Business in the real world(2)

An organisation that produces a good or service

To be their own boss
To ensure employment
Personal satisfaction
Want to be flexible
They see a gap in the market
To help others
To pursue an interest

A tangible product

An intangible item

A need is a basic human requirement whereas a want is something you desire/ a luxury

Land, Labour, Capital and Enterprise

the physical land where the business is located and natural resources used

The skills and number of employees employed by the business

The equipment used to provide the good or service

the skills of the people involved to identify opportunities and meet these

the loss of potential gain from other options when one option is chosen.

Business that extracts natural resources

Farms
Oil exploration
Fishing

Business that turns raw materials into products

Factories
Manufacturers

Business that provides services

Fast food shops
Estate agents
Delivery companies

a business or company

A person who organizes, manages, and takes on the risks of a business.

Hard-working
Innovative
Organised
Willing to take a risk

Technology
The economy
Legislation
Environmental expectations

A business owned by one person

You are your own boss
Can decide things quickly
Easy to set up
Keep all the profits
Make your own decisions

Unlimited liability
May lack finance
Heavy workload
May have a lack of skills
Hard to take a break

a business owned by two or more people

Share workload
More sources of finance
Share skills

May disagree with partners
Unlimited liability
Liable for other partners

A business owned and run by shareholders who are family and friends

Limited liability
Company exists even when owner dies
Better status
Managers can be employed

Hard to set up
Financial accounts are available to the public
Pay corporation tax
Less control

Owned by shareholders who are members of the general public
Shares are bought and sold on the stock exchange

Limited liability
Can raise lots of money through stocks
Better status

Less privacy
Can be taken over
Less control
Produce financial information

A business set up to achieve objectives not profit e.g. charities

Where the business owner is liable for all debts of the business

Sole trader or partnership
Doesn't need to be registered and won't have many assets to be protected by limited liability

A general goal of a business

A specific target that is set for a business

Survival
Profit maximisation
Growth
Market share
Customer satisfaction

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Helps to establish priorities
Provides a target
It can motivate
Helps to understand where the business is going

The size
The type e.g. not for profit
Level of competition

When a business is a start-up, it has initial costs so its hard to make a profit so the objective may just be to survive

Becoming dominant
International expansion
Increasing shareholder value
Ethical considerations

People that are affected by the activities of a business

Owners
Employees
Customers
Local community
Suppliers

Maximising pay for workers
Maximising profits
Minimising environmental impact
High dividend payments

Secure job
High earning

High dividends
High share price

Local jobs
Little environmental impact

Taxes paid
Growth
Legal behaviour

Paid on time
Informed on any changes

Value for money
Good service
Accurate information
Ethical

They may negotiate better pay
Customers can stop purchasing
Local councils might refuse to co-operate
Owners can vote for a decision

Communicate well with them
To involve them in discussions/decisions

Proximity to market
Availability to raw materials
Labour
Competition
Cost

Cheaper labour
Access to raw materials
Financial incentives from foreign governments
To avoid tariffs
Market may be growing fast

Different rules
Customers may have different tastes
Environmental costs
Supply chain problems
Unethical

Written description of what and how a business is trying to achieve its aims over the next few years

Helps to set up a business successfully
Persuades possible investors
Sets objectives
Organises actions

Details of the founders
An analysis of the market and target audience
Objectives
Prices and expected sales
How they will compete against rivals
The financial position

Hard to predict future sales figures
People may not have the skills to plan ahead well
Needs to be regularly changed and reviewed

costs that vary with the quantity of products produced

Costs that do not vary with the quantity of products produced

fixed costs + variable costs

money from sales

Expenses paid to run the business

financial gain
total revenue - total cost

When costs are greater than revenue

Internal growth
External growth

Internal growth
When a business sells the right to use its name and sell its products

Can grow quickly
Provides finance

Lose some control
Liable for franchisees
Have to share profits

Use an establish brand
Access to training and supplies
Share marketing costs
Learn from other franchisees

Have to share profits
Less creative control
Have to pay royalties
Sales may suffer if another franchisee gets a bad reputation

Franchising
Opening new shops
E-commerce
Outsourcing

Merging
A takeover

when the average cost of producing a good or service falls as the quantity produced increases

Economies of scale
More market power
Better status
Harder to take over
More rewards for staff

Diseconomies of scale
Slower decision-making
Employees feel less important
Harder to control

occurs when the average cost per unit increases as the business' size increases

When a large-scale production allows efficient use of technology

Big businesses gain discounts from bulk buying reducing the cost per unit

total cost of production/number of units produced