1.1 Flashcards
Business
An organization that uses resources to produce goods or services that satisfies the needs of consumers
Inputs
Factors of production
Land
Labour
Capital
Entrepreneurship
Outputs
Goods - Tangible products sold by businesses
Services - Non-Tangible - e.g. banking, education
Added Value
Businesses “add value”, whereby the output produced is worth more than the inputs
e.g. car is worth more than the sum of all parts
Primary Sector
Extraction, harvesting and conversion of natural resources for use by firms
Secondary Sector
Manufacture and production of products from raw materials
Tertiary Sector
Service industry, e.g. banking, insurance, education, tourism
Quarternary Sector
businesses involved in intellectual, knowledge-based activities regarding information
e.g. drug research
Entrepreneur
Someone who takes the financial risk and starts and manages a new company in return for profit
Human Resources
Manage personnel - recruitment, training, contracts, motivation etc
Finance and Accounts
Managing the organisation’s money
Marketing
identify and satisfy wants and needs of consumers
Operations Management
purchase resources, quality management and production efficiency
Challenges new businesses face?
financial problems - lack of own start up capital and cash flow (liquidity)
Lack of customers
strong competition
poor marketing - unwanted product, wrong pricing etc
hiring the wrong people and managing them poorly
high production costs
legal problem - e.g. copyright and patent problems, environmental laws
external influences - unforeseen global problems - e.g. a pandemic
Why would someone start a business?
Money
Inheritance - taking over the family business
autonomy - be your own boss - choose hours, salary etc
challenge - personal satisfaction and self-esteem
security - can’t be fired, earn for retirement
hobbies - pursue what you have passion for
