business in the real world

• what is a business?

  a business is an organisation that exists to provide goods and services on a commercial basis to customers
• why do people start a business?

  • profit motive
  • be own boss/independant
  • exploiting an opportunity
  • having an interest in something
  • family business
  • social enterprise
  • challenge/sense of self achievement
• profit motive 


  the desire to make money
• profit 


  money made minus costs paid, a key goal for businesses
• social enterprise 


  a business set up to help society rather than make a profit
• enterprise 


  taking risks and developing new skills
• entrepreneur


  somebody with enterprising skills such as risk-taking, passion and new ideas
• enterprise skills 


  • initiative
  • risk-taking
  • organisational skills
  • having ideas
  • innovation
  • knowledge
  • persistance
  • hard working
  • passion
  • enthusiasm
• primary sector 


  the first stage of production; often where raw materials come from.

  good examples: farming, fishing, forestry, mining and minerals
• secondary sector 


  the second stage of production; using raw materials to make something- often manufacturing

  good examples:cars, electrical goods, furniture, food
• tertiary sector

  the third stage of production; selling goods from the secondary sector- commonly called service industry

  covers all services like: shops, banking,lawyers, travel insurance, cafes, hotels, hairdressing and entertainment
• de-industrialisation 


  the decline of the secondary sector
• opportunity cost 


  the next best alternative forgo when making a choice
• goods vs. services

  a good is a tangible item and is for use

  a service is something intangible
• durable vs. non durable goods


  a durable good is one you can use more than once

  a non durable good is a single use item
• factors of production 


  Land, Labour, Capital and Enterprise

  the resources needed to produce goods and services
• Land


  space and natural resources from the earth
• labour


  'human capital' the skills of people
• capital


  equipment, buildings and machinery needed in a business
• business objectives (main three)

  profit (maximisation) - the profit motive is the desire to make a profit, main aim for many businesses

  
  

  growth - gaining more market share ahead of your competitors and becoming larger

  
  

  survival- usually when a business starts they want to break even, plus in tough economic conditions
• factors affecting objectives


  • type of business/ownership
  • time
  • economy
  • customers/ competition
  • size of business
  • local, national, international
• Key terms: Ethics and Business ethics 


  • ethics - standards of right and wrong
  • business ethics- trading in an honest and fair way
• business ethics


  • this involves taking into consideration all stakeholders such as treating workers, customers and suppliers fairly and honestly
  • it is becoming increasingly important and can be a USP for a business leading to higher sales and/or a premium price
• key terms - stakeholders 


  is anyone with an interest in a business. stakeholders are individuals, groups or organisations that are affected by the activity of a business
• benefits and drawbacks of acting ethically 


  Benefits:

  • improves reputation
  • encourages potential investors
  • increased sales
  • improved employee motivation
  • greater brand awareness

  Drawbacks:

  • higher costs
  • training costs may increase
  • profits potentially reduced
• location factors 


  • cost of land
  • transport links
  • customers
  • raw materials
  • labour
• SMART objectives 


  -Specific

  -Measurable

  -Achievable

  -Realistic

  -Time bound
• location


  location is where a business chooses to place its site such as retail operations or offices
• location factors


  footfall- potential customers walking past a business

  cost- how much the business costs to run

  infrastructure- transport and communication links the business can access

  labour- the number of spare workers in the area and skills of the local population

  government policy- what the local council helps a business with (government grants)

  geography - the terrain and accessibility of the land

  competition - how many similiar businesses there are and how well they would compete with them
• business plan 


  a business plan is the proposal of what aims a business would like to achieve and how it plans to accomplish them
• benefit and drawbacks of a business plan


  benefits:

  • can anticipate problems
  • sense of direction
  • banks/ investors to help finance you
  • includes functional plans to help meet aims
  • can be updated as the business progresses

  Drawbacks:

  • uncertainty of future predictions
  • market condition change
  • takes time and money to draw up and finance the business plan
  • lack of skills
  • lack of experience
• what goes into a business plan?


  • mission/aims - states the goal of the business
  • product/services - a description of what the business if offering
  • competition - how many competitors there are and why they stand out
  • timescale - when all of this is going to happen