Topic 1 - What is business ? Flashcards
(45 cards)
What are the functional areas
Marketing
Finance
Operations
Human resources
Why does a business exist
- show people what they can achieve
- be their own boss
- to supply goods and services
- provide employment
- create new good and services to enhance customer lives
- improve a countries reputation
What are some common business objectives
Profit optimisation Profit maximisation Growth Cash flow Survival Social and ethical
What is a business mission
Aim for a business that is settled upon by a boss turned into a motivational statement
What are objectives
The steps that needs to be taken to achieve the aim and mission
What do objectives need to be
S - specific M - measurable A - agreeable R - realistic T - timely
Why do businesses set objectives
- to be able to distribute power
- motivating to have a clear goal
- objectives are the basis for devising a strategy
- know what is needed to be done to achieve mission
What is revenue
sales x sales price
What are fixed costs
Costs that don’t change with output
What are variable costs
Costs that change directly with output
What are total costs
fixed costs + variable costs
What is the primary sector
Business extract or grow raw materials
What is the secondary sector
Manufacture goods using raw materials
What is the tertiary sector
Provides services
What is the order of business objectives
Mission
Corporate aims
Corporate objectives
Functional. team and individual
What is unlimited liability
Finances of the business are inseparable from the owners
Describe the features of a sole trader
- one owner
- small amount of employees
- faces all the burdens alone
- gains from all financial success
- unlimited liability
Disadvantages of sole traders
- limited sources of finance
- long hours of work
- difficulties of running business during periods of ill health
- unlimited liability
- all the responsibility for making business decisions is yours
- harder to retain employees
Describe the key features of a partnership
- two or more people start a business
- unlimited liability
Advantages of sole traders
- They are the easiest type of business to set up.
- The sole trader gets to be their own boss.
- The sole trader decides what to do with the profit.
- It is easy to change the legal structure if circumstances change.
What is limited liability
Legal duty to pay debts remains with the business
Describe the features of a private limited company
- shares cannot be sold without everyone’s agreement
- cannot be listed on the stock market
- ## limited liability
Describe the features of a public limited company
- on the stock exchange
- publish financial accounts in companies house
Advantages of limited companies
- confidence to expand
- can raise capital
