1: Understanding The Nature And Purpose Of Business

Front 1

Define: Business Objectives

Back 1

Goals that must be achieved in order to realise the stated aims of an organisation, department or individual team. Tend to be medium length. Either corporate or functional objectives.

Front 2

Define: Corporate Objectives

Back 2

Goals of the whole organisation rather than of different elements of the organisation. Are set in order to co-ordinate the activities of, guide the actions of, and give a sense of direction to the whole organisation. Dictated by the mission or corporate aims of the organisation.

Front 3

Define: Functional Objectives

Back 3

Goals of each of the functional areas of the organisation (eg: marketing, finance, operations, HR). Designed to ensure the business achieves its corporate objectives, overall aims or mission. Are set in order to co-ordinate the activities of, guide the actions of, and give a sense of direction to a department.

Front 4

Define: Mission

Back 4

An organisation's aims or long-term intentions.

Front 5

Define: Mission Statement

Back 5

A qualitative statement of an organisation's aims that uses language intended to motivate employees and convince customers and suppliers of their sincerity.

Front 6

Define: Strategy

Back 6

The medium to long-term plans through which a business intends to achieve its objectives.

Front 7

Define: Cash Flow

Back 7

The amounts of money flowing into and out of a business over a period of time.

Front 8

Define: Price

Back 8

The amount paid by a customer to purchase one unit of product.

Front 9

Define: Total Revenue

Back 9

The income received from an organisation's activities.

Total revenue = Price per unit x quantity of units sold.

Front 10

Name 3 names for Total Revenue

Back 10

Income

Revenue

Sales Revenue

Sales Turnover

Turnover

Front 11

Define: Profit

Back 11

The difference between the income of a business and its total costs

Profit = Total revenue - total costs

Front 12

Name 2 reasons why business exist

Back 12

To provide goods and services

To make a profit

Front 13

Name 5 common business objectives (8)

Back 13

* Profit

* Growth

* Survival

* Cash Flow

* Social and Ethical objectives

* Diversification

* Market Standing

* Meeting the needs of other stakeholders

Front 14

Define SMART objectives

Back 14

Specific

Measurable

Achievable

Realistic

Timed

Front 15

Define: Fixed Costs

Back 15

Costs that do not vary directly with output

Front 16

Define: Variable Costs

Back 16

Costs that vary directly with output

Front 17

Define: Total costs

Back 17

The sum of fixed costs and variable costs

Front 18

Define the relationship between sales volume and total revenue

Back 18

Selling price stays the same:

Direct.

If sales volume doubles, total revenue doubles

Front 19

Name 5 fixed costs (7)

Back 19

* Machinery

* Rent

* Salaries

* Administration

* Vehicles

* Marketing

* Lighting and Heating

Front 20

Name 3 variable costs

Back 20

* Raw materials

* Wages of direct labour

* Power

Front 21

Differentiate: wages and salary

Back 21

Wages = paid to those who make the product

Salary = paid to staff not directly involved in production

Front 22

Define the relationship between output and costs

Back 22

Total variable costs change by the same percentage as output.

Eg: If output doubles, variable costs double

Fixed costs stay the same

Front 23

Define the relationship between costs and price

Back 23

Generally, if costs rise, prices rise too.

This is because they try to maintain the profit margin.

Front 24

Name 4 reasons as to why profit is important (6)

Back 24

* As a reward

* As a motivator

* As a measure of success

* As a guide for future investment

* As a source of finance

* Attractive to stakeholders