Business, sectors and objectives, Stakeholders, Integration and Pricing. Flashcards
(34 cards)
What is Profit Maximisation
When you try to make the most profit possible. This is likely to be the aim of the owners and shareholders.
What are the 4 business objectives?
Profit maximisation, Survival, Growth and Providing a service.
What is a Stakeholder?
Everyone who is affected by a business because they have a stake in what the business does.
Who is the most important stakeholder?
The owner
What are internal stakeholders?
Stakeholders that work in the business itself.
What are external stakeholders?
Stakeholders that are outside the business.
What are the three business sectors?
Primary, Secondary and Tertiary
What is the definition of the primary business sector?
The first stage of the production process. Eg. Fishing, mining, farming, and forestry
What is the definition of the secondary business sector?
Manufacturing industries that make a product from raw materials. Eg. Car manufacture and computer manufacture.
What is the definition of the tertiary business sector?
Businesses that provide a service rather than a physical product. Eg. Shops, banking, insurance and hotels
What are the four factors of production?
Land, Labour, Capital and Enterprise.
What grants are available for entrepreneurs?
Government grants and advice grants.
What is diversification integration?
When you take over or merge with another business that in involved in a different business activity.
What is horizontal integration?
When you merge or take over a business that is involved in the same business activity.
What is the trend between price and demand?
As price increases, quantity demand decreases.
What is the trend between price and quantity supplied?
As price increases, quantity supply increases.
What we the 3 ways of distribution?
- Producers -> consumers
- Producers -> sales outlet -> consumers
- Producers -> wholesaler -> sales outlet -> consumers
What is competitor pricing?
When you look at your competitors prices to give you an indication on what you should price your product at.
What is cost-plus pricing?
When you look at your costs before deciding on a price.
When is competitor pricing important?
When you are selling homogenous goods eg. Tennis balls or pencils
When is cost-plus pricing important?
When you are making a product with high costs.
What is penetration pricing?
When you try and penetrate into a market by lowering your price to try and tempt your customers away from competitors.
What is skimming?
When a business introduces a new technical product that is superior to competitors so consumers are willing to pay a premium for the best products. Eg. The tablet market
What is forwards vertical integration?
When you merge or take over your sales outlets.
