Chapter 1: Understanding the nature and purpose of business Flashcards
Good
Physical product such as a house or designer suit
Service
Intangible item such as insurance or decorating
Product
More general team which includes goods and services
Gross domestic product (GDP)
Value of a country’s total output of goods and services over a period of time, normally 1 year
Mission statement
Sets out a business’s overall purpose to direct and stimulates the entire organisation
Aims
Long-term plans of a business from which it’s corporate objectives are derived
Objectives
Medium- long term targets established to coordinate the business
Profit
The surplus of total revenue over total costs for a business over a trading period
Cash flow
Movement of cash into and out of a business over a time period
Stakeholders
Individuals or groups who have an interest in a business
Such as employees,customers and local residents
Revenues
Earnings or income generated by a business as a result of its trading activities
Fixed costs
Costs that do not alter when the business alters its level of output
Rent and rates are examples
Variable costs
Alter directly with the businesses level of output
For example fuel costs
Total costs
Are fixed and variable costs added together
Average costs
Total costs of production divided by level of production or output to give the cost of producing a single unit of output
