unit 1 Flashcards by Theo Bussetil

why do business exist

create employment (31.2 million people). 4% unemployed. pay income tax, claim less benefits able to purchase more goods (multiplier affect) creates economic growth

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how do businesses help

pay corporation taxes meaning government can help schools and hospitals, create new products and enhance countries reputations for example France and wine

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what do businesses do

provide goods and services such as physical (phones) and intangible (dental service)

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wha are the four benefits of business to society

employment, pays taxes, create wealth, drive innovation to make new and developed things

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what is an entrepreneur

person who sets up a business and takes financial risk

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what is a start up

new business enterprise formed by entrepreneur

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what is the role of an entrepreneur

spots opportunities, takes calculated risks, create growth and develop.

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what is a calculated risk

research that has been done to take a risk and make company better

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what does catalyst mean

think and develop and branch off multiple ideas

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what is the transformation process

input turns into an out put

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example of transformation process

wood turned into desk

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CELL

capital, enterprise, land, labour

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incorporated

legal difference between the business and owner

owners have limited liability

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unincorporated

business is the owner

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what is a small & medium sized enterprise

business with fewer then 250 employees

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what percent of businesses are SMEs

99%

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primary sectors

any business that grow goods or extracts materials from the land (mining, farming, energy extraction)

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secondary sectors

take thee raw materials from the primary sector and turn them into finished goods (manufacturing, food, processing, component assembly)

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tertiary sectors

providing services to consumer and businesses (personal services, retailing, household franchise, teaching)

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quaternary sectors

providing information and ICT (software, financial services, data processing

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what is B2C

business to consumer

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what is a mission

statement of the business aims which describes the purpose of the organisation

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what is a aim

a long term plan from which business objectives are derived

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what is a business objective

the septic intended outcomes of business strategies

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what are the main functions of objectives

clear statement of what needs to be achieved

what are the 4 functions of business

finance, opperations, marketing, HR

how can objectives be used

provide targets, reduce uncertainty, motivate employees

market capitalisation

the value of business

what a share

part ownership of a business

what is dividends

profit split between share holders

equation for reward of shares

div per share/share price x 100

equation of market capitalisation

share price x umber of shares

what is equity finance

finance from shares

CESSPIT

cashflow ethical social survival profit increase turnover

cash flow

money coming in and out of the business

ethical business

morally right (children in companies)

social

benefit groups within society (fair-trade, animal testing)

survival

need to have finance and able to compete (60% companies fail)

profit

financial gain after all costs have been cut from revenue

increase turnover

know as growth - this causes more profit and power but can also lead to failure

SMART objectives

specific measurable achievable relevant time bound

what does smart help with

helps management set effective objectives

specific

state would should be achieved

measurable

possible to determine wether it has been achieved

achievable

objective should be realistic given the circumstances in which it is set

relevat

objectives relevant to people responsible for achieving them

time bound

objectives set with time frame

what is finance needed for

business set-up day to day training growth and development

what personal source of finance is used by entrepreneurs

inheritance cash + investment

internal sources

retained profits working capital

why are personal sources important to a start up

cheap keep more control over business

external sources

issue shares bank loan

benefits of retained profits

cheap flexible don't dilute company

downsides of retained profits

shareholders might prefer dividends high profits could show debt

what are bank loans

longterm finance interested fixed or variable start up provide security for the loan

what are bank overdrafts

short-term finance higher interest rates easier to short

what can influence business objectives

competition market conditions size and legal status social attitudes

types of strategic objectives

focused on long term stretching and challenging higher risk hard to change

types of tactical objectives

focused on short term low risk realistic and achievable easy to change

PESTLE

political economic social technological legal environmental

market conditions

features of markets level of sales sales growth levels of rivals

demand

amount of good and services that are affordable to buy good to see how desirable the market is

income levels

will have an impact on the demand for all goods

what does inferior goods mean

when the demand for goods fall as consumers income rises

what happens when income levels rise

normal and luxury goods sales will rise

what are interest rates

the costs of borrowing money and the return for lending it

how will high interest rates affect consumers

people with loans have less disposable income saving becomes attractive the fall in demand for consumer and capital goods will slow down economic growth

what are demographic factors

age/gender/ethnicity/location

problems with businesses becoming environmentally friendly

becomes much more expensive change in products (plastic bags)

what is fair trade about

ethical better pay for suppliers better working conditions items more expensive

example of businesses using environmental changes to an advantage

M&S saved £135 million

example of businesses that have gone against environmental improvement

BP fined $18 for oil spillage dumped in sea

companies challenged against environmental issues

lego lots of plastic

how did lego improve environmental challenges

joined WWF decrease of 10% in energy use using renewable energy for all factories (wind turbine) using sustainable resources for packaging and plastic

arguments against firms turning environmentally friendly

can change prices, so consumer prices go up change in producing product can't make it efficiently due to restrictions reduce international competition

what is green washing.

making people think your company is. more environmentally friendly then it accurately is