1.1 - Introduction to Business Management - The Nature of Business | Quizlet

What is a business?

An organization that uses resources to produce goods or services that satisfy customer needs.

What is the basic business model?

Inputs (factors of production) → Production process → Outputs (goods or services).

What are outputs?

The goods or services produced by a business.

What are inputs?

The resources used to produce goods or services.

What are the three factors of production?

Land, labor, and capital.

What is land as a factor of production?

Natural resources found on or in the ground that are used in production.

Give examples of land.

Oil, coal, metals, fruit farms, cattle, chickens.

What is labor as a factor of production?

Human effort, skills, and knowledge used in production.

Give examples of labor.

Employees, managers, technicians.

What is capital as a factor of production?

Man-made resources and purchased inputs used to produce goods or services.

Give examples of capital.

Machinery, equipment, tools

What is the difference between goods and services?

Goods are tangible physical products, while services are intangible activities performed for customers.

Give examples of goods.

iPhone, table, car, clothing.

Give examples of services.

Banking, education, hairdressing, transport, insurance.

What is added value?

The amount by which the market value of the output > the total value of the inputs.

How is added value created?

By transforming inputs into outputs that customers value more highly.

Give an example of added value (cars)

A car manufacturer combines metal, rubber, labor, and machinery to produce a car worth more than the value of the individual inputs.

Give another example of added value.

Raw fruit is packaged and sold for more than the combined cost of the fruit and packaging.

What is the primary sector?

The sector that extracts or harvests natural resources.

Give examples of primary sector activities.

Oil drilling, mining, fishing, coffee farming, agriculture.

What is the secondary sector?

The sector that manufactures and processes raw materials into finished goods.

Give examples of secondary sector activities.

Clothing production, smartphone assembly, car manufacturing, food processing.

What is the tertiary sector?

The sector that provides services to customers.

Give examples of tertiary sector activities.

Banking, insurance, tourism, education, transport.

What is the quaternary (knowledge-based) sector?

A sector focused on knowledge, research, information, and innovation.

Give examples of quaternary sector activities.

Research and development (R&D), computing, drug research, scientific research.

Which sector does Apple mainly operate in?

Secondary sector (manufacturing goods such as iPhones).

Which sector does FC Barcelona mainly operate in?

Tertiary sector (providing entertainment services through football matches).

Which sector does FIS (educational institute) operate in?

Tertiary sector (education service; not-for-profit).

Which sector does Oxfam operate in?

Tertiary sector (charitable services; non-profit).

Which sector does RMV (Germany's transport company) operate in?

Tertiary sector (transport services).

What is an entrepreneur?

A person who takes financial risks to start and manage a new business, usually with the aim of making a profit.

What does financial risk mean for an entrepreneur?

They may lose their own invested money and could face additional financial liabilities if the business fails.

Why do entrepreneurs take financial risks?

To create and grow a successful business and earn profits.

Is making a profit usually the goal of entrepreneurs?

Yes, although some businesses are later established as non-profit or social enterprises.

Give an example of a famous entrepreneur.

Elon Musk

Give an example of a local entrepreneur.

A fruit shop owner who invests personal savings to open and manage a shop while accepting the risk of failure.

What are common entrepreneurial traits?

Knowledgeable, open-minded, ambitious, driven ("hungry"), innovative.

Is innovation required to be an entrepreneur?

No. It is helpful but not essential.

Can anyone become an entrepreneur?

Yes. Entrepreneurial traits are advantageous but not mandatory.

What is the main purpose of a business?

To satisfy customer needs by producing goods or services using available resources.

What is the difference between the primary, secondary, tertiary, and quaternary sectors?

Primary: extracts natural resources. Secondary: manufactures goods. Tertiary: provides services. Quaternary: produces knowledge, research, and innovation.