1.1

1.1

1. 1.1.1

   • economic problem
     • only a limited amount of resources are avaliable to produce the unlimited quantity of good and services people desire
     • scarce resources
       • when there is an insufficient amount of something to satisfy wants
     • unlimited wants
       • the infinite desire for something

2. 1.1.2

   • S- specific M- measurable A- agreed R- realistic T- time specific
   • profit maximisation
     • PROFIT = REVENUE - COSTS
     • maximise their profit by increasing revenue and reducing costs
   • sales maximisation
     • maximise sales or sales revenue
     • building a loyal customer base
     • Growth- stronger competitive position
   • satisficing
     • reaching a good enough profit level to be satisfied without maximising
     • face a trade-off between longer hours to earn more and going home to relax
     • make enough to keep shareholders happy
   • objectives
     • financial
       • survival
       • satisficing
       • market power
       • sales maximisation
       • cost efficiency
     • non-financial
       • independance
       • employee welfare
       • social objectives
   • survival
     • keep the business going
   • market share
     • the proportion of a specific market that is supplied by one business
     • BUSINESS SALES / TOTAL SALES IN THE MARKET X 100%
     • large share can give the business some market power, a degree of security and reduced risk.
   • cost efficiency
     • operating efficiently with minimum waste and the lowest possible unit costs
   • return on investment
     • owners and others who provide finance might prioritise return on investment
       • would come from interest on loans or dividends for shareholders
   • social objectives
     • an ethical business takes into account the impact ofn
       • employees
       • local environment
       • customers
   • customer satisfaction
     • ensure repeat purchases
     • good reputation

3. 1.1.3

   • stakeholders
     • can be any person or groups of people who have an interest in the activities of a business or organisation
     • customers
       • want--> quality, value, continuity
       • conflict- employees
     • employees
       • want--> good pay, good working conditions, job security
       • conflict- owners
     • investors/shareholders
       • want--> high dividends, increased share value
         • dividends = % of profits paid to shareholders
       • conflict- owners
     • suppliers
       • want--> customers pay after 30 days, continuity
       • conflict- owner
     • local community
       • want--> business to be a good neighbour (no noise, litter,traffic)
       • conflict- customers
     • goverment
       • want--> pay tax, follow the law
       • conflict- owner
     • pressure groups
       • want--> business to comply with their beliefs
       • conflict- owner
     • owners
       • want--> profit, growth, continuity
       • conflict- all stakeholders
   • economic agents
     • people and organisations who are involved in economic activity
       • decision makers who decide how resources should be allocated
     • goverments
       • provides rules for how firms and consumers should interact
     • consumers
       • who consumes a produced good/service by financial purpose
     • firms
       • role is to transform factors of production into goods/services to sell