Introduction To Business Flashcards
(34 cards)
What are the four factors of production?
Land, Labour, Capital, Enterprise
What is the purpose of business activity?
To produce goods and services that satisfy customer needs and wants, and to add value by transforming inputs into outputs.
Define ‘Entrepreneur
An individual who takes the risk to start and manage a business with the aim of making a profit.
What is opportunity cost?
The next best alternative forgone when a decision is made.
When you make a decision (e.g., choosing to study instead of going out), you’re giving up the next best thing you could have done with that time or money. That thing you gave up is the opportunity cost.
What are the main business sectors?
Primary: Extraction of raw materials
• Secondary: Manufacturing and processing
• Tertiary: Providing services
What are business objectives?
Goals set by a business, e.g., profit maximization, growth, survival, social/ethical goals.
What is the difference between a mission and an objective?
Mission: The overall purpose or aim of the business.
• Objective: Specific, measurable steps to achieve the mission.
Q: Define stakeholder.
Any individual or group affected by or having an interest in a business
List internal and external stakeholders.
Internal: Employees, managers, owners
• External: Customers, suppliers, community, government, creditors
What is a sole trader?
A business owned and operated by one person, with unlimited liability.
Define partnership
A business owned by 2–20 people who share responsibilities and profits.
What are the two types of limited companies?
Ltd (Private Limited Company)
• Plc (Public Limited Company)
What is limited liability?
Shareholders are only liable for the amount they invested in the business.
What is a franchise?
A legal agreement where one business (franchisee) operates under the brand and systems of another (franchisor).
What is a business plan and why is it important?
A document that outlines the goals, strategies, and financial forecasts of a business. It helps to secure funding and guide decisions.
What is revenue?
Income generated from selling goods or services:
Formula: Revenue = Price × Quantity Sold
What is profit?
The difference between total revenue and total costs.
Formula: Profit = Revenue - Total Costs
What are fixed and variable costs?
Fixed: Do not change with output (e.g., rent)
• Variable: Change with output (e.g., raw materials)
What is market share?
The percentage of total market sales held by one business.
Formula: (Sales of business ÷ Total market sales) × 100
How do businesses measure success?
Profit, market share, growth, survival, customer satisfaction, employee retention.
What is enterprise?
: The process of identifying and acting on new business opportunities and taking the risk to start and grow a business.
What are the four factors of production?
A: Land, Labour, Capital, and Enterprise (organising the others and taking risk)
What are the three sectors of production?
Primary: Extracting raw materials
• Secondary: Manufacturing/processing
• Tertiary: Providing services
What is the difference between private, public, and third sector businesses?
Private: Owned by individuals for profit
• Public: Owned by the government for public benefit
• Third sector: Not-for-profit, e.g., charities
