3.1

• most firms exist to generate, grow income and profits
• what is the transformation process?

  describes what happens inside a business where value is added to inputs to create outputs.
• what is a business' mission statement?

  purpose and values
• What are corporate aims?

  targets to help grow the business long term
• what are corporate objectives?

  steps taken in order to achieve aims
• Business' provides employment and wealth for individuals and therefore improves reputation of region/ country
• Common business objectives are survival, growth, increase profit, market share, meet customer needs
• a partnership is a business started and owned by more than one person
• what is a legal partnership agreement?

  how profits are shared, what partners have to invest, how decisions are taken and what happens if a partner leaves or dies
• true or false everyone in a partnership owes business liabilities

  true
• three advantages of partnership

  simple, shared workload, each provide investments
• three disadvantages of partnership

  long time to reach decision, unlimited liability, complicated to sell
• two advantages of a limited company

  protects shareholder, pay less tax
• two disadvantages of limited company

  greater admin costs, public disclosure of company information
• what are not for profit organisations?

  trade to benefit the community, social aims e.g. job creation and training
• what are social enterprises?

  trading in goods or services for social purpose
• what is market capitalisation?

  value of a company on the stock marker
• what is dividends?

  business' give a portion of their profits to their shareholders
• who buys shares?

  general public, banks, foreign investors
• three reasons for buying shares

  return on investments in form of dividends, ownership
• a risk of buying shares is value of share can change