Section 1: BUSINESS ESSENTIALS

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Why businesses exist

Businesses exist to provide goods or services to customers.

Business objectives

1. The most important objective/aim is to make a profit in order to survive. if a business does not make a profit, it will go bankrupt and have to close down.

2. To be the biggest in their market

3. Provide the highest quality product possible

4. Maximize sales or wealth creation

5. Stability - maintaining market shares or a reasonable income

6. Being independent, satisfying customers, or trying to limit the environmental damage caused

Different priorities

Profit is not the main objective for all businesses

'non-profit' organisation - e.g. a charity

Public sector - Businesses owned by the government. e.g. schools and hospitals

[These types of businesses need to earn enough income to cover their costs. Any surplus is put back into the business]

Social enterprises/'more than profit' organisations - businesses achieving social objectives e.g. homelessness and farmers

[This type of business' main aim is to use the profit they make to benefit society]

Why someone would choose to start a business

1. Lots of entrepreneurs have financial objectives - e.g. To earn a steady income or gain fortune

2. Non-financial reasons such as freedom of being your own boss

3. A challenge you can enjoy

4. Wanting to benefit others - e.g. charities or having social objectives

Página 2

Enterprise

Taking advantages of business opportunities

Involves identifying new business opportunities, and then taking advantage of them.

There is always a risk of failure, but the reward for a successful enterprise activity is profit.

Can involve