Flashcards in Understanding Business Deck (71):
Give a description of a good
Goods(or products) are Tangible. This means that they can be seen and touched.
Give a description of a service
Services are Intangible. This means they cannot be seen or touched after they are provided.
Often they are something that an organisation does for its customers.
Give 4 examples of a good.
mars bar, milk, sandwich, burger, newspaper, petrol
Give 4 examples of a service.
bus, train, fish shop, hairdressers, internet, travel agent,bank loan, power station.
What is a Durable Good?
Goods that are not consumed in use and can be used a number of times
What is a Non-Durable Good?
A good which is consumed or only used once
What is a Consumer Good?
Goods bought and used by consumers (private individuals)
What is a Capital Good?
Goods that are used in producing other goods
Consumed by businesses
Describe the difference between Needs and Wants.
A need is something that you require and is essential whereas a want is something you desire to have.
Define what a Buyer is.
Buyers are the people who spend money on goods or services.
Define what a Seller is.
Sellers are people who offer goods or services in exchange for money.
Define what a Consumer is.
Consumers is the person who uses the product.
Define what a Opportunity Cost is.
Whichever cost you chose you lose something in the process whichever thing you lose is called Opportunity Cost.
What is Wealth Creation
Wealth is created by a business by adding value to a product as it goes through the production process.
What are Factors of Production?
To provide us with products(goods and services). Factors of production are the different resources that are combined to produce something.
Explain what C.E.L.L is
C- capital: man-made resources that are needed to make a product
Example: machines, tools and money.
E-enterprise: combining all factors of production by the entrepreneur.
L-land: natural resources of the world
Example: water, air and plants.
L-labour: people employed by a business(the workforce) to make the product
Who have needs and wants?
Who identify the wants and needs of the consumers
Why do businesses produce goods and services to consumers?
To satisfy them with their needs and wants to make a profit
Who buy the goods and services and who produce them?
The consumers buy the goods and services.
The businesses produce the goods and services.
What is Sectors of Industry?
Businesses belong to different sectors of industry.
Some businesses will belong to more than one sector, for example a farmer may harvest his own fruit, bake this fruit cake in a farm shop. In this example the farmer's business would belong to all three sectors
Describe what the Primary sector does in the sectors of industry.
Businesses in this sector take raw materials from the ground
Example: farming, fishing, forestry.
Describe what the Secondary sector does in the Sectors of Industry.
Businesses in this sector use raw materials and make something with them.
Example: manufacturer, builder, cake baker.
Describe what the Tertiary sector does in the Sectors of Industry?
Businesses in this sector provide a service
Example: hairdressers, instructor, hotel.
What 3 categories are in the Sectors of Economy?
Private, Public and Third
What is a sole trader?
They are usually a small business. Normally the sole trader would invest their own money(capital) into the business when starting it up.
What is a partnership?
Usually a small to medium-sized businesses. Each partner brings a share of capital to the business when it is starting up.
What is a Private Limited Company?
To be an owner of a Ltd company you have to buy shares. Normally shareholders would receive a return on the money they have invested in the business called dividend. A Board of Directors manage the company.
Who owns a Public Sector organisation?
The government on behalf of a taxpayer.
What is a Public Sector organisation's aim?
To provide a service to the general public.
What types of organisations are in the Third Sector?
They are non-profit making or social enterprises.
What are Non-Profit Making Organisations?
Charities and voluntary organisations set up to support specific causes.
What are Social Enterprises?
They have a main social or environmental aim rather than to make profit for owners or shareholders but are run in a business-type way.
Name 4 advantages of a sole trader.
•Easy to set up; no legal documents
•Profits kept by owner
•Flexible working hours
•All decisions made by owner and can be made quickly without having to consult other people.
Name 4 disadvantages of a sole trader.
•No one to share the workload with
• Raising large amounts of start up capital can be difficult as businesses might be seen a risk compared to larger, more est. business.
• Unlimited liability
• No discount for bulk buying
Name 4 disadvantages of a partnership.
•Workload, responsibility and decision making shared
• Different partners bring different skills
• Finance raised more easily
• Customers and Suppliers may think less of a risk to deal with
Name 3 advantages of being a Private Ltd. Company.
•Finance raised easily
•Shareholders and Directors bring different experience and skills
Name 3 disadvantages of being a Private Ltd. Conpany
•More complicated to set up because of the legal process involved
•The rules laid down by law have to be followed
•The cost of setting up a Ltd Company can be high
Why is Customer Satisfaction important?
Having a satisfied customer will encourage them to be loyal to the business, which means they will return in future and make more purchases.
What can a business do to make sure every customer is as happy as possible?
•Providing highest possible quality product
•Having trained employees
•Having a customer care strategy
- lets customers know about level of service that will be provided
•Having a customer complaints procedure
-it aims to make sure customer complaints are handled in best possible way
•Having an after-sales service
-gives customers opportunity to ask questions about purchase after being bought
Definition of external factors.
These are things outside the control of a business on how it operates.
Definition of internal factors.
These are things within a business that impact on how it operates.
What does PESTEC stand for?
Explain political influences.
They come from the actions of the government.
If the government change a law the organisation has to follow through with it or else they would be breaking the law.
Explain Economic influences.
Refers to anything that encourages people to spend or not spend money.
Example: when unemployment is high people more careful about what they spend their money on.
Explain Social Influences.
People change their taster very quickly
Example: their taste in clothing can change rapidly so businesses have to try keep up with what customers want.
Explain Technological influences.
Technology is changing rapidly and has a huge impact on business.
If a business doesn't have up-to-date technology then other businesses can out compete them.
Explain Environmental influences.
The weather is an example of an environmental influence.
When it is hot some businesses do better and when it's cold other businesses do better.
Example: when it is cold, a jumper shop sells more jumpers than an ice cream seller will sell ice creams.
Explain Competitive influences.
Businesses don't like competition because they can take away customers and profits.
What are the main 3 internal factor groups?
Financial, Human resources and current technology.
How will a business be affected by financial influences?
By a lack of finance(money).
How will a business be affected by human resources influences?
Employees can affect how a business works by carrying out their work to a poor standard.
Managers have to make decisions and if they make a wrong decision this could affect the business.
How will a business be affected by technology?
If technology is out of date , this might mean that orders can't be processed as quickly as possible or things can go wrong
Businesses who invest lots of money into new technology can often have a competitive edge over their competitors.
What are the 8 stakeholders?
Owners, Shareholders, Employees, Banks, Customers, Suppliers, Local community, Local government
Give an interest and an influence for an owner.
Interest: want business to make profit
Influence: make decisions
Give an interest and an influence of a shareholder.
Interest: want business to make profit
Influence: can invest more or less capital into the business
Give an interest and an influence of an employee.
Interest: want to revive a good rate of pay
Influence: can take industrial action such as a strike
Give an interest and an influence of a bank.
Interest: want loans to be repaid on time.
Influence: can refuse to provide loans.
Give an interest and an influence of customers.
Interest: want a good quality product.
Influence: can buy/not buy products
Give an interest and an influence of a supplier.
Interest: want to receive repeat orders for materials
Influence: may not deliver on time
Give an interest and an influence of a local community.
Interest: want businesses in local area to be socially responsible eg air pollution.
Influence: can make complaints to their MP or local council.
Give an interest and an influence of a local government.
Interest: want businesses to invest money into local area.
Influence: can refuse or grant planning permission.
Describe what the Quaternary sector does in the sectors of industry.
Businesses in this sector provide information and knowledge-based services.
Examples: ICT information, Consultancy and R&D.
State the businesses which are in the private sector.
Business organisations which are in the private sector are Public Limited(plc), Private Limited(Ltd), Multinational and Franchise.
Describe what a Multinational company is.
Multinational corporations have branches(subsidiaries) in more than one country.Most multinationals are limited companies. Their head office is usually based in the home country.
Describe what a Franchise is.
A business which is run by one firm under the name of another.
The main original business is known as the franchiser and the owner of each individual branch is known as the franchisee.
What are the aims of a Franchise?
Grow an increase market share and the franchise model allows this. They also aim to maximise profits and, if they are a PLC, increase their market value too.
What aims do businesses in the private sector wish to achieve?
- To maximise profits.
- To expand/grow.
- To survive.
- To increase market share.
- Social responsibility (eg protect the environment).
- Customer satisfaction.
- To provide quality services.
What aims do businesses in the public sector wish to achieve?
- To be efficient.
- To provide a quality service
- To be cost effective.
- Social responsibility (eg protect the environment or meet the basic needs of its community)
What aims do businesses int he third sector wish to achieve?
- To maximise donations.
- To benefit a community.
- To help those in need.
- To provide services that would otherwise not be available to a community/group.
- To improve an area/community/group of people.