Understanding Business Activity
What is the difference between a want and a need?
Need: something essential for survival
Want: something you desire but not necessarily need
What are three sectors of production?
Secondary
Teritary
What are 4 characteristics of a successful Entrepreneur?
Risk Taker
Charismatic
Team Player
Creative
Self Confident
What are the four ways you can measure a business
1. Value of Output
2. Number of Employees
3. Value of Sales
4. Value of Capital Employed
What are three reasons you would want your business to grow?
To achieve economies of scale and see the average cost of production decline
To achieve a greater market share
To satisfy the ego of owners and businessmen
To achieve security by being more diversified
To survive in an increasingly competitive market
What is the economic problem?
unlimited wants and limited resources which create SCARCITY
Define what each sector does?
WITH an example
Primary: extraction of NATURAL resources
Example: mining, farming, energy extraction, coal mining
Secondary: manufactures goods using the raw materials provided by the primary sector
Example: construction, aircraft and car manufacturing, baking, cooking
Tertiary: provides services to consumers and other sectors of the industry:
example: transport, banking, retail, insurance, hotels and hairdressing
Name two ways governments can support start ups?
Business idea and help
Premises
Finance
Labor
Research
What does " Value of Capital employed
" mean?
The total value of capital used in the business that include machines and equipment
How many different types of GROWTH is there?
What are they?
Internal and External
What are the four factors of production? IN DETAIL
Land: natural Resources
Labor: People who work for you
Enterprise: decision making ability and risk taking - the brains of the business
Capital: Machines, equipment and finance
What does DE-INDUSTRIALIZATION mean?
the decrease of the secondary sector in a country
What is a business plan?
What is an advantage of the business plan?
A business plan is a document containing the business objectives and important details about the operations, finance and owners of the new business
helps you stay organized, plan ahead, decrease risk of failure
What are the disadvantages of only calculating a business with "Value of Sales"?
It could be misleading because people sell very different products at different price ranges
What are examples of external growth?
What are different types of integration
Merger
Takeover
Horizontal
Vertical
What is opportunity cost?
give me a BUSINESS opportunity cost
the loss of other alternatives when one alternative is chosen.
Hospitals or Schools
Fill in the blanks
Developing countries have a bigger........... or.... than .........
Developed countries have a big................
1. Primary
2. Secondary
3. tertiary
4. Teritary
What are 5 different components in a business plan?
Mission & Vision
The Industry Overview
Competitive Analysis
USP - Unique Selling Point
Target Audience - Who is your customer? The more specific the better
Management & Operations
Financial Plan
There are 5
Governments
Banks
Workers/future employees
Investors
Competitors
What is an advantage of a merger/takeover?
What is a disadvantage of a merger/takeover?
Reducing the number of competitors in the market
Clashing of cultures
What is added value?
is the difference between the selling price of a product and the cost bought in materials and various components.
What is a mixed economy?
Define each sector and tell me what is the aim for both
BOTH a private and public
Private: NOT owned by the government - profit
Public: Govt or state owned - to provide services to the citizens of the country
Why is it important to have a business plan if you are a:
Business Owner
OR
Investor or Bank Manager
WHY does each stakeholder want to know how big your business is?
Name 4 reasons why a business COULD fail
1.