1.1 What Is A Busienss Flashcards
(20 cards)
Devine a ‘business’
= a decision-making organisation
= involved in the production of goods and/or services to satisfy the needs and wants of individuals & societies
= aim = create value and is usually rewarded with profit in return.
Why do businesses exist ?
- Combine human, physical, and financial resources to produce goods & services
- Satisfy consumer needs and wants
- Add value to resources by transforming inputs into outputs
- Earn profit (for-profit businesses) or achieve a social goal (non-profits)
What are the 4 factors of production
1) land (physical resources)
2) labour (Human Resources)
3) capital
4) entrepeneurship
Define + state examples of the factor of production: LAND
Examples: water, minerals, forests, farmland. = all natural resources used in the production of g.&.s., such as raw materials, energy sources, and land space.
Define the factor of production: LABOUR
= human input—both physical & mental—in the production process
Define factor of production CAPiTAL + state examples
Examples: tools, machines, vehicles, infrastructure. = non-natural goods (man-made resources) used to produce other products, such as tools, machinery, and infrastructure.
Define factor of production: ENTREPRENEURSHIP
= ability to organise the factors of production + take risks + and innovate in order to create & run a business
State the 4 functional areas of a business
1) Human Resources
2) finance & accounts
3) marketing
4) operations management (production)
What does the functional area HUMAN RESOURCES do?
Manages the workforce through recruitment, training, appraisal, and dismissal.
Ensures legal compliance (e.g., wage laws, working conditions, anti-discrimination).
What does the functional area FINANCE & ACCOUNTS DO ?
Manages the organisation’s money and prepares final accounts.
Responsible for budgeting, cost control, and sourcing finance for business needs.
Role of functional area MARKETING
Identifies and satisfies customer needs profitably.
Key activities:
Market research
Pricing decisions
Promotion strategies
Product distribution (place)
Role of functional area OPERATIONS MANAGEMENT
Ensures goods/services are produced efficiently and meet quality standards.
Involves resource allocation, production planning, stock control, and logistics.
What are the 4 economic sectors of industry?
Primary sector
Secondary sector
Tertiary sector
Quaternary sector
Define primary sector
- business activity that involves the extraction of natural resources from the Earth
- includes activities such as farming, fishing, forestry, and mining
- this sector tends to dominate in less economically developed countries due to reliance on natural resources
Define secondary sector
Examples: factories, construction.
- business activity involved in the manufacturing or construction of finished or semi-finished goods
- transforms raw materials from the primary sector into products for sale or further processing
- plays a key role in industrialisation and contributes significantly to employment and GDP in emerging economies
Define tertiary sector
- business activity that provides a product to customers
- includes services like banking & education
- sector = the dominant GDP earner for the economy in economically developed countries
Define quaternary sector
= knowledge-based activities (including information technology, R&D & consultancy services)
This sector provides expertise, advice, and specialised skills to other businesses or industries.
Define an economic sector
• A broad category of business activity based on the stage of production a firm operates in.
• It classifies economic activity into sectors such as primary, secondary, tertiary, and quaternary based on the type of output produced.
Define ‘functional area’
• A specific department within a business responsible for carrying out particular tasks to meet organizational objectives.
• Examples include marketing, finance, human resources, and operations, each contributing to the business’s overall strategy.
Define ‘factor of production’
• resources used in the production of goods and services, classified into land, labour, capital, and entrepreneurship.
• Each factor plays a vital role: land provides natural resources, labour supplies human effort, capital offers tools and machinery, and entrepreneurship organises the other factors and takes risks.
