Summary
Summary A write-up of Unit 1 from Business A-Level
A write-up of Unit 1 from Business A-Level AQA
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Business – Unit 1: What is a business?Contents:
1.1 – Understanding the nature and purpose of business
1.2 – Different business forms
1.3 – Business objectives
1.1 – Understanding the nature and purpose of business
Why businesses exist?
A business is any organisation that makes goods or provides services to satisfy customer
needs.
Goods – physical or tangible products, such as food or vehicles
Services – non-physical items, such as hairdressing
Businesses exist mostly to earn a profit or to help/give back to the community, by providing
jobs, through not-for-profits, etc.
How businesses compete?
- Unique selling point (USP)/customer service
- Lowest price/price efficiency
- Satisfying customer needs
Business-to-business (B2B) – one business selling to another business
Business-to-consumer (B2C) – a business selling directly to its consumers
Why are businesses important to society?
Businesses provide jobs. These jobs give wages; people spend these wages in other
businesses. Then those businesses get more money and then can expand, hire new people
and provide more jobs and thus the cycle continues.
Inputs, Transformation Process, and Outputs
Transformation process – the conversion of a firm’s inputs into outputs that reach the
customer and adds value.
Inputs – land, labour, capital, enterprise
Added value – an amount added to the value of a product or service
Transformation
Input process (added Output
value)
, Added value = selling price – cost of transformation
This type of transformation process and output depends on and determines the industry
sector that the business will be placed into.
Raw material Manufacturing Distribution Retailer
Primary Secondary Tertiary
Consumer
sector sector sector
Primary sector – extracts or develops natural resources, such as timber, agriculture, oil or
mineral.
Secondary sector – make use of extracted primary materials to build, manufacture, or
develop finished goods.
Tertiary sector – provides the services needed to meet the needs of the end users, for
example through retailing, distribution, insurance and customer services
Business objectives:
Mission statement – short statement of a business’ purpose and focus
Objectives – goal to help a business achieve its mission
Corporate objectives – relate to the business as a whole
Functional objectives – set for each business function (or department)
Cash flow – movement of money in and out of the business
Objectives are set, often, in financial terms. These could include desired sales or profits,
rates of growth, value of the business or dividends paid to shareholders.
Objectives should conform to a set of criteria referred to by the acronym SMART:
S – specific – clear, precise and well-defined
M – measurable – must be able to be measured
A – achievable – should be possible given the circumstances and resources given
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