The purpose and nature of a business Flashcards
What is the purpose of business?
‘Provide goods and/or services to customers and other businesses’
What are good? Explain with an example
A good is something that you can touch such as a pen.
What is a services? Explain with an example
A service is something intangible (cannot touch) or what someone else does for you, such as a bus journey.
Why do business do this?
To meet our wants and needs.
What is a need?
A need is something you must have to survive (e.g water)
What is a want?
A want is something you would like to have (e.g earrings)
Why start a business?
Be their own boss and make their own decisions
Keep all the profits - potentially earn more than working for someone else
Need a job Prove something to themselves - satisfaction
Interest or hobby Unhappy with current job
Flexible working hours Spotted a business opportunity
They want to help others - provide a service for others
What is an entrepreneur?
An entrepreneur simply is an individual with an idea for a business and starts a business because of this idea.
What is an entrepreneur?
Determination Initiative Drive Self belief
Risk taker Passion Confidence Creative
Perseverance Courage Committed
List the factors of production
Land - where the business is located
Labour - employees employed by the business
Capital - equipment used to provide the goods or services
Enterprise - the skills of people to identify business opportunities and bring together resources to meet these needs
What is meant by opportunity cost? Use an example to help your explanation.
Opportunity cost is the sacrifice we make whenever we decide to do anything - it is the thing you give up.
E.g-
If you are going to have lunch you could have salad or pizza whatever you don’t choose is the opportunity cost.
Identify and describe the three business sectors.
Primary are the first stage of the production process using raw materials - lumberjack
Secondary (manufacturing) are at the second stage of production using primary resources and turning them into goods - car manufacturers
Tertiary (service) is the final stage and provide services - estate agents
What are the four business functions?
Marketing - get the customers to buy the product
Operations - producing the product
Human Resources (HR) - managing people
Finance - managing money
What is the business environment?
The business environment refers to the factors that affect the business but are outside its control.
What could these be?
Technological change
Economic change
Legal change
Environmental expectations
