.g. insurance, dental services

Why/ how are businesses important to our society?

Creates employment & Develop human capital

Promote Innovation through R&D and new products

Pay taxes on profits earned & collects taxes for Govt

Capital gain - returns on investment

Define 'Start Up'

A start-up is a new business enterprise, formed by one or more entrepreneurs

What is the role of an Entrepreneur?

Spot business opportunities

Risk taking → gain possible future returns

Acts a catalyst for the creation & growth of new business enterprises

What are the Factors of Production?

Labour

Enterprise

Land

Capital

Define Labour (Factors of Production)

All work force in an economy. Each worker has different attributes

Define Enterprise (Factors of Production)

Management and organisation skills → produce profitable g&s

Define Land (Factors of Production)

Any Natural resources extracted from the earth for production

Define Capital (Factors of Production)

The money paid for human-made aids for the production process. (Money, Electronics ect)

What are the Business sectors?

Primary

Secondary

Tertiary

Quaternary

Define the Primary Sector

Extraction of natural resources, e.g Agriculture, Farming

Define the Secondary Sector

Production of finished goods and components, e.g Manufacturing, Food processing, Construction

Define the Tertiary Sector

Providing services to consumers and businesses e.g Shops, Teaching, Taxi services

Define the Quaternary Sector

Providing information and ICT, e.g Science Research, Banking