Untitled Flashcards Set

Here’s a breakdown of each topic with some essential details:

1. The Nature of Business

• Definition: Business is an organization that provides goods or services to satisfy customer needs and earn profit.

• Purpose: To create value for stakeholders, including owners, employees, customers, and society, by generating profit and contributing to the economy.

2. The Four Business Sectors

• Primary Sector: Involves extraction and harvesting of natural resources (e.g., agriculture, mining).

• Secondary Sector: Focuses on manufacturing and processing (e.g., factories producing cars, clothes).

• Tertiary Sector: Provides services (e.g., retail, banking, healthcare).

• Quaternary Sector: Involves knowledge-based services and technology (e.g., IT, research and development).

3. Entrepreneurship

• Definition: The process of creating and managing a business to achieve a desired objective, typically involving risk-taking.

• Role of Entrepreneurs: Entrepreneurs identify market opportunities, innovate, create jobs, and drive economic growth.

4. Starting Up a Business

• Process: Includes ideation, planning, acquiring funding, legal formalities, and launching operations.

• Challenges: New businesses often face challenges like limited funding, competition, finding the right team, and managing risks.

5. Private & Public Sector Businesses

• Private Sector: Owned and operated by private individuals or groups; aims to earn profit (e.g., Apple, local shops).

• Public Sector: Government-owned organizations aimed at providing public services (e.g., public schools, national healthcare).

6. Types of For-Profit (Commercial) Businesses

• Sole Trader: Owned by one person, easy to set up, but has unlimited liability.

• Partnership: Owned by two or more individuals sharing profits, risks, and liability.

• Corporation: Legally distinct from its owners, with limited liability, often large-scale (e.g., Microsoft).

• Franchise: Allows an individual to operate under an established brand’s name, with certain rules (e.g., McDonald's franchise).

7. Types of For-Profit Social Enterprises

• Cooperative: Owned and operated by members, who share profits equally (e.g., agricultural cooperatives).

• Microfinance Providers: Provide financial services to low-income individuals (e.g., Grameen Bank).

• Public-Private Partnerships (PPPs): Collaboration between government and private sector, often to deliver public services.

8. Types of Non-Profit Social Enterprises

• Non-Governmental Organizations (NGOs): Independent from the government, focus on social or environmental causes (e.g., Amnesty International).

• Charities: Raise funds to support social, medical, or humanitarian issues (e.g., Red Cross).

9. Aims, Objectives, Strategies & Tactics

• Aims: Long-term goals that represent the overall purpose (e.g., “to be the market leader”).

• Objectives: Specific, measurable goals set to achieve aims (e.g., “increase sales by 10% in a year”).

• Strategies: Plans to achieve objectives (e.g., launching a new product line).

• Tactics: Short-term actions to support strategies (e.g., offering discounts).

10. Common Business Objectives

• Profit Maximization: Increasing revenue and minimizing costs.

• Growth: Expanding the business through new locations, products, or market share.

• Survival: Especially important for new or struggling businesses.

• Customer Satisfaction: Ensuring high-quality products and services to retain customers.

• Corporate Social Responsibility (CSR): Acting responsibly towards society and the environment.

11. Corporate Social Responsibility (CSR)

• Definition: A commitment by businesses to contribute positively to society and the environment.

• Examples: Reducing carbon emissions, ethical labor practices, supporting local communities.

12. Internal & External Stakeholders

• Internal Stakeholders: People within the business who are directly affected by its operations.

  • Examples: Employees, managers, owners/shareholders.

  • Role: Employees contribute labor, managers make decisions, owners invest and expect returns.

• External Stakeholders: People or groups outside the business with an interest in its activities.

  • Examples: Customers (who buy products), suppliers (who provide resources), local community, and government.

  • Role: Customers drive sales, suppliers enable production, communities may benefit from job creation, and governments enforce regulations.

13. Stakeholder Conflicts

• Definition: Disputes arise when the interests of stakeholders are incompatible.

• Examples:

  • Owners vs. Employees: Owners may want to minimize wages to increase profits, while employees seek higher wages.

  • Customers vs. Shareholders: Shareholders may push for higher prices to increase profits, but customers prefer low prices.

  • Environmentalists vs. Managers: Environmental groups may oppose certain business practices, like pollution, while managers aim for cost-effective production.