1.4 Making The Business Effective

Question 1

What is a private limited company

Answer 1

-owned but shareholders,people who have invested into the company
-shareholders get dividend if the business makes profit

Question 2

What is limited liability in a PLC

Answer 2

-shareholders are not responsible for the company’s debt
-shareholders may only lose money they have invested in the company to help pay off any outstanding debts or liabilities

Question 3

What are the advantages of a PLC

Answer 3

-limited liability
-easier to raise finance as can sell shares
-stable form of structure
-original workers are likely to contain control

Question 4

What are the disadvantages of PLCs

Answer 4

-conflict between shareholders
-greater administrative costs
-less Privacy

Question 5

How do business choose the most suitable legal structure

Answer 5

-size and type of business
-lender requirements
-investment protection
-control
-growth

Question 6

What is a franchise

Answer 6

A franchise is the right given by one business to another to sell goods or services using its name for a return for a fee and share of profits

Question 7

What is a franchisor

Answer 7

The business that gives the right

Question 8

What is a franchisee

Answer 8

The business that agrees to sell/manufacture under license by the franchisor

Question 9

What does a franchisor provide

Answer 9

-training
-equipment
-materials
-am established brand name
-ongoing support

Question 10

What are the legal requirements for a franchise and how is it financed

Answer 10

-Have to buy a copy of the license so trading can begin

-franchisee will use there own savings or loans

Question 11

What is footfall, labour and proximity

Answer 11

Footfall- the number of people passing a particular location in a given time

Labour- staff

Proximity-nearness

Question 12

What what are the factors that influence business location

Answer 12

• Proximity to-market,materials,labour,competition
• nature of business activity
  -technology
  -costs

Question 13

What is bulk gaining products

Answer 13

Bull gaining product- the end product is bigger then the raw materials
-is is sensible to locate closer to market

Question 14

What is bulk reducing products

Answer 14

Bulk reducing product-the end product is smaller then the raw materials
-they will locate close to materials

Question 15

Why do business factor in proximity to labour

Answer 15

-start up business access to a reliable supply of skilled staff will be important

-labour intensive business will look in areas with lower wages and higher unemployment

Question 16

What is the impact of the internet on location decisions

Answer 16

-e commerce
-cheaper and quicker to launch a business online
-reach uk wide and international customer base
-open 24/7

Question 17

What is the marketing mix (4 ps)

Answer 17

-Price
-product
-place
-promotion

Each of the 4 ps of the marketing mix effect eachother

Question 18

How can business use marketing mix to try to gain competitive advantage

Answer 18

-create USP
-develop relationships with customers
-offering product or service that fills gap in market

Question 19

What is e conmerce

Answer 19

Buying and selling of goods and services using the internet.

Question 20

What do businesses need to adapt their marketing mix for

Answer 20

-competition
-consumer needs
-technology

Question 21

What is a wholesaler

Answer 21

A business that buys in bulk from the producer,who then sells smaller quantities to retailers and consumers

Question 22

What is a retailer

Answer 22

A store(or person) that sells products directly to customers

Question 23

What are ways of promoting your goods or services

Answer 23

-advertising
-sales promotions
-sponsorships
-leaflets

Question 24

What is a business plan

Answer 24

A business plan is a written document that describes a businesses aims,objectives,strategies,the market it is is and financial forecast

Question 25

What is the purpose of business planning

Answer 25

-provides a focus on the business idea
-helps test financial stability of the idea
-it is essential to raise finance from outside providers
-identify target market through market research

Question 26

What should be included in a business plan

Answer 26

-the idea
-objectives
-finance required
-market overview
-how it will operate
-cash flow forecast
-forecast revenue,costs and profits

Question 27

What is the advantage of business planning

Answer 27

-reduces risk
-will help secure finance
-including market research can help reduce risk of failure

Question 28

What is the disadvantage of business planning

Answer 28

-Sales maybe overestimated
-any plan will require constant updating
-requires time and effort

Question 29

advantages on plc

Answer 29

-limited liability
-additional sources of finance
-control shareholders

Question 30

disadvnatages of plc

Answer 30

-shared profits
-legal requirements to publish financial accounts
-no access to stock exchange