The Purpose & Nature of Businesses Flashcards
All 35 cards in this deck
What is a business?
An organisation that produces goods or provides services to meet the needs and wants of customers.
Name three reasons for starting a business that relate to what it provides for customers.
To produce goods/supply services; to distribute products; to fulfil a business opportunity (gap in the market).
What is meant by starting a business to 'distribute products'?
Setting up a business to move products from producers to the customers who want them, e.g. a delivery or wholesale business.
What is meant by starting a business to 'fulfil a business opportunity'?
Setting up a business to meet a gap in the market — customer demand that no other business is currently meeting.
True or false? Every business is set up in order to make money for its owner.
False. Some businesses are set up to provide a good or service to benefit others, e.g. a charity or social enterprise.
What are goods?
Tangible items that can be physically touched and held, which businesses make and sell for customers to own.
What are services?
Intangible actions that cannot be stored, which businesses provide for customers to access for a period of time.
What are needs?
Things required in order to survive, such as food, water, shelter, warmth and clothing.
What are wants?
Things people would like to have but can survive without, and which are unlimited, e.g. holidays, designer accessories, mobile phones.
True or false? A haircut is classed as a good.
False. A haircut is a service — it is intangible and cannot be stored.
Name the four factors of production.
Land, labour, capital and enterprise.
What is 'land' as a factor of production?
The natural resources a business uses, including the site it occupies and raw materials taken from the earth.
What is 'labour' as a factor of production?
The workforce needed to produce a product or service.
What is 'capital' as a factor of production?
The equipment or machinery used to provide the goods or services.
What is 'enterprise' as a factor of production?
Organising the resources to take a risk or capitalise on a business opportunity — the entrepreneur leading the business.
What is opportunity cost?
Something that is given up in order to do something else when choosing between alternative options.
e.g. spending limited funds on a new van means giving up the advertising campaign.What is the primary sector?
Businesses that extract or grow raw materials from natural resources, e.g. farming, fishing, mining.
What is the secondary sector?
Businesses that manufacture or construct products from raw materials, e.g. a car manufacturer.
What is the tertiary sector?
Businesses that provide services, e.g. retail, banking, hairdressing.
True or false? A bakery that makes and sells its own bread is in the primary sector.
False. Making bread from raw materials is secondary sector work (selling it is tertiary).
True or false? A business can operate in more than one sector of industry.
True. e.g. a farm that grows crops (primary), processes them into jam (secondary) and sells it in its own shop (tertiary).
What is meant by the term 'entrepreneur'?
A person who sets up a business, taking the risk of organising the resources to spot and use a business opportunity.
Give one reason an entrepreneur needs to be hard working.
To get the business known.
Give one reason an entrepreneur needs to be innovative.
To spot opportunities and come up with new ideas.
Give one reason an entrepreneur needs to be organised.
To manage their workload.
Why must an entrepreneur be willing to take risks?
Because they invest their own money and time in a business that may fail.
Give three personal objectives an entrepreneur may have when starting a business.
To be their own boss; to have flexible working hours; to pursue an interest (also: earn more money, dissatisfaction with current job).
True or false? To be an entrepreneur you must invent a completely new product.
False. Many entrepreneurs simply spot a gap in the market or do something better than existing businesses.
Name the four types of change that make the business environment dynamic.
Changes in technology, the economic situation, legislation and environmental expectations.
What is e-commerce?
Any transaction that takes place through the internet.
What is m-commerce?
Any business transaction that takes place through a mobile device such as a phone or tablet.
What is inflation?
The rise in the price of goods and services.
What is legislation?
Laws made by the government, e.g. a rise in the minimum wage increases a business's costs.
Which parts of a business are affected by customers' environmental expectations?
How it produces, packages and transports its products, and the resources it uses.
True or false? Once a business is successful it no longer needs to respond to changes in its environment.
False. The business environment is constantly changing, so businesses must keep adapting to technology, the economy, laws and environmental expectations.