why businesses exist
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- Created by: ManuSB
- Created on: 13-02-24 16:58
why businesses exist
- essentially to provide goods and services for their customers
- if a business can meet the needs of its customers in terms of the cost and quality of the g/s it provides
- if a business can meet the needs of its customers in terms of the cost and quality of the g/s it provides
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what is the role of a business
- to provide a good and service
- reinvested for business growth
- if revenue is greater then total costs
- to meet the needs of the customer
- reinvested for business growth
- if revenue is greater then total costs
- to meet the needs of the customer
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why do businesses exist
business are important as they :
- create wealth
- create jobs
- develop new products to benefit society
-provide a source of tax revenue for the gov
- create wealth
- create jobs
- develop new products to benefit society
-provide a source of tax revenue for the gov
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what is a mission
a qualitative statement of an organisations aims that uses language intended to motivate employees
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what is a mission statement
a mission statement sets out a businesses overall purpose to direct and stimulate the entire organisations
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examples of mission statements
investors- many shareholders will want to ensure that their money being invested in an ethical business with strong values
employees- the missions statement acts a a set of guiding principles for employees.
employees- the missions statement acts a a set of guiding principles for employees.
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define business objectives
objectives are medium long term plans establishes to coordinate the business and acts as a target
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define cooperate objectives
goals of the whole organisation rather than of different elements of the organisation. they are set in order to coordinate the activities of and guide the actions of the whole organisation
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define functional objectives
goals of each of the department of a business ( e.g. marketing , finance , operations) they are designed to ensure that the business achieved its corporate objectives thus its overall aims and missions
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what is the relationship between missions and objectives
the objectives of a business will flow from the missions and the aims. whereas a mission outlines the visions of the business in broad terms
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why do businesses set objectives
businesses set objectives to:
- provide quantifiable steps to achieve aims
-clarify directions of the business
- measure success against targets
-provide targets to motivate and reward employees
-influence potential investors
- provide quantifiable steps to achieve aims
-clarify directions of the business
- measure success against targets
-provide targets to motivate and reward employees
-influence potential investors
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what is a SMART objectives
the appropriateness of an objective can be analyse using SMART. all objectives should be :
- specific (clearly and easily defined)
-Measurable(quantifiable eg to increase something by 15%)
-Agreed
-Realistic(achievable)
-Timebound
- specific (clearly and easily defined)
-Measurable(quantifiable eg to increase something by 15%)
-Agreed
-Realistic(achievable)
-Timebound
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factors which influence business objectives
(factor 1)
(factor 1)
size - objectives may change as a business grows and become more successful. most business when starting up will aim to survive
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(factor 2)
Market- some markets are more competitive than others and this will determine objectives, such as targeting market share
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financial and non financial objectives
financial - profitability , growth , market share ,
non financial - brand recognition , sustainability , customer satisfaction
non financial - brand recognition , sustainability , customer satisfaction
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what is revenue
revenue is the value of sales made during a trading period
(revenue is also known as income , sales revenue , sales turnover , turnover )
(revenue is also known as income , sales revenue , sales turnover , turnover )
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what is the revenue formula
total revenue = price x quantity sold
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define variable cost
variable costs are those that change directly with the level of output or sales, such as the material used to make a product
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define fixed cost
fixed costs are those that do not change with the level of output or sales, such as rent
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what is the profit formula
total revenue - total costs = profit
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what is a private sector business
private sector organisations are funded , owned and run by private organisations
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examples of private sector organisations
most private organisations aim to make profit although a large number of private organisations are non profit or charities
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what is a public sector organisation
public sector organisations are owned and operated by the government. these organisations mainly provide essential services including education or healthcare
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what is an unincorporated business
in an unincorporated businesses there is no legal distinction between the individual owner and the business itself
(like sole traders and partnerships)
(like sole traders and partnerships)
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what is an incorporated business
this is when a business and its owner has its own have separate identities
(private limited companies and public limited companies)
(private limited companies and public limited companies)
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what is limited liability
when an owner of a business isn't liable for the businesses debts - therefore there is legal distinction between the owner and the business
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what is unlimited liability
when an owner of a business is liable for the debts of the business- therefore there is no legal distinction between the owner and its business
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what is a sole trader
a business that is owned by one person. the owner may operate on his own or may employee other people
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advantages of a sole trader
- east to start up (there are no registration and no start up costs)
- owners get to keep all profits
- owners get to keep all profits
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disadvantages of sole traders
- unlimited liability
- own boss but long hours
- own boss but long hours
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what is a private limited company plc
a small to medium sized business that is usually run by the family or the small group of individuals who owned it
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Other cards in this set
Card 2
Front
what is the role of a business
Back
- to provide a good and service
- reinvested for business growth
- if revenue is greater then total costs
- to meet the needs of the customer
- reinvested for business growth
- if revenue is greater then total costs
- to meet the needs of the customer
Card 3
Front
why do businesses exist
Back
Card 4
Front
what is a mission
Back
Card 5
Front
what is a mission statement
Back
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