Miss M Al-Saad Flashcards
(42 cards)
Why do businesses exist
Business exist for multiple reasons
- To provide goods/services that meet needs & wants of their customers
- to achieve a specific social, ethical or environmental purpose
- To create wealth for owners or other stakeholders in the business
What is a mission statement
Mission statements are long term goals that a business strive to achieve
It is a broad statement of why the business exists
Benefits of a good mission statement
- it can be used as a marketing tool to attract customers
- it can be used to motivate employees
- it can attract future shareholders
- As a starting goal for a business
What are objectives
Objectives are specific, short term goals that business want to achieve/maintain in the business
Objectives should be S.M.A.R.T (Specific, measurable, achievable, realistic & time based)
What does S.M.A.R.T mean in a business
Specific
Measurable
Achievable
Realistic
Time based
Objectives can be corporate and functional.
What does corporate mean
Corporate objectives are meant for the whole business
Objectives can be corporate and functional.
What does functional mean
Functional objectives are based in a specific financial department
They may be HR, Operations, Finance, Marketing
What are output levels
Output levels are the number of goods or services produced by a industry, company or economy in a timeframe
What are variable costs
Variable costs are things that change almost immediately depending on the levels of output
What are fixed costs
Fixed costs are costs that don’t immediately change depending on the output levels in the business
Examples of fixed costs
Insurance, Mortgage, Rent, Salaries
Examples of variable costs
Raw materials, Packaging supplies, Commissions, Salaries
What is capital expenditure
Money spent by a business or organisation on acquiring or maintaining fixed assets
What is revenue expenditure
Any money spent in the business to cover short-term expenses
Examples of objectives
To (achieve):
Specific levels of profit
Specific levels of growth
Specific levels of cash flow
Survive as a business
Social and ethical targets
What is revenue
Revenue is the total amount of money a business earns from selling goods or services.
Cash cow products mean?
Products that have high market share in a low growth market
What is a product portfolio
The range of products a business sells (aka the product mix)
Benefits of a wide product portfolio
- more revenue as there’s more products available for purchase
- different products are at different stages of the product life cycle (products in growth/maturity stage can provide cash sales to develop products in the research & introduction stage)
Problem child products mean
Low market share in a high growth market
What is penetration pricing
Charging a low price for new product to secure a place in the market
The goal is to attract customers away from competitors by offering a lower price
Psychological pricing
Charging prices below significant figures.
E.g £9.99, £19.99, £49.99
What is Dynamic pricing
Businesses setting highly flexible prices for products based on current market demands
What is revenue
The value of products sold during a particular period
