Business Review Sheet

schoolstudycanada's version from 2017-06-26 00:58

Understanding Business

Question Answer
entrepreneura person who operates a business
businessoffer a good/service to make money
needsGoods & services necessary for survival
wantsExtras in life
goodstangible items that you can purchase & use.
consumer goodsgoods bought by consumers
business to business goodsgoods businesses buy from producers
servicesintangible items that you can't touch. This usually takes the form of knowledge.
not-for-profit businessA business that does not profit from revenue that it gains
co-brandingTwo businesses working under "one roof"
producersomeone who makes goods or provides services
consumerperson who buys goods or services
essential goods/servicesNecessary for survival (heat, water, food)
luxury goods/servicesNon-essential for survival (vacation)
choiceyes/no. Multiple product choices
automationmachines do the labour, not humans
profitthe reward that an owner receives for taking risks
solventhaving the ability to pay all debts and other obligations is called being solvent
demandThe willingness and ability of customers to pay for a good/service is known as demand
supplyquantity of goods/services that producers can/want to provide. Determined by the cost of producing it and the price people are willing to pay for it
expensesthe amounts paid out to produce goods & services
hierarchyRanking of higher and lower orders in a system
costsMoney used in each step of production
obsoleteWhen a good/service is no longer needed
interdependencerelying on other company's to provide products or services to meet their needs/wants
4 ways businesses can be described (w examples)- type of ownership (partnership, co-operation, sole proprietor)
- the goods/services is offers (ford produces cars)
- different functions that it performs in its community (C.C Society)
- the types of jobs it provides (butcher, meat inspector, meat packer, farmer, truck driver)
Factors of productionEconomic resources through with g/s are produced (capital, natural, human)
Factor of production - capital$ to purchase buildings, equipment, trucks
Factor of production - naturalraw materials that come from earth, water, air
Factor of production - humanlabour of people who create g/s
Maslow's hierarchy of needs - description of each level and goods/services that fulfill needs at each level- Physiological. The things that a person needs to survive (basic needs [food, water])
- Safety. (Buying a house, living in a safe neighborhood)
- Social. Sense of belonging/love in a community (phone)
- Esteem. Self, esteem ,recognition. (fancy car)
- Self actualisation. fulfillment of ones potential (sheridan college)
3 factors that create demand- Consumer awareness/interest via the media
- an ample supply of the good or service
- prices are reasonable & competitive
4 factors that affect demand- changes in income
- changes in consumer tastes
- change in future conditions
- changing population
- price of substitution
4 factors that affect supply- change in number of producers
- price (must be able to sell at a price that covers costs plus earns a profit)
- technological changes
- production shortages (if materials used to create good/service are in limited/unavaliable supply)
3 factors that affect price- supply & demand
- production costs
- competition
Effects of surplusThe amount supplied is greater than the amount demanded by consumers. Sellers will:
- lower their price
- consumers will then buy more of the product
- producers will produce less supply
Effects of shortageThe amount demanded it greater than the amount supplied. This cases:
- price of the goods to increase
- producers will increase supply
- consumers will buy less
What do businesses do with profits? (4 points)- expansion and growth
- provide better goods & services
- save for rainy day
- owner receives money for personal use, or shareholders receive dividens
Benefits of competition- lower prices on products
- better quality goods/services
- develop new goods and services (more choice for customers)

Business and the Consumer

Question Answer
valueswhat we believe is important - affects our needs and wants
short term goalssomething we work to achieve - affects our needs and wants. (Saving for a new IPad, making a team)
long term goalssomething we work to achieve - affects our needs and wants. (getting accepted into college, saving for a car)
why we buy (6 reasons)- income and price. (amount of discretionary income [what's left after expenses & taxes are paid])
- status. (conspicuous consumption- buying to impress others)
- current trends. (peer pressure)
- customs & habits. (we are influenced by our family background)
- safety. (buying items that are good quality)
- promotion. (create false impressions in viewers mind so they desire to quench their desires by buying the product.)
How contact time affects businessThe longer customers spend time with employees, the higher the opportunity that they will make a purchase based on the employees suggestion (time spent in store increases)
How time spent in store affects businessThe longer a business can keep a customer in store, the greater the chances of them making a sale.
How waiting affects businessThe longer a customer has to wait in line to checkout a product, the more impatient the customer gets, due to them being busy.
What is needed to start an e-commerce businesswebsite, domain name, physical space, payment method, security
Differences between traditional retail and internet shopping- You can't see products and touch them
- you don'tm meet the people offering the service/good
- more goods & services avaliable
- more trade options
- comparison between objects is easier

Going into business

Question Answer
GDP- Gross-Domestic-Product
- Sums up the dollar value of all goods/services produced within a country's borders
- indicator of market expansion, not human well-being
Dept financing- borrowed money.
- if you borrow from a bank it might be difficult to pay them off later
equity financing- money from savings or investors
- give up your own savings
- sometimes means loosing part of the ownership o' business
manufacturing bus. (w examples)create products
retail business (w examples)sell products from manufacturer
service business (w examples)sell services
s.o.h.o.- Small Office, Home Office
franchiseWhen a company allows stores to be bought by investors/other businesses
sole proprietorone owner.
partnershiptwo or more people are owners of one company
corporationa type more than one owner of a company
proxy votewhen a shareholder cannot make it to an annual general meeting, *IT gives it's voting right to another person who is attending
shareholderPeople who hold shares in a company - usually a corporation
shareA piece of the company's ownership. Sold to investors to gain money to invest in the business
franchiseePerson who buys a franchise form franchiser
limited liabilityIf company fails financially, the creditors only take company property
patronage refundwhen a co-op experiences a surplus and the owners pay the shareholders
dividend(total profits)
------------ [divide] = (dividend)
board of directors- members who set policies of the company.
- they appoint an executive to manage daily operations of the business.
- board of directors is responsible to the shareholders
why do people start a business (3 reasons)- earn money
- test out skills
- waste their time
what does GDP measureDollar value of all goods/services produced within a country
information a loan officer/supervisor needs from borrowers(5)- past credit history
- company's business plan
- wether owner has skills necessary to achieve the objectives of loan
2 advantages of operating a home business- no office politics
- no lengthy transportation
- less meetings
2 disadvantages of operating a home business- easily distracted, less productive
characteristics of sole proprietorship- one owner
- most common type of ownership
- owner provides their own capital, labour, and management
- receive all of the profits or suffer all the losses
advantages of sole proprietorship- proprietor makes all business decisions
- person gets satisfaction from seeing their ideas result in success
- all profits belong to boss
- profits can be used as they wish
- owner knows all staff personally, as well as customers & suppliers. Leads to a friendlier environment
disadvantages of sole proprietorship- The owner might not be knowledgable in all areas of business
- there is limited capital to invest in business
- illness or death could result in closing of business
- SP takes all financial risks, and SP suffers from Unlimited liability
characteristics of partnership- two or more owners
- share expenses & work
- increase capital available for business
- They sign a partnership agreement (names, location, nature of business, owner name, duties & responsibilities, capital each user will provide & receive)
advantages of partnership- two heads are better than one. double the skill
- more personal capital available & banks are more willing to lend money
disadvantages of partnership- not a large capital base
- unlimited liability
- partners might not agree
- if one partner dies, partnership ends
characteristics of corporation- large
- many owners
- uses a charter (name, purpose, capital raised, location, names of members)
- has shares
- has an annual general meeting
- has a board of directors
advantages of corporation- are able to raise an unlimited amount of capital
- many specialized skills in business
- limited liability-- if a corporation fails financially, a shareholder looses the amount invested in shares
- corporations can operate indefinitely
disadvantages of corporation- customers & employees do not receive personal contact with owners
- shareholders with small amount of shares do not have much power over how the company is run
- double taxation on profits. Corporate taxes & shareholders taxes
characteristics of co-operative- owned/financed by members
- 1 vote/member
- run by a board of directors
advantages of co-operative- sell less expensive goods/services
- easily set up
- earn patronage refund
disadvantages of co-operative- decision-making process could be difficult
characteristics of franchise- must sign a franchise contract
- must follow company procedures
- must invest a minimum cash payment
- pay advertising fee
- pay monthly franchisee fee
advantages of franchise- get management training
- franchising help
- location selection
- employee training
- parent co. supervises you to guaruntee product/service
- a supply of product
- no competing franchises in the area
- advertising help
- 7% failure rate
disadvantages of franchise- pay a fee to franchiser
- franchisee must buy minimum inventory
- franchisee is dependent on the franchisor to keep on top of changes within the industry
- MUST STRICTLY FOLLOW RULES OF FRANCHISE (selling price, product stocked, advertising)
3 major types of economiescommand, market, mixed
3 economic questions all countries must ask- What to produce
- How to produce them
- For whom should these things be produced