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What is Business Activity, EBITDA: earnings before interest, tax,…
What is Business Activity
Business is an
organisation
that produces
goods & services
to meet
customer's
needs & wants
.
organisation:
group that is formed for a particular purpose.
consumers:
final users of goods & services (customers).
goods:
physical tangible products.
consumer goods:
goods and services sold to ordinary people rather than businesses such as smartphones and health care.
producer goods:
goods and services produced for one business for another, such as delivery van.
services:
non-physical intangible products.
needs:
basic requirements for human survival.
wants:
desires for goods and services, which are infinite, which means no end.
output:
amount of goods of work produced by a person, machine or factory.
human resources:
in some businesses, the department that deals with employing, training and helping people.
Purpose
Private enterprise:
businesses owned by individuals/group of individuals. ->
private sector
.
make profit for their owners.
Social enterprise:
organisations such as charities
it's a private sector but it's aim is not to make profit (non-profit).
Public enterprise:
businesses owned by central or local government ->
public sector.
their aim is to provide goods & services.
Stakeholders:
an individual or group with an interest in the operation of a business.
Employees:
work for business -> to get salary.
Customers:
buys goods & services
business
consumers
Local community:
are more likely to get employed and higher salaries.
Government:
has interest in all businesses: provide employment, pay taxes, and generate wealth.
Managers:
help running businesses and they also motivate workers, settle disputes, make decisions, solve problems, lead teams, etc.
Financiers:
lend money to businesses and they may be banks, individuals, relatives, etc.
Suppliers:
provide raw materials, parts, commercial services, utlities (electricity, water, etc.), etc.
Owners:
entrepreneur
-
person who takes risks & sets up businesses; individual who organises the other factors of production and risks their own money in a business venture.
large businesses (limited companies) -> owned by shareholders.
shareholders invest in business & get a share of profit called
dividend
.
EBITDA:
earnings before interest, tax, depreciation and amortisation
scarce
-
resources with limited availability.
finite
-
having an end or a limit.
infinite
-
without limits in space or time.
premises
-
buildings and land used by a shop or business.