UNIT 1 - understanding nature and purpose of business

Question 1

bs exist in many shapes and sizes and for different

Answer 1

purposes

Question 2

wht is an important reason why businessses exist

Answer 2

the opportunity for making profit

Question 3

but the opppportunity for making profit is not the only reasons why

Answer 3

businesses exist

Question 4

Uwhat are the 3 other reasons businesses can exist

Answer 4

provide goods and services

develop a good idea

provide help and support for others - most notably charities that raise funds in various ways

Question 5

in terms of providing goods and services this includes

Answer 5

pubic services e.g nhs /polic / fire services

Question 6

developing a good idea is also known as

Answer 6

enterprise

Question 7

charities raise funds in various ways to help and support

Answer 7

the lives of others

Question 8

mission statement aka

Answer 8

vsion statment

Question 9

what is missiona statemnt

Answer 9

broad qualitative descripion about the organisation so stkh understand its intent

Question 10

give example of nike mission statement

Answer 10

bring inspiration and innovation to overy athelete in the world

Question 11

why do we have mission satemt

2 things

Answer 11

bring focus and meaning to business

act as a guide when making critical descisons that may affect direction of a business

Question 12

when looking at objectives of a business its important to rember they are quite

Answer 12

complex and will vary according to circumnstances and type of organisaton

Question 13

state the 5 common business objectives

Answer 13

profit
growht
survival
cashflow
social/ethical objectives

Question 14

over recent years global nature of business and intense competition in many markets mean 2 other obj become increasingly importtant what are these

Answer 14

customer service
CSR

Question 15

each functional area set objectives that should

Answer 15

conrtibute to the business achieving its overall objectives

Question 16

what are corp obj/corporate iams

Answer 16

goals that help a business achieve its mission

Question 17

corp obj drive what objectives

Answer 17

functional obj

Question 18

what are functional obj

Answer 18

objectives of eahc department , more detailed and specific to eahc dpt

Question 19

why do we have all these obj

Answer 19

can be a measure of success - success in mkting dpt needs a functional obj and cant get this from geenric mission statement

allows coord between managment and employees therfore giveing focus and direction to employees and maangers to help broader def of mission statemtn

Question 20

mission statement outlines bigger picture nd generally establishes teh

Answer 20

core values and principles that help guide and conduct action of staff

Question 21

how do objectives differ from mission statement

Answer 21

theyre actionable and measurable

Question 22

without missio statemtn objectives have no

Answer 22

direction

Question 23

but without objectives the mission statement is

Answer 23

unachievable

Question 24

in addition to being actionable and measurable objectives hould have what charactersitics

Answer 24

smart characteristics

Question 25

outline SMART ojective

Answer 25

Specific Measurable Achievable Relasitic Time bound

Question 26

what does Specific mean

Answer 26

objective must be clear precise and well defined

Question 27

what does Measurable mean

Answer 27

must be possible to know when an objective has been completed

Question 28

what does Achievable mean

Answer 28

objectives must be within capabialities and have sufficient resources

Question 29

what does realistic mean

Answer 29

an objective must be challenign but possible o achieve given capabilities and resources

Question 30

what does time based mean

Answer 30

must be a dealdine to work to

Question 31

give an exmaple of smart objective for coffe shop and say why smart

Answer 31

increase mkt share by 2.5% a year for the next 5 years got clearly defined and measurable goal

Question 32

business objectives arent all about making

Answer 32

profit

Question 33

business objectives are lieklt to

Answer 33

change over time

Question 34

the relative importance of different objectives is likely to

Answer 34

vary over time depending on circumntances

Question 35

the relaive importance of diff objectives e.g in difficult economic times what is liekly to be more important

Answer 35

survival tha profit or enviro targets

Question 36

relative impoartace of diff objectives i in booming economt what objective will be more important

Answer 36

profit growth

Question 37

why do business set obj reason 1 - the fact theyre measurable ....

Answer 37

the fact theyre measurable and time based means they can be used to evaluate performace * if good business can reward them *if bad implement training or diff methods of approaching task

Question 38

why do bs set objectives reason2 - if theyre realistic and achievable ...

Answer 38

if theyre realistic and achievable they can provide motivation for those responsible which will lead to increased productivity

Question 39

why do bs set objectives reason 3 objectives should be specific ....

Answer 39

should be specific and as a result will give meaning to plannign and ensure that a busines remains focused on its mission

Question 40

link - mission and objectives of a business can be a driver of decision making and strategy but importance is likely to

Answer 40

vary according o the opportunities and threats the business faces

Question 41

profit

Answer 41

Money remaining once all costs deducted from revenue

Question 42

profit canbe thought of as reward

Answer 42

owners/sh of a business recieve for taking risk of investing in business

Question 43

as profit is a reward it provides an incentive for

Answer 43

setting up in business

Question 44

revenue

Answer 44

moeny recieed from sales

Question 45

revenue

Answer 45

selling price x quanity sold

Question 46

variable costs

Answer 46

costs that vary *directly* with output

Question 47

what are fixed costs

Answer 47

costs that dont vary as a result of changes in level of output

Question 48

fixed costs dont chang ein teh

Answer 48

short term

Question 49

total costs

Answer 49

fixed costs and variable costs

Question 50

total costs represent the

Answer 50

total costs of production in a given time period

Question 51

profit

Answer 51

TR-TC

Question 52

Why is profit imprortant 4

Answer 52

reward for taking on risks motivate employees sign of financial stability indicator of sucess shareholders

Question 53

explain profti importance in terms of reward for taking risks

Answer 53

owner takes risk as an entrepreneur and look for reward for profit which provides an incentive to set up business in terms of sh they take risk which helps with expansino and D2D

Question 54

explain profit importanc in terms of motivating employees

Answer 54

you can profit share this can increase motivation , productivity and output and herfore sales which shoudl lead to more profit have to be profitable to pay dividend and bs needs o grow in future and one of best sources of finance is retained profit as cheap but takes a long time to build up depedns on dividedns shareholders expecting and how st as opposed to lt they are

Question 55

explain retined profits in terms of shareholders and some it depends and eval points

Answer 55

have to be profitable to pay dividend and bs needs o grow in future and one of best sources of finance is retained profit as cheap but takes a long time to build up depedns on dividedns shareholders expecting and how st as opposed to lt they are

Question 56

explain importance of profit as a sign of financial stability

Answer 56

if got profit and lots suppleirs are more likely to trust the bs and therfore extends trade credit this improves cashflow and working capital furthermore banks re more liekly to five loan

Question 57

explain profit importance in terms of indicator of success

Answer 57

if its primary objective it shows the bs is achievinvg it