What is business? Flashcards
(21 cards)
Why do businesses exist?
To provide goods and services, create employment, generate profit, meet needs, and support the economy.
What are common business objectives?
Profit, growth, survival, cash flow, social and ethical goals.
What is the relationship between mission and objectives?
A mission sets out the overall purpose; objectives are specific steps to achieve it.
Why do businesses set objectives?
To provide direction, motivate employees, measure performance, and attract investors.
What is profit and how is it measured?
Profit = Revenue - Total Costs
Revenue = Price × Quantity
Total Costs = Fixed Costs + Variable Costs
What are the main types of business forms?
Sole trader, private limited company (Ltd), public limited company (Plc), public sector, non-profit, social enterprise.
Why might a business change its form?
To access more capital, limit liability, grow, or change ownership structure.
What’s the difference between limited and unlimited liability?
Limited = personal assets protected.
Unlimited = personal assets at risk.
What is ordinary share capital?
Money raised from selling shares; gives shareholders part-ownership and voting rights.
What is market capitalisation?
Share price × number of shares issued.
What are dividends?
Share of profits paid to shareholders.
What is the role of shareholders?
Provide capital, influence decisions, share in profits.
Why do people invest in shares?
For dividends, capital gain, and ownership influence.
What affects share price?
Company performance, market trends, economic conditions, investor confidence.
How does ownership affect mission and objectives?
Sole traders may focus on survival or income; Plc’s may focus on profit and shareholder returns.
What is the external environment in business?
External factors that affect a business’s operations and decisions.
How do competition and market conditions affect costs and demand?
High competition may reduce prices and profits; bad conditions may lower demand.
How does income affect business demand?
Higher income = increased demand; lower income = reduced demand.
How do interest rates impact businesses?
High rates increase costs for borrowing, reducing investment and consumer spending.
How do demographic factors affect businesses?
Aging populations, migration, and family structures influence product demand and workforce supply.
How do environmental issues and fair trade affect business?
Businesses may face higher costs but gain consumer loyalty from ethical practices.
