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AA IB Business HL > Unit 1 - Introduction to Business Management > Flashcards

Unit 1 - Introduction to Business Management Flashcards

(108 cards)

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1
Q

What is the primary purpose of business activity?

A

The primary purpose of business activity is to produce goods or services that satisfy a need or demand in the market.

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2
Q

Define the term goods.

A

Goods are tangible physical items capable of being stored, such as cars or gaming consoles.

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3
Q

What is labour intensive production?

A

Labour intensive production is the predominant use of physical labour in the manufacture of goods or services.

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4
Q

What is the transformation process?

A

The transformation process is where businesses take inputs and process them to produce outputs that customers want to buy.

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5
Q

What are services?

A

Services are intangible, cannot be stored and are provided to customers when they are needed, such as insurance or hairdressing.

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6
Q

What are the four main types of resource inputs in business?

A

The four main types of resource inputs in business are financial, human, physical and enterprise.

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7
Q

Define capital intensive production.

A

Capital intensive production involves the predominant use of machinery in the manufacture of goods or services.

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8
Q

What are the four main sectors of industry?

A

The four main sectors of industry are primary, secondary, tertiary, and quaternary.

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9
Q

What is the chain of production?

A

The chain of production is the series of steps taken to turn raw materials into a finished product that can be marketed and sold.

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10
Q

What is meant by sectoral change?

A

Sectoral change occurs when large numbers of firms change their sector of operation as the economy in which they are based grows and develops.

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11
Q

What is the digital service economy?

A

The digital service economy is the provision of services through online platforms, often replacing traditional brick-and-mortar businesses.

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12
Q

Define the term entrepreneur.

A

An entrepreneur is a person who is willing and able to take risks in pursuing a business idea or invention.

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13
Q

What are the three main roles of entrepreneurs?

A

Entrepreneurs organise resources, make business decisions and take risks.

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14
Q

Define the term intrapreneurship.

A

Intrapreneurship is the promotion of entrepreneurial thinking and behaviour within an existing business.

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15
Q

Define the term profit satisficing.

A

Profit satisficing occurs when the entrepreneur is focused on achieving a satisfactory level of profit rather than making as much profit as possible.

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16
Q

What is social entrepreneurship?

A

Social entrepreneurship aims to create enterprises that address a social or environmental problem while also earning a living.

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17
Q

What is working capital?

A

Working capital is the money available to fund day-to-day operations of a business.

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18
Q

What is meant by the term autonomy?

A

Autonomy is the freedom to make one’s own decisions.

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19
Q

What is meant by the term redundancy?

A

Redundancy occurs when workers lose their job because it is no longer required, usually receiving compensation.

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20
Q

Define the term business plan.

A

A business plan is a detailed document that sets out the objectives of a business, its planned strategy and tactics and the expected cash flow and profits, usually over a period of three to ten years.

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20
Q

What is crowdfunding?

A

Crowdfunding is a method of raising finance by asking a large number of people to invest a small amount of money in a business idea, typically via the internet.

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20
Q

What is the most common source of finance for start-up businesses?

A

The most common source of finance for start-up businesses is owner’s funds.

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21
Q

Define the term peer-to-peer lending.

A

Peer-to-peer lending is the practice of lending money to individuals or businesses through online services that match lenders with borrowers.

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22
Q

What is the advantage of initially launching a business on a small scale?

A

Launching a business on a small scale allows an entrepreneur to establish whether the business idea will be well-received and identify the relative popularity of products at an early stage.

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23
What are business angels?
Business angels are wealthy individuals who provide capital for business start-ups or expanding firms, usually in exchange for a proportion of ownership.
24
What are three essential elements that must be determined to successfully launch a business?
Essential elements that must be determined include: *Business and product name *The location of the business *The form of ownership the business will take *Equipment required *Operational format, such as online or bricks-and-mortar
25
State two groups of laws that must be considered when setting up a business.
Laws that must be considered include: *Employment law *Pay and working conditions *Health & Safety law *Consumer protection law *Company formation
26
What are public sector firms?
Public sector firms are owned and controlled by the Government and are usually funded through taxation
27
What are private sector firms?
Private sector firms are owned and controlled by other firms and private individuals, and are usually funded by the owner's capital, borrowing and retained profits.
28
What is the main goal of most public sector firms?
The main goal of most public sector firms is usually to provide a service.
29
Define the term nationalisation.
Nationalisation is when the government takes over ownership of firms that previously operated in the private sector.
30
What are merit goods?
Merit goods are beneficial for society but are not provided in sufficient quantities by private businesses, such as education or health services. Governments often provide them to make up the shortfall.
30
Give an example of a strategically important public sector service.
Examples of strategically important public sector organisations include: *The armed forces *Policing *The judiciary *Health services *Education services
30
What is meant by the term partial privatisation?
Partial privatisation is when the government retains a share in a privatised firm so they can influence decision-making and receive a share of the profits.
31
What is a sole trader?
A sole trader is the single owner of a small business.
32
What is a partnership?
A partnership is formed when two or more people join together to set up and run a business.
33
What is a partnership agreement?
A partnership agreement sets out the rules of the partnership, such as its dissolution, how profits are distributed and the voting rights of partners
34
Define the term limited liability.
Limited liability is a legal protection for the owners of companies, who are only responsible for business debts up to the amount they have invested.
35
What are Articles of Association?
Articles of Association set out the rules of a private limited company, including ownership and voting rights of shareholders.
36
What is an IPO?
An IPO is an Initial Public Offering, where a company transitions from a private limited company to a public limited company by undergoing a stock market flotation
37
What is a public limited company?
A public limited company is a large business that sells shares to the public and is listed on a stock exchange.
38
What is the main benefit of becoming a PLC?
The main benefit of becoming a PLC is access to significant amounts of capital that can be raised very quickly during flotation.
39
Define the term social enterprise.
A social enterprise is a business or organisation that aims to generate revenue as well as achieve social, environmental, or cultural objectives.
40
What is a cooperative?
A cooperative is a social enterprise that is owned and run by and for its members, with the principle that working together increases its power.
41
What is an employee cooperative?
An employee cooperative is owned equally by workers within the business, each of whom has a vote in key decisions.
42
What is a community cooperative?
A community cooperative is owned by members of the local community, who usually contribute time as well as finance to the cooperative.
43
What is a producer cooperative?
A producer cooperative is a group of manufacturers that work together during the production process, often sharing expensive capital equipment.
44
What is a non-profit social enterprise?
A non-profit social enterprise pursues a social or environmental mission while maintaining financial stability - but rarely making a profit or surplus.
45
What is the key difference between charities and NGOs?
Charities are regulated by national Charity Commissions and have a relatively narrow scope of operations, such as education. NGOs can have a broader scope and may not always be registered charities.
46
What are business aims?
Business aims are the long-term aspirations of an organisation.
47
Define SMART objectives.
SMART objectives are targets that are: Specific Measurable Achievable Relevant Time-bound
48
What is a mission statement?
A mission statement outlines the fundamental purpose and reason for an organisation's existence.
49
What is an operational objective?
An operational objective is the day-to-day goal or target of business functions or departments, derived from strategic and tactical objectives.
50
What is a tactical objective?
A tactical objective is a target set by a middle manager intended to direct the work of the functional area they oversee.
51
What is meant by profit maximisation?
Profit maximisation involves maximising the difference between total revenue and total costs.
52
Which common business objective focuses on increasing sales revenue and market share?
Growth as a business objective focuses on increasing sales revenue and market share.
53
Why might a business set a survival objective?
The survival objective focuses on keeping the business going, especially during challenging market conditions or periods of change or crisis.
54
What is meant by protecting shareholder value?
Protecting shareholder value refers to protecting the long-term share price and value of dividends payable to shareholders.
55
What is the profit equation?
Profit = Total Revenue (TR) / Total Cost (TC)
56
What is meant by the term retrenchment?
Retrenchment occurs when a business decides to significantly cut or scale back its activities and, as a result, has to let some staff go.
57
What are two ways firms can maximise profits?
Firms can maximise profits by either increasing sales revenue or decreasing costs.
58
What is Corporate Social Responsibility?
Corporate Social responsibility (CSR) refers to the responsibility of businesses to have a positive impact on society, voluntarily integrating social and environmental concerns into their business operations.
59
What is meant by the term ethics?
Ethics relates to the rights or wrongs of making a decision that are beyond legal requirements
60
What is a corporate responsibility report?
A Corporate Responsibility Report is an annual publication that provides an audit of the steps being taken to meet a company's commitments to a range of stakeholders.
61
Give two examples of socially responsible activities undertaken by businesses?
Examples of socially responsible activities include: *Sustainable sourcing of raw materials *Responsible marketing *Protecting the environment *Responsible customer service
61
Define the term stakeholder.
A stakeholder is an individual or group that affects or is affected by the actions of a business.
61
How might CSR improve employee morale?
CSR can improve employee morale by making workers feel more connected to a business that behaves responsibly.
61
What is greenwashing?
Greenwashing is creating the impression that a business is environmentally friendly when, in fact, it is not.
62
True or False? CSR only benefits the community and not the business.
False. CSR can benefit both the community and the business through improved reputation, added value, and increased employee motivation.
63
What is a vision statement?
A vision statement is a future-focused, aspirational declaration of what the business aims to achieve in the long term.
64
What are internal stakeholders?
Internal stakeholders are individuals or groups inside the business that affect or are affected by the actions of that business.
65
Give two examples of internal stakeholders.
Examples of internal stakeholders include: *Employees *Managers *Directors *Business owners
66
67
What are external stakeholders?
External stakeholders are individuals or groups outside of a business that affect or are affected by the actions of that business.
68
Give two examples of external stakeholders.
Examples of external stakeholders include: *Customers *Shareholders *Suppliers *The local community
69
Give two primary objectives of employees as stakeholders?
The primary objectives of employees as stakeholders include: Earning a living Job security Fair pay A safe working environment
70
What is usually the primary objective of shareholders as stakeholders?
The primary objective of shareholders as stakeholders is usually to maximise the returns on their investment.
71
What is usually the primary objective of shareholders as stakeholders?
The primary objective of shareholders as stakeholders is usually to maximise the returns on their investment.
72
What is a pressure group?
Pressure groups are organisations that seek to influence the policies and actions of businesses or governments.
73
What is stakeholder conflict?
Stakeholder conflict is where different business stakeholder groups have conflicting interests and objectives, leading to tensions, disagreements and challenges.
74
75
Define the term economies of scale.
Economies of scale are efficiencies that lower a business's average costs as its scale of output increases.
76
What is productive efficiency?
Productive efficiency is the point at which a business cannot reduce costs any further as output increases.
77
What are internal economies of scale?
Internal economies of scale are lower average costs achieved as a business grows, due to factors inside the organisation.
78
What are financial economies?
Financial economies are achieved when large firms receive lower interest rates on loans than smaller firms, lowering their cost per unit.
79
What are external economies of scale?
External economies of scale are the lower average costs achieved as the industry grows, due to factors outside of the business.
80
Define management diseconomies.
Management diseconomies occur when managers work more in their own interests than in the interests of the firm, reducing efficiency and increasing average costs.
81
What are communication diseconomies?
Communication diseconomies occur when a firm's organisational structure becomes increasingly complex, resulting in communication difficulties that increase average costs.
82
State two reasons why businesses grow.
Businesses grow for a range of reasons, including to: Increase market share and profitability Benefit from economies of scale Gain stronger market power Access a wider range of finance Achieve entrepreneurial or social aims
83
What is satisficing?
Satisficing is when business owners prioritise an acceptable quality of life over profit maximisation.
84
Define the term niche market.
A niche market is a small, specialised market segment for a particular product or service.
85
What is the difference between profit and profitability?
Profit is the absolute amount of money a company makes. Profitability is a measure of how efficiently a company generates profit relative to its revenue or investment.
86
Define the term product diversification.
Product diversification is the strategy of introducing new products or product lines to reach new markets or customer segments.
87
What is meant by the term organic growth?
Organic growth is internal growth generated by gaining greater market share, product diversification, opening new stores, or international expansion.
88
What is a joint venture?
A joint venture occurs when two businesses join together to share their knowledge, resources, and skills to form a separate business entity for a specified period of time.
89
Define the term franchising.
Franchising is a business model where the rights to operate a business model, use its branding and software tools, and receive support are sold to a smaller business in exchange for ongoing fees.
90
What is a strategic alliance?
A strategic alliance is a cooperative arrangement between two or more companies without the formation of a new legal entity.
91
Define the term franchising.
Franchising is a business model where the rights to operate a business model, use its branding and software tools, and receive support are sold to a smaller business in exchange for ongoing fees.
92
Define the term vertical integration.
Vertical integration involves a firm merging with another in its supply chain.
93
Define the term horizontal integration.
Horizontal integration is a type of external growth where a firm integrates with a competitor in the same industry, e.g. one ice cream manufacturer purchases another.
94
What is the difference between forward and backward vertical integration?
Forward vertical integration involves merging with a firm further forward in the supply chain, such as a customer. Backward vertical integration involves merging with a firm further backward in the supply chain, such as a supplier.
95
Define the term globalisation.
Globalisation is the economic integration of different countries through increasing freedoms in the cross-border movement of people, goods and services, technology and finance.
96
Define the term multinational company.
A multinational company is a business that is registered in one country but has manufacturing operations and/or outlets in different countries.
97
What is meant by the term deregulation?
Deregulation is the reduction or elimination of government regulations in a particular industry.
98
What is a barrier to trade?
A barrier to trade is a government-imposed restriction on the free international exchange of goods or services, such as a tariff or quota.
99
Define the term transfer pricing.
Transfer pricing is a method used by MNCs to report profits away from where they are generated, and in countries with lower tax rates instead.
100
What is tax avoidance?
Tax avoidance is the use of legal methods to minimise tax liabilities.
101
How do customers in host countries benefit from MNCs?
Customers in host countries benefit from MNCs in a range of ways, including: *A wider choice of goods and services *Potentially lower prices *Better quality of goods and services.

AA IB Business HL (5 decks)

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