Unit 1.1 Nature Of Business Activity

Front 1

Business

Back 1

a decision making organization involved in the process of using inputs to produce goods and/or provide services.

Front 2

Inputs

Back 2

the resources

Hint 2

a.k.a labor, raw materials, components, machinery, equipment

Front 3

Outputs

Back 3

provision of final goods and services (=product)

Front 4

Processes

Back 4

turning the inputs into the provision of services or the manufacturing of goods

Front 5

Product

Back 5

refer to both goods and services

Front 6

Goods

Back 6

physical products such as cars, computer, books and food

Front 7

Services

Back 7

intangible products like haircut, bus ride, visit to cinema

Front 8

Why does business exist?

Back 8

to satisfy the needs and wants of people (organizations and governments)

Front 9

Needs

Back 9

basic necessities that a person must have in order to survive aka food, water, warmth, shelter and clothing

Front 10

Wants

Back 10

desires that people have aka things that they would like to have, like larger home, a new cell phone

Hint 10

It is infinite since people want more than they need. (Trshna)

Front 11

Market

Back 11

a place or process whereby buyers(customers) and sellers(businesses) meet to trade

Hint 11

Usually refers to physical outlet, such as a shop, restaurant or shop. But also there are non-physical forms like e-commerce/telemarket

Front 12

Customers

Back 12

people or organization that buy a product

Front 13

Consumers

Back 13

people or organization that actually use the product

Front 14

Consumer goods

Back 14

products that are sold to the general public rather than to other businesses

Front 15

Capital goods

Back 15

products purchased by other business aka computers, machinery, specialist equipment and tools

Front 16

Value added

Back 16

Value of inputs -Value of outputs

Hint 16

allows business to sell its products for more than its production costs (aka making profit)

Front 17

Reasons why customers want to pay prices in excess of the costs

Back 17

Speed and/or quality of service. Prestige associated with the purchase. Feel-good. Perceived value for money. Quality of finished product. Brand image and/or brand loyalty. Taste/design. Inability to purchase it somewhere as cheaper.

Front 18

Opportunity cost

Back 18

the best alternative that is forgone when making a decision

Front 19

Profit

Back 19

positive difference between a firm's total revenue and its total costs per period of time

Hint 19

Total revenue -total cost

Front 20

Revenue

Back 20

inflows of money usually from the sales of products

Front 21

Costs

Back 21

outflows of money to finance production activities

Front 22

Loss

Back 22

when business has higher costs than revenue

Front 23

Function of Profit

Back 23

Incentive to produce. Reward for risk takers. Encourages invention and innovation. Indicator of growth. Source of finance -to fund internal growth of business.

Front 24

Factors of production

Back 24

resources that are used to produce a good/ to provide a service

Front 25

Land

Back 25

all natural resources found on the planet that are available for production

Hint 25

wood, water, fish, crude oil, minerals, metal ores, and physical land

Front 26

Labor

Back 26

physical and mental effort of people used in the production of a good/service

Front 27

Capital

Back 27

non-natural(manufactured) resources that are used in the creation and production of other products

Hint 27

money, buildings, equipment, tools, machinery and vehicles

Front 28

Enterprise

Back 28

management, organization and planning of the other three factors (land, labor, and capital) of production

Front 29

Rent

Back 29

reward for the use of land

Hint 29

Land owners earn rental income for letting out their property

Front 30

Interest

Back 30

return for the use of capital(=non-natural resources)

Front 31

Wages/salaries

Back 31

remuneration for labor in return for physical and mental efforts into production process

Front 32

Income

Back 32

four returns(rent, wages, interest, and profit) for factor inputs

Front 33

Specialization

Back 33

a business concentrate on the production of a particular good/service/a small range of similar products

Hint 33

ex) Italian restaurant specializes in 'pastas and pizzas'

Front 34

Different levels of specialization

Back 34

Individual-people specialize in profession. Department-within organization specialize in various functions. Corporate-most firms specialize in the provision of limited range of products. Regional-certain regions in country specialize. National-countries specialize.

Hint 34

individual level -professors
department -marketing dept, personal dept..
corporate -Hilton specialize in hotel service
regional -Murano specialize in glass making
national -Japan specialize in manufacturing

Front 35

Division of Labor

Back 35

term used to refer to the specialization of people, rather than organizations

Hint 35

defines different aspects of a job and assigns different people to each particular part of work

Front 36

Advantages of specialization

Back 36

Increased productivity. Increased efficiency. Standardization -product specifications being consistently met. Higher profit margins.

Front 37

Disadvantages of specialization

Back 37

Boredom. Inflexibility. A lack of autonomy. Capital costs.

Front 38

Four functional areas of business to operate efficiently

Back 38

Production. Marketing. Finance. Human resources

Front 39

Production Department

Back 39

responsible for the process of converting raw materials into finished goods, ready for delivery to customers. Also process of providing service to customers

Hint 39

ex) extraction of crude oil, construction of roads, and provision of financial services

Front 40

Marketing Department

Back 40

responsible for identifying and satisfying consumer wants and needs -usually in charge of ensuring that the firm's products sell.

Hint 40

Functions of marketing: four P's
price, product, place, promotion

Front 41

Finance Department

Back 41

in charge of managing the organization's money.

Front 42

Human Resources Department

Back 42

responsible for managing the personnel of the organization.

Hint 42

Deals with issues like: workforce planning, recruitment, training, appraisal, pay and benefits, equal opportunities, health and safety maters, and fostering work relations

Front 43

Primary Sector

Back 43

businesses involved with extraction and harvesting of the natural products from the earth (agriculture, mining, and forestry)

Front 44

Secondary Sector

Back 44

businesses involved with raw materials and other resources for the manufacturing or construction of finished and useable products. (air craft manufacturer using steel, construction firms, clothes manufacturers)

Front 45

Tertiary Sector/Service Sector

Back 45

businesses providing services, entertainment, and financial services (retailing, education, travel and tourism, insurance, transport, banking)

Front 46

Gross Domestic Product (GDP)

Back 46

value of the country's output each year

Front 47

Chain of production

Back 47

three sectors of production are linked through this and tracks the stages of an item's production, from the extraction of raw materials used to produce the product all the way through to it being delivered to the consumer.

Hint 47

Final stage of chain of production is getting the product to the consumers

Front 48

Structural Change

Back 48

an economic condition when an industry/market changes how it functions or operates