OCR - Introduction to business

Introduction to Business…read more

Unit 1 - Businesses
A purpose of a business is to create wealth and prosperity (employment,
health, education)
Opportunity costs are costs the business cannot goes without
Risk Averse- business that stay the same and earn the same without
changing
Strategic decisions plot the course of the business
Tactical decisions carry out tasks to meet strategic
Goods and services link in together
Strategic is higher up in a business as there is more things to control
Adding Value ­ any method that adds value to inputs to make a profit
Capital intensive ­ is mostly machines doing the work
Labour intensive ­ needs lots of people
Factors of production ­
Land
Capital
Enterprise
Labour
Decisions are based on ­
Risk
Opportunity cost
Factors of production…read more

Unit 2 ­ sources of finance
Cashflow is the money in and out of the business
Cash flow forecast tells you the expected flows of cash, if not done
the business will fail
You need money for starting up the business and then fro day ­ to
day running
Internal ­ profits, Assets, debtors
External- loans/overdrafts/share capital
Internal External
Reduces Costs Outside Investments
(venture capitalists)
Does not have any extra Trade credit boosts day to
cost day finances
No need to borrow extra Only borrow when you
need to with overdraft
Internal External
Short term solution Can be reluctant to trade
Constrain the business Loose control
Limited as only profit Expensive ­ interest rates…read more

Unit 3 ­ Human Resources
It is an expensive process so must be done
correctly
Training =) Training = (
Range of skills Creating promotions
Improves productivity/qualityExpensive
Flexibility Trained up then could leave
with the new skills
External people =) External =(
Wide range of candidates Expensive
May have skills so no training Time consuming
De-motivates employees
Internal People =) Internal =(
Quick and cheap May not have required skills
Promotion=motivation No knew idea
No training creates vacancy elsewhere
Aware of skills…read more

Unit 4 ­ Market Research
Include the price, packaging,
promotion, customer wants/needs,
the trends at the time
Other factors are ­
1. Finance for expansion
2. Supplier relationships
3. Cash flow for bills
4. Good marketing techniques
5. Ability to respond to the market
6. The right staff
7. HR planning
8. Customer needs
9. Technological changes
10. SMART objectives
11. Taking risks…read more

Unit 5 ­ Size and Scale
Size is measured by ­ profit , revenue, no. Of
employees, turnover and geographical area
External Growth ­ is reduction in cost by a
skilled labour force or specialist services
Internal growth ­ range of financial sources,
managerial and specialists, technical, risk
bearing and purchasing/marketing
Profit is not used as too many variables
effect it
Primary sector ­ extracting raw materials ­
fishing /growing
Tertiary sector ­ companies/people that
provide a service - Tesco
Secondary sector ­ turning raw material into
finished goods - manufacturing…read more