3.1.1 Flashcards
(18 cards)
Why do businesses exist?
- they create employment
- they create income
-they create new products and services
-they can enhance a countrys reputation
primary industry
agriculture, forestry, fishing, mining, and quarrying, oil and gas extraction
secondary industry
manufacturing, construction and the supply of electricity, gas and water
tertiary industry
the supply of services, for example, hotels, catering, transport, education and health
what is a mission statement?
it sets out a business’s overall purpose to direct and stimulate the entire organisation
what do mission statements focus on?
- the organisations values
- non financial goals it may pursue
- the benefits of the business to the community
- how consumers are to be satisfied
what are business aims?
aims are long term plans of the business from which its corporate objectives are derived
what are business objectives?
they are medium to long term targets established to coordinate a business
examples of business objectives
- profits and profit maximisation
- growth
- survival
- cash flow
- social and ethical objectives
- diversification
why do businesses set objectives?
- managers can ensure that everyone is working towards the same overall target
- employees may be more motivated
- the success of a business’s plans can be reviewed
revenue formula
quantity sold x selling price
profit formula
total revenue - total costs
what is ordinary share capital?
how much you raise by selling a share
average costs formula
total costs/total output
what ate fixed costs?
- costs that do not change with output e.g. salaries, rent
what are variable costs?
- costs that change with output
- e.g. wages, raw materials
what are semi-variable costs?
costs that have both fixed and variable elements- e.g. transport costs
