National 5 Business Management - Understanding Business

These flashcards cover key concepts related to understanding business, including its role in society, business organizations, objectives, customer satisfaction, internal and external factors, and stakeholders.

A __ is something that a human being requires in order to survive, such as food, water, clothing and shelter.

need

A __ is something that a human being can live without but which can make life more enjoyable, such as mobile phones, holidays, Netflix and cars.

want

__ goods are goods that can be used more than once such as mobile phones, fridges/freezers and bicycles.

Durable

__ goods are goods that can only be used once or that only last for a short period of time such as a piece of cake, a single journey bus ticket and a pair of shoes.

Non-durable

The factors of production are __, __, and , which can be remembered using the acronym CELL.

capital, enterprise, land, labour

An entrepreneur will possess many and such as Leadership, Communication, Organisation, Problem-solving, Interpersonal, Determined, Motivated, Risk-taking, Innovative and Confident.

skills, qualities

__ sector industry involves extracting raw materials from the environment or growing raw materials, e.g. mining and farming.

Primary

__ sector industry involves manufacturing products, e.g. factories and house building.

Secondary

__ sector industry involves any business which provides a service, e.g. gyms and hotels.

Tertiary

__ sector organisations are owned by private individuals, controlled by the owners or a board of directors and funded through personal investment, loans and through the profits the business generates.

Private

A __ is a business that is owned and controlled by one person and tend to be small businesses.

sole trader

Sole traders have __ liability, meaning that they are legally responsible for paying the debts of the business.

unlimited

A __ is a type of business that has between 2 and 20 owners are referred to as partners.

partnership

A partnership agreement lays out the terms of the partnership that all partners agree to follow such as how much each partner has agreed to put into the business, for each partner, how the of the business will be split between partners, key and __ of each partner.

capital, salary, profits, roles, responsibilities

The ownership of a __ is divided into small portions known as shares and the owners are known as its shareholders.

private limited company

A private limited company has liability, meaning that the business is seen as a separate legal entity from its shareholders and is controlled by a .

limited, board of directors

__ of the business are divided between shareholders through a process known as dividends, which is a certain amount of profit that is paid for every share that is owned in the business.

Profits

You can identify a private limited company as it will have the letters __ at the end of its name.

LTD

__ sector organisations are owned by the government, controlled by elected officials such as MSPs and councilors and primarily funded through taxation.

Public

Scotland is divided into 32 local authorities, often referred to as __ and each is responsible for providing vital services to the people who live within that area.

councils

__ sector organisations are not owned by any one particular individual and controlled by a board of trustees and usually funded through donations and fundraising activities.

Third

A __ is an organisation that has been set up to help a particular cause and will use donations and money raised from fundraising activities to help their chosen cause.

charity

Voluntary and __ groups usually exist to provide a service to people living within a certain area can are run by volunteers.

community

Social enterprises operates very much like a private sector business except that all __ that is made by a social enterprise is invested into good causes, with a primarily social or environmental aim.

profit

Before setting up a business, an entrepreneur will create a __ that will detail all the key information about the business and how it will operate.

business plan

The first objective of all organizations will be simply to __ which means to keep the business open and trading.

survive

__ is achieved when the money generated from selling goods and services (known as sales revenue) is greater than the costs such as wages and rent of running the business.

Profit

__ is when the business aims to make as much profit as it possibly can, which can be achieved through reducing operating costs or by increasing the price at which it sells its goods and services.

Profit maximisation

__ is where the business aims to sell as many goods and services as it possibly can, using strategies such as advertising, promotional activities and reducing the price of the goods and services.

Sales maximisation

The objective of __ is when an organization aims to treat its customers well by providing excellent customer service and to make them happy with their buying experience from the business.

customer satisfaction

__ is the number of customers in the market who buy from a business, commonly represented with percentages, and an organization might also aim to become the market leader which is the company in the market that has the most customers buying from them.

Market share

__ is about the business aiming to continue coming up with new ideas for products or making improvements to existing ones, which is important in keeping up with changing customer tastes and demands.

Enterprise and innovation

__ is when the business aims to act in ways which are beneficial to the environment, their staff or the communities in which they operate and has become an increasingly important objective for organizations in all three sectors as consumers demand organizations to be more socially responsible.

Corporate social responsibility (CSR)

Government organizations in the public sector will aim to provide to the public such as and __, make best use of the fund, stay within an allocated budget, continually improve the quality of the services offered, cut costs and reduce spending where possible and corporate social responsibility.

vital services, healthcare, education

Organizations in the third sector will aim to help their specified cause, raise as much in funding and donations as possible to help their cause, raise and increase __ of their cause, increase the number of volunteers helping them, provide a service to those in need, survive and be able to continue to help their cause, continually aim to improve the quality of the services offered, corporate social responsibility.

awareness

__ is the way that a business treats and looks after its customers and a business should aim to provide excellent service to a customer before, during and after they make a purchase.

Customer service

Methods of maximizing customer service includes providing to all staff on customer service procedures, using rigorous recruitment and selection methods, gathering using surveys and comment cards, implementing a customer procedure, offering excellent such as helplines, extended warranties and a generous returns po and offering a customer __ which outlines standards for customer service and guidance for staff regarding how to offer good customer service and keeping staff morale and motivation up.

training, customer feedback, complaints procedure, excellent after-sales services, care policy

Benefits of excellent customer service includes increased customer retention, customers will become to the business, and will improve, the business will be able to charge a higher for its products and services, happy customers will recommend the business and fewer unhappy customers will result in fewer which will result in increase in and __.

loyal, image, reputation, price, complaints, sales, profits

__ factors refer to anything within an organization which can affect it, either positively or negatively, and the three main include finance, human resources and current technology.

Internal

A lack of __ may mean that a business is unable to pay its bills, purchase raw materials, take on more staff, grow meaning open up a new store and carry out marketing activities.

finance

__ refers to all of the employees in a workplace and they can provide good or poor customer service, undertake industrial action which can stop production and delay customer orders.

Human resources

Current __ is the technology that a business is currently using, but it may be out-of-date which may lead to money being spent fixing the technology, productivity is slower, which can delay customer orders, production may have to stop if machinery breaks down and staff may get frustrated working with out-of-date software.

technology

__ factors are also known as PESTEC factors, and they include Political, Economic, Social, Technological, Environmental and Competitive.

External

__ factors are laws/legislation passed by the government which can influence business.

Political

__ factors are anything which affects how much people are spending, e.g. unemployment, recession, interest rates and exchange rates of currencies.

Economic

__ factors refer to people's changing values, beliefs and lifestyles, e.g. demographic changes and socio-cultural changes.

Social

__ factors refer to the technology that a business is not currently using and it becoming available.

Technological

__ factors refer to weather conditions, including natural disasters, and the extent to which a business is environmentally friendly.

Environmental

__ factors refer to any activities carried out by businesses which provide similar goods or services to one another

Competitive

A __ is an individual, group or organization that has an interest in the success of a business and who can take actions or make decisions which will influence how the business operates or how successful the business can be.

stakeholder

Stakeholder means what stakeholders wants from the business, or the reason(s) why they want the business to be successful and stakeholder means the actions that stakeholders take which impact on the business.

interest, influence

The internal stakeholders include and and external stakeholders include customers, banks, suppliers, the local community, government and pressure groups.

owner(s)/shareholder(s), employees

The main interest of owners and shareholders is to make a good __ on the money that they have invested into the business and they can influence the business by increasing or decreasing the amount of capital that they invest into the business.

return

The main interests of an employee are to receive a good rate of pay and for the business to provide good working __. They will also want __ security, for example being employed on a permanent contract, and for there to be __ opportunities available for them to progress their career.

conditions, job, promotional

The main interest of customers is __ for money meaning a good quality product or service at a reasonable price and they have a huge level of influence on the success of businesses.

value

The primary interest of banks is that they will want to know that a business will be able to __ any money it has borrowed on time and in full

pay back

If local residents are unhappy with how a business is operating, they can influence the business by and against it, which could be highly damaging to the reputation and image of the business.

protesting, petitioning

Governments will want businesses to be successful as this means it will receive more from them and it has a wide range of influences on businesses and it can raise or lower the rate of .

Corporation Tax, Corporation Tax

The interest of pressure groups is that they want businesses to take actions which __ their cause, as they can influence businesses by holding protests and demonstrations.

support