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Description
Flashcards by Chandré Matlala, updated more than 1 year ago
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Created by Chandré Matlala
over 7 years ago
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| Question | Answer |
| Business | The organised effort of individuals to produce and sell the good and services that satisfy society's needs for a profit |
| Three types of businesses | 1. Manufacturing businesses 2. service businesses 3. marketing intermediaries |
| Manufacturing businesses | Businesses that process various materials |
| Service Businesses | Businesses that render a service (eg. Banks) |
| Marketing intermediaries | Businesses that buy products and resell them (eg. Game) |
| Profit | The money that remains after all business expenses have been deducted |
| Stakeholders | The different people that are affected by the policies and decisions made by a firm |
| Factors of production | Resources used to produce goods and services. Consist of: 1. capital 2. labour 3. land and natural resources 4. entrepreneurship |
| Capitalism | An economic system in which individuals own and operate majority of businesses that provides goods and services |
| Invisible hand theory -by Adam Smith | When individuals act to improve their own fortunes, they indirectly promote the good of their community. |
| Market economy | An economic system in which businesses and individuals decide what to produce and buy and the market determines prices and quantities sold |
| Mixed economies | Exhibits elements of both capitalism and socialism |
| Households | made up of individuals who are the consumers of goods as well as the owners of some factors of production |
| Businesses | exchange money for natural resources, labour and capital in order to produce goods and services |
| Governments | Promote and protect public welfare. Their services are important as they would not be produced by private businesses or would only be produced for those that can't afford them |
| Command Economies | 1. Socialism 2. Communism |
| Socialism | -key industries owned and controlled by government -small scale private businesses allowed -workers may choose own occupation -production determined by national goals -distribution of goods and services controlled by the state |
| Aim of socialism | The equitable distribution of income, the elimination of poverty and economic waste, the providing of social services to all that need them and the |
| Disadvantages of socialism | There is increased taxation and the loss of incentive and motivation for individuals and businesses |
| Communism | -all factors of production are owned and controlled by the government -production is based on centralized state planning to meet the needs of the state -the state dictates occupational choices and sets prices and wages |
| Aim of communism | To create Karl Marx's concept of a classless society where all contribute according to their ability and receive benefits according to their needs |
| Productivity | The average level of output per worker per hour |
| Important aspects of improving productivity | 1. reducing costs 2. enabling employees to work more efficiently |
| The Business Cycle | |
| Types of competition | 1. perfect competition 2. monopolistic competition 3. oligopoly 4. monopoly |
| Perfect Competition | -many buyers and sellers of a single product and neither are able to affect the price of the product -no restrictions on firms entering the industry -all buyers and sellers accept going price |
| Monopolistic Competition | -many businesses with relatively large number of sellers that differentiate their product -products similar in nature and satisfy the same need |
| Oligopoly | -few sellers -sizable investments required to enter market -market actions of one affects others |
| Monopoly | -one seller -barriers in place to keep firms from entering industry -sellers have complete control over price -firms must consider demand and set price at most profitable level |
| PESTLE Analysis | 1. political environment 2. economic environment 3. social environment 4. technological environment 5. legal environment 6. environmental environment |
| Political Environment | The influence different political systems have on the environment (government plays a role here) |
| Economic environment | Analyzing changes in the economy to understand trends and make forecasts for business planning |
| Social Environment | Analyzing how the business impacts society and its consumer market |
| Technological environment | Responding to the fast-paced changes in technology |
| Legal environment | Consists of national legal systems, regional legal frameworks and international law |
| Environmental environment | The effects of pollution, wastage of resources, deforestation, natural disasters etc on the firm |
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