1.1 What is a business? Flashcards
(19 cards)
resource input: Human
the right quality and quantity of people required to make the product or provide the service. All businesses require at least one human input
resource input: physical
the right quality and quantity of materials, machinery and land space required to make the product or service
resource input: finance
the right quantity of cash and other forms of finance required to make the product or service
resource input: entrepreneurship
the least tangible input but crucially important for business. It is the individual that comes up with the business idea and has the determination to turn that idea into a functioning and ideally successful business. Enterprise exists in all types of business, including the everyday (lawn-mowing services, laundry services or brick manufacturing)
Goods
tangible products that we can physically take home
Services
intangible and the buyer does not physically take them home
What are the 4 business functions?
Human resources (HR)
Marketing
Finance and accounts
Production/operations management
role of HR
Ensuring the appropriate people are employed to make the product or service and that they are suitably rewarded for doing so:
- HR department must recruit people, train them, at times dismiss them and determine appropriate compensation
role of marketing
Ensuring that the business offers a product or service that is desired by a sufficient number of people or business for profitable operations
- Marketing department must use appropriate strategies to promote, price, package, and distribute the product or service
role of finance and accounts
Ensuring that appropriate funds are made available to make the product or service
- Finance and accounts department must forecast requirements, keep accurate records, procure financial resources from various providers, and ensure proper payment for goods and services acquired to operate the business
role of production/operations management
Ensuring that appropriate processes are used in order to make the product or service, and that the product or service is of the desired quality
- Production department must control the quantity and flow of stock, determine appropriate methods of production, and in today’s competitive world, look for ways to produce the good or service more efficiently
Primary sector
the part of the economy engaged in extraction (such as of minerals or oil) or production of raw materials (farming, fishing, forestry, raising livestock, and quarrying)
Secondary sector
the part of the economy engaged in the production of finished goods (manufacturing sector of the economy)
Tertiary sector
the part of the economy engaged in the delivery of services, such as banking, healthcare and restaurants
Quaternary sector
the part of the economy engaged in the production, processing and transmission of information. Whereas some consider the quaternary sector a subset of the tertiary sector, other emphasize that quaternary sector activities are based on advanced knowledge and include information technology services, consultancy and research and development
Reasons to start a business
- rewards
- independence
- necessity
- challenge
- interest
- finding a gap
- sharing an idea
Steps for start-ups (of business)
- organizing the basics
- market research
- making business plan
- establishing legal requirements
- raising the finance
- testing the market
capital-intensive (production process)
Processes use large proportion of land or machinery relative to other inputs, especially labour
- Sometimes the land or machinery may have proprietary or special qualities (land rich in a resource, or specialized equipment with unique features)
- Or land and the machinery simply cost a great deal due to the scale of the operation (e.g a car factory)
labour-intensive (production process)
Processes use a large proportion of labour relative to other inputs, especially in relation to land or machinery
- These operations may involve fairly low-skilled workers but can also involve highly skilled employees
