Unit 1 (What is business?) Flashcards
What’s the role of an entrepreneur?
- Spot business opportunities
- Calculated risks (weigh pros and cons)
- Acts as a catalyst for the creation & growth of new business enterprises
What is an aim?
A long term goal
-> shows direction of business
eg. low costs, premium brand, market leader
What is an objective?
A short term goal (usually a year)
-> eg to increase sales by 10% by 2024
What does SMART stand for?
Specific
Measurable
Achievable
Realistic
Time bound
What is the formula for profit?
Profit = Total Revenue - Total Costs
What is shrinkflation?
Manufacturers keep price the same but the product smaller
What is the formula for break-even?
Revenue = Total Costs
What are Social Objectives or CSR?
CSR ‘Corporate Social Responsibility’
-> Objectives to help others
What are some examples of social objectives?
-> Reducing impact on environment
-> Fair wages in developing countries
-> Helping society
-> Compliance with laws eg. pub operating hours so no noise pollution for local community
What are business ethics?
Moral principles, idea that businesses know right from wrong
What is a mission statement?
A qualitative statement of the business’ aim.
What is the public sector?
Part of the economy that is owned and controlled by the government.
What are some examples of organisations in the public sector?
-> Schools
-> NHS/healthcare
-> Military
-> Law Enforcement
What is privatization?
Turning a public business into a private business.
What is a flotation?
Process of converting a private company to a public company through issuing shares to public investors.
Why privatize businesses?
- To improve government finances
- It would improve efficiency of these firms as a result of more competition in the private sector.
- Hopefully encourage people to buy shares
What is nationalisation?
Taking privately controlled companies and putting them under the control of the government.
Why do businesses set objectives?
Business objectives are set in order to co-ordinate business
activity and give a sense of direction to, and guide the
actions of, the organisation as a whole
They act as a focus for decision making and effort, and as a
yardstick against which success or failure can be measured.
Appropriate business objectives encourage a sense of
common purpose among the workforce
This makes it much easier to co-ordinate actions and to
create a team spirit, which in turn is likely to lead to
improvements in efficiency and a more productive and
motivated staff
Why do businesses have a mission statement?
a mission statement is useful for defining
what the business is trying to do in a way that all staff can
understand and identify with.
Formally stating the business mission or main aims of the
business provides a common purpose for everyone to identify
with and work towards, and a collective view that helps to build
team spirit and encourage commitment.
What is market capitalisation?
The total market value of the issued share capital of a company. A measure of size and value of a company.
Formula for market capitalisation
Number of shares sold X share prices TODAY
What is ordinary share capital?
Money raised by a business through new shares.
What is a profit warning?
Warning to investors that profit may be lower or even make a loss
What is the Monetary Policy Committee?
Committee of Bank of England which decides the official interest rate in the UK 8 times a year.
