Unit 1 - What Is Business?

Front 1

The factors of production

Back 1

The resources which are needed in the process of turning inputs into outputs and adding value. Capital, Enterprise, Land, Labour

Front 2

Capital

Back 2

Goods made to produce other goods/services e.g. machinery

Front 3

Enterprise

Back 3

Brings all the factors together to make goods/services

Front 4

Land

Back 4

All the natural resources e.g. coal, oil

Front 5

Labour

Back 5

Physical and mental effort involved in production

Front 6

Types of businesses

Back 6

Primary, secondary, tertiary

Front 7

Primary business

Back 7

Extraction of raw materials from the earth eg farming, fishing, mining

Front 8

Secondary business

Back 8

Transforming or refining raw materials eg materials

Front 9

Tertiary business

Back 9

Service industry eg retail, hotels

Front 10

B2C

Back 10

Business to consumer

Front 11

B2B

Back 11

Business to Business

Front 12

Adding value

Back 12

Process of increasing the worth of resources by modifying them

Added value = selling price - the cost of bought in materials, components and services

Front 13

How can firms add value??

Back 13

-Manufacturing

-Providing service

-Customer service

-Branding

-After-sale service

Front 14

Mission statement

Back 14

A qualitative statement of an organisation

Front 15

Corporate cares

Back 15

The long term statement of what a business wants to achieve

Front 16

Objectives

Back 16

More precise and detailed goals/targets

Front 17

Team objectives

Back 17

Must achieve to meet department objective which will help the company achieve its overall corporate objectives

Front 18

Smart objectives

Back 18

Specific, Measurable, Agreed, Realistic, Time bound

Front 19

Specific

Back 19

Clear and easily defined

Front 20

Measurable

Back 20

Numerical target to reach

Front 21

Agreed

Back 21

Agree on objectives

Front 22

Realistic

Back 22

Achievable and not obstructing other objectives

Front 23

Time bound

Back 23

Based on explicit timescales eg over 3 years

Front 24

Survival

Back 24

During the early years of trading or during difficult economic or market conditions

Front 25

Break even

Back 25

Ensuring all costs are covered by the firms revenue

Front 26

Sales growth and maximisation

Back 26

Maximise and grow sales

Front 27

Growth and expansion

Back 27

Nationally through increasing in store numbers, product lines, workforce, etc. or internationally by operating in more countries

Front 28

Reducing risk

Back 28

By releasing more products or operating in more countries.

Front 29

Diversification

Back 29

Establishing a UP, launching new products in new markets.

Front 30

Front (Term)

Back 30

Back (Definition)

Front 31

Front (Term)

Back 31

Back (Definition)

Front 32

Front (Term)

Back 32

Back (Definition)

Front 33

Front (Term)

Back 33

Back (Definition)

Front 34

Front (Term)

Back 34

Back (Definition)

Front 35

Staff Retention

Back 35

Keeping staff

Front 36

Dividends

Back 36

Share of the profits that go to the shareholders.

Front 37

Revenue

Back 37

(also known as turnover and sales) is the money received from sales of goods or services

Front 38

Formula for revenue

Back 38

Total Revenue = selling price x no. of items sold

Front 39

Fixed costs

Back 39

Costs that do not change directly with the level of the output.

Front 40

Variable costs

Back 40

Costs that change directly with the output. They will increase by a set amount each time.

Front 41

Total costs

Back 41

Fixed costs + Variable costs

Front 42

Profit

Back 42

Difference between total revenue and total costs. The money left over is the profit

Front 43

Profit formula

Back 43

total revenue - total costs

Front 44

Why is profit important?

Back 44

- to pay back debt

- to reinvest in the business (i.e. growth)

- pay staff

- keep business running

- keep owners/ shareholders happy

- help get new shareholders to invest

- help obtain investment and bank loans

- pay taxes

- avoid share price drops and a hostile takeover

Front 45

Contribution

Back 45

Shows how much money is available for fixed costs

Front 46

Contribution formula

Back 46

total revenue - variable costs

Front 47

Different types of business

Back 47

Sole trader, private/public limited company, public/private sector organisations, not for profit organisations.

Front 48

Sole trader

Back 48

a business owned and run by one individual

Front 49

unlimited liability

Back 49

you are responsible for your business's debts

(sole trader and partnership)

Front 50

limited liability

Back 50

the liability of the owners of a business is limited to the fully paid-up value of the share capital

Front 51

Private limited company

Back 51

small to medium-sized business, often run by a family or a small group of people who own it.

its shares cannot be sold without the agreement of the other shareholders

Front 52

Public limited company

Back 52

a business with limited liability, shares are traded on the stock exchange, the company will have 'plc' after its name, shareholders can sell shares to whoever they like.

Front 53

Market capitalisation

Back 53

current share price x number of issued shares

Front 54

Public sector organisation

Back 54

owned and run by the government

provide a service for the general public.

for example, the NHS

Front 55

Private sector organisations

Back 55

owned and run by any individuals - they will set their main objective as profit and sales.

Front 56

non-profit organisations

Back 56

established for particular social, community, environmental, welfare or cultural aims and objectives and not for financial gain.

Front 57

Charities

Back 57

registered not for profit, main aim to raise money for a specific cause e.g. WaterAid

Front 58

Mutuals

Back 58

organisations that are owned by, and run for the benefit of their current (and future) members.

e.g. Nationwide

Front 59

Shareholder

Back 59

owns a share in the organisation in which they have invested