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Summary Unit 1- What is Business?
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Notes on Unit 1- What is business? From AQA a-level business. It covers topics like PESTLE, different types of businesses, why people start businesses, definitions of key business terms.

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  • April 27, 2023
  • 6
  • 2022/2023
  • Summary

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Available practice questions

Unit 1- What is business?

Flashcards 46 Flashcards
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Flashcards 46 Flashcards
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Some examples from this set of practice questions

1.

What is a partnership?

Answer: A business with between 2-20 people owning it.

2.

Give some examples of common business objectives?

Answer: - Profit optimisation - Profit maximisation -Growth -Cash flow -Survival -Social & Ethical objectives

3.

How can objectives be used ?

Answer: -Implement the mission -Provide a clear focus for decision making -Provide a target -Motivate staff -Reduce uncertainty Provide a criteria for evaluating performance

4.

Advantages and disadvantages of partnerships?

Answer: ads- wide range of skills & knowledge, able to raise large amount of capital, pressures of owner reduced disads- unlimited liability, arguments are likely to happen, control is shared

5.

What is a company?

Answer: A business organisation that has its own legal identity

6.

What does Specific stand for in SMART?

Answer: The objective should state exactly what is to be achieved

7.

What does Measurable stand for in SMART?

Answer: An objective should be capable of measurement- so that it is possible to determine whether it has been achieved

8.

What does Achievable stand for in SMART?

Answer: The objective should be realistic given the circumstances in which it is set and the resources available to the business

9.

What does Realistic stand for in SMART?

Answer: Objectives should be relevant to the people responsible for achieving them

10.

What does Time stand for in SMART?

Answer: Objectives should be set with a timeframe in mind. These deadlines also need to be realistic.

Content preview

Unit 1- What is business?


Why business exist:

- To provide goods and services
- To develop a good idea
- To help and support others
- To make a profit

Mission statement:

The purpose of a mission statement is to help bring focus and meaning to a business and act as a
guide when making critical decisions that may affect the direction of a business.

- What an organisation is and why it exists
- The overriding goal of the business
- The reason for its existence
- A strategic perspective
- A vision for the future

What makes a good mission:

- Contains a formulation of objectives that enables progress towards them to be measured
- Differentiates the business form its competitors
- Is relevant to all major stakeholders

Common criticisms of mission statements:

- Not always supported by actions of the business
- Often too vague and general
- Sometimes not a true reflection of reality

Mission- A qualitative statement of the business’ aim

Aim- a long term plan from which business objectives are derived

Objectives- a target which must be achieved in order to realise the stated aim.

Business objectives:

- The specific intended outcomes of business strategy
- The anticipated end results of a programme of activities
- Targets which the business adopts in order to achieve its primary aims

Main functions of objectives:

- A clear statement of what needs to be achieved
- A focus for all activity
- Targets for individual and group achievement
- A means of measuring performance

How objectives can be used:

- Implement the mission

, - Provide a clear focus for decision making
- Provide a target
- Motivate employees
- Reduce uncertainty
- Provide sense of unity

How the hierarchy works:

The objectives cascade down from the mission getting progressively more specific. Objectives are
translated into more specific objectives for different parts of the business.

Corporate objectives are often stated in terms of:

- Profit
- Return on investment
- Growth
- Market share
- Cash flow
- Sales revenue
- Shareholder value
- Corporate image and reputation

Functional areas:

- Finance
- Marketing
- Operations
- Human Resource

SMART:

Specific- the objective should state exactly what is to be achieved

Measurable- an objective should be capable of measurement- so that it is possible to determine
whether it has been achieved

Achievable- the objective should be realistic given the circumstances in which it is set and the
resources avalible to the business

Relevant- objectives should be relevant to the people responsible for achieving them

Time- objectives should be set with a timeframe in mind. These deadlines also need to be realistic

Factors influencing business objectives:

- Age of the business
- Size and legal status
- Ownership
- Views of owners and managers
- Market conditions
- Legislation
- State of the economy
- Competition
- Risk and attitude to risk

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