Business F291UNIT 1

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  • Unit 1... What Businesses Do.
    • Decision making in a business.
      • STRATEGIC  - affect long term success of the business.
        • E.G. creation of a new product line.
      • TACTICAL - day-to-day decisions, directly affects individuals and groups.
        • E.G. if a machine breaks the workforce will have to reorganise themselves.
      • All decision making combines the use of measureable information.
        • E.G. historic evidence, knowledge, skills, exoperience of managers and future forecasts and statistics.
      • Been constrained by external forces.
        • Legislation.
        • Changes in the economy.
        • Enviroment.
        • Changes in technology.
    • Opportunity cost - cost of the next best alternative.
    • Goods and Services.
      • COMMERCIAL SERVICES - support businesses to operate.
        • E.G. advertising, banking, insurance and transportation.
      • DIRECT SERVICES - contribute to the needs of the stakeholders.
        • E.G. hairdressers.
    • Adding Value.
      • LAND.
      • LABOUR.
        • FACTORS OF PRODUCTION. ADDS VALUE TO INPUTS.
          • LAND.
          • CAPITAL.
      • ENTERPRISE.
        • FACTORS OF PRODUCTION. ADDS VALUE TO INPUTS.
          • CAPITAL.
      • Meets all the needs of the stakeholders in a profitable way.
      • Value added by brand names, styles, fashions and extra features.
    • EVALUATION.
      • Strategic decisions are only taken by senior management for the long term.
        • Managers ignore market changes
      • Opportunity cost ignored when decision is made quickly.
      • Any decision carries an element of risk and results in the loss of alternative courses of action.

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