What is a business?

seth.bragg
Mind Map by , created over 5 years ago

GCSE Business Mind Map on What is a business?, created by seth.bragg on 03/18/2014.

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seth.bragg
Created by seth.bragg over 5 years ago
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What is a business?
1 A business is any organisation that makes goods or provides services
1.1 Many types of business exist in the UK ranging from small firms owned and run by one elf employed person to large companies which employ thousands of staff the world over
1.1.1 A business start up is a new firm operating in a market for the first time
1.1.2 The majority of businesses are very small and operate in the service sector
1.2 Goods are physical products
1.3 Services are non-physical items
1.4 Customer needs are the wants and desires of buyers
1.5 A business buys the products they need form suppliers and sell to customers
1.5.1 An individual person who uses the product is called the consumer
1.5.1.1 Business sell their product to customers in markets; any place where buyers and sellers meet to trade products
1.5.2 Businesses are likely to be in competition with other firms offering similar products
1.6 To create goods and services, businesses need to buy or hire inputs such as raw materials, equipment, buildings and staff
1.6.1 These inputs are turned into outputs called products
1.6.1.1 A business adds value when the selling price of an item produced is higher than the cost of all the resources used to make it
2 Sectors; the three types of industry in which firms operate
2.1 Primary: the acquiring of raw materials such as fish from fishing, milk from farming, coal from mining etc.
2.2 Secondary: manufacturing and assembly (converting raw materials into products)
2.3 Tertiary: commercial services supporting the production and distribution process, e.g. insurance, transport, advertising etc.
2.4 The three sectors are very much interdependent as firms rely on other businesses in different sectors
3 The setting up of a business is called enterprise
3.1 An individual who sets up a business is called an entrepreneur and does it for the following motives
3.1.1 Making a profit
3.1.2 The satisfaction of setting up a successful business and being independent
3.1.3 Making a difference
3.2 New businesses start out with few customers and are likely to face competition
3.2.1 To be successful, new businesses need to create a competitive advantage over its rivals by offering a product that customers prefer to a rival's product
3.3 Setting up a business involves risks and rewards; the reward being profit
3.3.1 If losses or not enough profit is made an owner may decide to close the business
3.4 Many businesses have limited resource and find research costly
3.4.1 Lack of planning and reliance on gut instinct often leads to business failure
3.4.1.1 However, a business plan is a report by a new or existing business that contains all of its research findings and why the firm hopes to succeed
3.4.1.1.1 Contents of the business plan may include the results of market research and competitor analysis
3.4.1.1.2 By doing this, owners are forced to think about their aims, competition and financial needs helping to reduce risk and reassuring stakeholders, such as banks
4 Competitive and changing markets
4.1 Attracting customers requires making products seem superior to that of their rivals
4.1.1 However rivals are likely to be at work on creating new products or improving operations to reduce costs and drive down prices
4.1.2 Businesses are constantly needing to adapt their products in accordance to ever changing trends and customer needs; success today is no guarantee of future profits
4.2 A competitive market will have many businesses trying to win the same customers
4.3 A monopoly is either the only supplier in the market or one with more than 25% of the market
4.4 Competition can make markets better by improving:
4.4.1 Price
4.4.2 Product range
4.4.3 Customer service

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