Studied by 4 people
Advantages to owning a business
-Profit/financial rewards
-be their own boss
-job in area of interest
Public sector
Government owned
Private sector
Privately owned
Aims of a business
-to offer the highest quality goods and services possible
-to give excellent customer service
-to have a great image and reputation
-to offer a diverse range of goods or services
Stakeholder
People who have an interest in a business
Mission statement
Tell you about a Business’ intentions (a written description of the aims of a business)
Corporate objectives
The goals of a business as a whole, will depend upon the size of a business
Functional objectives
The objectives of each department, more detailed than corporate and are specific to each department.
SMART acronym
Specific
Measurable
Agreed
Realistic
Timely
6 different types of objectives
Profit
Growth
Survival
Cash Flow
Social
Ethical
Revenue
The value of sales - it’s sometimes just called sales and can also be called a turnover, it’s affected by both sales volume and price.
Revenue equation
selling price per unit x quantity of units sold
Fixed costs
Don’t change with output e.g rent or cost of new machinery
Variable costs
Rise and fall as output changes e.g hourly wages, raw material costs and packaging costs
Total costs equation
fixed costs + variable costs
Profit equation
total revenue - total costs
Market conditions
A term that describes a wide range of factors affecting the market. These factors influence cost faced by businesses and demand for their products
4 factors affecting the market
-Political
-labour supply
-incomes and economic factors
-seasonal demand and supply
Disposable income
Your earnings after tax, national insurance and pension payment have been deducted
Political factors
1) if demand in the economy is too low, governments try to increase it. They cut taxes so ppl have more to spend and increase their spending in the economy.
2) try reduce demand if it’s too high, they raise taxes so ppl have less money to spend
3) gov influence demand for particular products by using taxes
Perfect competition
Where all firms compete on an equal basis - products are pretty much identical , all charged similar price. Need to keep costs low but remain a high quality.
Oligopoly
Small number of large firms dominate the market and charge similar prices. To get ahead, they’ll focus on market + brand image to increase demand, so marketing costs will be high
Monopoly
Where one business has complete control over its market, no competition. Can increase prices without much concern if demand decreasing, able to keep marketing costs low.
3 different types of competition between businesses
- Perfect competition
-Oligopoly
-Monopoly
