3.1 What is a business?

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  • Created on: 28-12-18 18:10
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  • 3.1 What is a business?
    • Aim - a long term plan from which business objectives are derived
    • Objective - a target which must be achieved in order to realise the stated aim
      • Business objective - these are the measurable targets of how to achieve business aims
        • SMART - a clearly defined target with points measured: specific, measurable, agreed, realistic, time specific
    • Unlimited liability  - when a business's owner is personally responsible for the debts & liability of the business - a characteristic of a sole trader/ partnership
    • Limited liability - shareholders only lose the vale of their investment, not personally liable for the debts - a characteristic for a Plc & Ltd
    • Revenue - the value of sales made during a trading period. It also includes products sold on credit as well as those sold for cash
    • Variable costs - things that change directly with the level of output of sales, such as the raw materials used to make the product
    • Fixed costs - things that do not change with the level of output or sales, such as rent
    • Cost - is usually a monetary valuation of effort, material, resources,  time and utilities consumed, risks incurred, and opportunity forgone in production and delivery of a good or service
    • Price - how much a product is being sold for
    • Shareholder - an individual or an institution that owns a percentage of a company. They invest in companies to make a profit on their investment
    • Interest rate - the cost of borrowing money or the reward for saving
    • Demography - is the study of the human population

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