1.1.4 Making The Business Effective 🧨

Question 1

What is limited liability?

Answer 1

Owner and business are separate legal entities
Any debts can only be paid off with the money that owner invested into business , personal possessions are protected

Question 2

What is unlimited liability?

Answer 2

Business owner not protected by law so any person possessions can be lost in order to cover any debts

Question 3

What are the control profits and privacy of unlimited liability?

Answer 3

100% control and profit
Account does not have to be made public

Question 4

What is the control privacy and profits of limited liability?

Answer 4

Control - normally with main owner but depends on how many shareholder there are

Profits- shared with shareholders

Privacy- accounts filed with companies house but can be view for a small fee

Question 5

What are the 4 business ownerships ?

Answer 5

Partnership 2-20 people
Sole trader 1 person but can employ others
LTD
PLC

Question 6

What are the positives and negatives of sole traders?

Answer 6

Positives - decisions can be made quickly and easily as it’s just one person

Quick and easy to set up

Keep all profits

Sole trades info is kept private

Negatives - lots of work load pressure
UNLIMITED LIABILITY
Hard to raise funds
No one to help sole trader if I’ll - lack of security

Question 7

What are the positives and negatives of a partnership?

Answer 7

Positives - wide range of expertise to share ideas and designs making

Owners share risks

Easier to raise funds to establish and expand business

Negatives - partners may disagree
Decisions have to be agreed with all partners - take a longer time
Profits shared

Question 8

What are the positives and negatives of having a LTD

Answer 8

Positives- people have more trust with LTDs
Limited liability
Easier to raise finance

Negatives- more complex to set up than a sole trader

More info is reported to government

Financial info can be published to others

Share holders may disagree

Question 9

What is a franchise

Answer 9

Franchisor seeking the rights to use business name and idea to seek good / services to a franchisee

Question 10

What is a franchisee?

Answer 10

Person buying the rights of using the business name and idea and has to pay royalty fees

Question 11

What is a franchisor ?

Answer 11

Person selling rights and franchise

Question 12

What is the purpose of selling a franchise?

Answer 12

Helps the expansion of an existing business in different locations

Question 13

What are the 7 things that a franchisee gets when they buy a franchise from a franchisor ?

Answer 13

Established brand name
On going support
Training
Equipment
Exclusive area - with demand
Promotion
Access to goods and services

Question 14

Positives of having a franchise?

Answer 14

Established customer base and brand image

Already have tried and tested products available to customers

Marketing costs are covered

Higher chance of survival

Question 15

What are the negatives of running a franchise?

Answer 15

Costs of initial investments are high

Have to pay royalty fees

Don’t have that much control to make decisions

eg. Found new type of burger that tastes amazing but you can sell it because you are not in charge

Restrictions where franchise can be set up

Question 16

What are the 5 things the business has to be in proximity to?

Answer 16

Competitors - ensures customers from rivals + an active market

Market- where potential customers are

Labour- workers for your business

Materials- raw materials to make your products

Transport - for raw materials to business

Question 17

What are the four things that determine what factor of location is important ?

Answer 17

Manufacturing - waste away form local residents/ noice pollution

Tourism - go to famous landmarks for demand

Retailing - set up in a busy high street to gain benefits

Exporting - need to access docks in order to distribute goods abroad

Question 18

What are the 4 p’s?

Answer 18

Price- if it corresponds to quality

Product - if it meets the customer needs and if it’s Able to be differentiated from competitors

Place- how the product gets to your
customers

Promotion- how customers are made aware that your product is available and exists

Question 19

How may a business adapt its marketing mix to meet the changing needs of customers ? (5)

Answer 19

1. Changing features of the product to incorporate new trends and tech
2. Adjust the price to be the same as competitors
3. New advertising to boost internet of production- in response to falling sales
4. Allowing customers to return online products free of charge
5. Selling products through popular retailers

Question 20

How does technology effect price?

Answer 20

Can easily compare them with competitors online- so have to closely monitor competitors to remain competitive

Reduces price of product,making the e-tailer market more competitive

Question 21

How does tech effect place?

Answer 21

More convenient- customers and purchase anytime anywhere

Question 22

How does tech effect product?

Answer 22

Have to be constantly innovated (due to high demand)

Question 23

How is promotion effected by tech ?

Answer 23

Go to social media - more effective can communicate with customers for free - more feedback quickly compared to traditional flyers / questionnaires

Question 24

What is a purpose of a business plan ?

Answer 24

1. Keeps owner in task and minimise risks (plan of action)
2. Persuades banks do give loan - seen as reliable
3. Provides financial forecast

Question 25

Who are the 4 people who use an business plan?

Answer 25

Owner - a work guide

Partners- anyone wanting to work with business

Investors- to access the risk and rewards of business

Lenders - to investigated if the loan will be a likely risk or success

Question 26

What are the 8 parts of a business plan?

Answer 26

Aims and objectives
Marker research
Financial forecasts
Business idea
Production
Marketing mix
Location
Sources of finance