Summary

Summary Unit 1- Understanding the nature and purpose of Business

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Institution
AQA

This is module 3.1 of The AQA A-Level business course, this document includes the nature and purpose of business. This is a helpful summary including calculations, definitions and examples! Along with detailed notes on each part of unit 3.1

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Uploaded on June 7, 2024
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Understanding the nature and purpose of
Businesses Definitions
Goods- a product that can
be purchased Physically
Why are businesses important? Services- Provided to the
consumer to meet their
1) Profits- Wealth is created by a business,
needs or demands
customers don’t pay the cost to create a Consumer- Anyone who
product but rather more, to allow for a purchases goods or
profit to be gained.
services provided by a
business
2) Employment- Businesses employ `
labourers, executives, and customer
assistants, Businesses are essential to the business cycle, as people
are employed, they will spend disposable income, going back into the
economy

3) New product creation- Investment into innovation, potentially
benefiting consumers or society i.e., Apple iPhone

4) Improvement of national status- With successful businesses come
profits, which contribute to the overall size of a market, this reflects on
the business through the economy and GDP.

5) Survival- This is usually the aim during year 1, where the company
aims to break even or even just stay afloat, to then become later
profitable

What does a Business do?
Businesses use the transformation process to turn raw materials into
outputs which can be sold at a marked-up price to gain a profit or
provide services to consumers.

Businesses, to operate, need to create mission statements and objectives.

, MISSION STATEMENTS AND OBJECTIVES
(MUST KNOW THE DIFFERENCE BETWEEN)

Mission statement- formal Qualitative, few-
sentence statement of an organisation’s
aims and values describing the general
purpose of what they want to achieve, can
be used to inform customers and potential
investors.
EXAMPLE- Nike “to bring inspiration and innovation to every athlete in
the world”

Aims- (aka corporate aims)- Long-term plan for a business, typically
expressed also as a qualitative statement

Objectives- more precise and
detailed goals or targets that
must be achieved to achieve
the mission statement

Common business objectives:
- Increase market share
- increase customer
satisfaction
-survival
- Growth
- Break-even
- social and ethical

Objectives will not be
presented as those, but rather more specific, for example, “improve market
share by 15%”

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