Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business > 1.4 Making the Business Effective > Flashcards

1.4 Making the Business Effective Flashcards

1
Q

What is a sole trader?

A

Businesses that have only 1 owner

  • most small businesses
  • plumbers, hairdressers, newsagents, fishmongers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the advantages of being a sole trader?

A
  • Easy to set up (great for start up businesses
  • Get to be own boss (more flexibility, make own decisions)
  • Owner alone gets to decide what to do with the profit
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the disadvantages of being a sole trader?

A
  • May have to work long hours with short holidays
  • Unincorporated-> business doesn’t have its own legal identity, so suing the business=suing the owner
  • Unlimited liability- liable for paying all the businesses debts if it goes bust-> personal finances are at risk (may have to sell assets to pay off debts)
  • Hard to raise money-> banks see it as risky investment, hard to get a loan so have to rely on friends, family and savings
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is a Partnership?

A

Business that is owned by 2 or more partners
- each partner has equal say in decision making
- equal share of profits between partners
- accountancy firms, solicitors, doctor’s surgeries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the advantages of a partnership?

A
  • More owners= more ideas and a greater range of skills and expertise
  • More people to share the workload
  • More capital (money) can be invested into the business-> it grows faster
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the disadvantages of being in a partnership?

A
  • Each partner is legally responsible for other partners’ actions
  • Unlimited liability
  • More owners could lead to more disagreements
  • Shared profit, could lead to less money per partner
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the 2 types of Limited Company?

A

Public Limited Company (PLC)

Private Limited Company (Ltd)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is a Limited Company?

A
  • Incorporated-> separate legal identity to the owners, so taxes, bills and property under the company name belong to the company NOT the owners
  • Limited Liability-> company is liable for legal issues, not the owners, owners assets aren’t at risk, ONLY money invested into the business
  • Owned by shareholders-> more shares= more control
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the advantages of being a Private Limited Company?

A
  • Limited Liability, can only lose amount invested into business (over sole traders and partnerships)
  • Easier to get a loan or mortgage (than for a sole trader or partnership)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the disadvantaged of being a Private Limited Company?

A
  • More expensive to set up partnerships (due to legal paperwork)
  • Company is legally obliged to publish accounts yearly (doesn’t have to be public) which sole traders and partnerships DO NOT have to do
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is Franchising?

A

A business sells the products or uses the trademarks of another firm, giving the firm their franchising from a fee or profit percentage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the difference between franchisors and franchisees?

A

Franchisor- product manufacturer

Franchisee- firms selling the products

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the 2 different ways franchises can operate?

A
  • Franchisees can trade under the name of the Franchisee bus advertise they sell a particular manufacturer’s products (car dealerships)
  • Franchisee can buy the right to trade under the name of the franchisor (fast food firms)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the advantages of Franchising?

A
  • Customers will recognise the franchisor brand, so are more likely to buy from the franchisee-> less risk of business failure
  • Less risky than starting a business from scratch + easier to get a bank loan to start up
  • Franchisor might provide franchisee with training, help with management or accounting etc
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the disadvantages of Franchising?

A
  • Franchisor may have strict rules on what to sell and how to operate the business-> freedom is limited
  • Franchisee usually has to pay a lot to start the franchise and then make regular payments to the franchisor-> high costs, may end up with less money that if they started the business from scratch
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What factors will a business consider when choosing where to locate itself?

A
  • Location of Raw materials
  • Labour supply
  • Competition
  • Location of the Market
  • Using the Internet
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

How does Location of Raw Materials influence the location of a business?

A
  • Nearby= lower transport costs
  • if bulk buying, being closer with less transport costs is efficient and keeps fixed costs low
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

How does Labour Supply influence the location of a business?

A
  • Near an area of high unemployment= keep wages low
  • Good selection of people to choose from + can easily build a workforce
  • Local colleges (built up areas) can provide training
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

How does Competition influence the location of a business?

A
  • Near competitors can be an advantage-> easy to find skilled labour, local suppliers, eager customers
  • Away from competitors-> won’t lose sales to competitors, do not have to reduce prices to stay competitive
20
Q

How does Location of the Market affect the location of a business?

A
  • Pay more to transport products than raw materials BC cheaper to locate nearer customers
  • Locate near market-> people get to know the business + easily access + helps get sales through passing trade (ie people walking past)
21
Q

How does Using the Internet influence the location of a business?

A
  • Internet-> location of firms is more flexible
  • Ecommerce-> manufacturers can locate further from market BUT closer to raw materials. Also no need to have a shop (lower costs)
    -Documents can be accessed over internet-> some businesses no longer need offices, people can work from home + employ people globally
22
Q

What is the Marketing Mix (4 P’s)?

A

Price
Place
Promotion
Product

23
Q

What is Product?

A

Creating a product that fulfils the identified wants and needs of a customer

24
Q

What is Price?

A

Must be good value for the customer
- doesn’t have to be cheap if it meets needs (ie is luxury)

25
Q

What is Promotion?

A

Promote the product so potential customers are aware it exists and want to buy it

26
Q

What is Place?

A

Method of distribution to get the product from the company to the customer
(ie sold through retailers or sold straight to the customer)

27
Q

What factors can affect a business’ marketing mix?

A
  • Each of the other factors
  • Changes in technology
  • Changing customer needs
  • Competitive markets + Competition
28
Q

How do the different parts of the marketing mix affect each other?

A

EG: Quality will affect the cost, therefore the price it is sold for etc

29
Q

How does Changes in Technology affect the marketing mix?

A
  • improvements in Ecommerce means more companies are selling online than in stores
  • changes in digital communication-> change how companies promote their products
30
Q

How do Changing customer needs affect the marketing mix?

A

EG: companies may have to lower prices for products using older technology as they no longer meet customer needs

31
Q

How does a Competitive market and a Business’ Competitors affect the marketing mix?

A
  • Competitors are offering the same products at lower prices-> business will need to lower prices to stay competitive
  • Competitor starts selling brand new product-> business may have to develop its own version of the same product to offer similar product rage
  • Competitive market-> may have lots of products, have to spend more on promotion to make products seem appealing
32
Q

Why does a Small Business have to ensure they get their marketing mic correct?

A

They have fewer sources of finance than established businesses, so are more likely to fail

33
Q

How do small businesses focus on Price?

A
  • Cannot benefit from ‘Economies of Scale’ like larger businesses due to their inability to bulk but raw materials
  • Also may have high start up costs from buying new machinery etc
  • Need to have HIGHER PRICES than larger businesses to cover costs in order to survive
34
Q

How do small businesses focus on Product?

A
  • Have less money to spend on developing a wide product range, so may have smaller range compared to larger businesses
  • Focus on providing higher quality products (ie choose job production over flow production)
35
Q

How do small businesses focus on Promotion?

A
  • Cannot use high cost promotion methods (TV ads etc) so use cheaper methods (flyers, free samples)
  • Promoting right brand (overall image of company) is important, especially when trying to establish a brand image to customers
  • Small businesses can promote to local customers (unless based online), which can affect the way they promote themselves (ie in local newspaper rather than national newspaper)
36
Q

How do small businesses focus on Place?

A
  • Chose to sell directly to customers or through small retailers
  • large retailers may not want to buy a new, unrecognised brand’s products (more risky)
  • hard to sell large quantities to retailers
37
Q

What is a Business Plan?

A

An outline of what a business will do, and how it aims to do it

38
Q

Why should businesses have a Business Plan?

A
  • Useful when a business wants to make a change
  • Forces the owner to think carefully about what the business will do, its organisation and resources-> allowing to calculate how much money is needed
  • Can be used to convince financial backers it is a sound investment-> can show backer info on business operations, helping them decide how likely it is they get their money back
  • Helps reduce risks of a new business idea
  • Can help realise a new business idea is bad at an early stage, before wasting any time and money (due to planning)
  • Can help make business decisions-> ie Sales forecast, shows how much stock is needed to meet demand
39
Q

What should a business plan include?

A

The business idea
Business aims and objectives
Target Market
Marketing Mix
Location
Finance

40
Q

What should the Business Idea include in the plan?

A

What the firm is about, details of products being sold, how it is achieving its USP

41
Q

What should the Business aims and objectives include in the plan?

A

Aims are more generic and long term
Objectives are more specific, short term

42
Q

What should the Target Market include in the plan?

A

Who the business is selling to, backed by market research

43
Q

What should the Marketing Mix include in the plan?

A

How the business will sell its products using the Marketing Mix/4 P’s

44
Q

What should the Location include in the plan?

A

Where the business should locate and why
(ie near target market or suppliers and why)

45
Q

What should Finance include in the plan?

A

How much money is needed to start up the business and where the money will come from
- Cash Flow forecast
- Forecast of business’ costs, revenue and profits
- ratios to show backer likely return of investment

Business (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions