1.4 Making The Business Effective Flashcards
What is a private limited company
-owned but shareholders,people who have invested into the company
-shareholders get dividend if the business makes profit
What is limited liability in a PLC
-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
What are the advantages of a PLC
-limited liability
-easier to raise finance as can sell shares
-stable form of structure
-original workers are likely to contain control
What are the disadvantages of PLCs
-conflict between shareholders
-greater administrative costs
-less Privacy
How do business choose the most suitable legal structure
-size and type of business
-lender requirements
-investment protection
-control
-growth
What is a franchise
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
What is a franchisor
The business that gives the right
What is a franchisee
The business that agrees to sell/manufacture under license by the franchisor
What does a franchisor provide
-training
-equipment
-materials
-am established brand name
-ongoing support
What are the legal requirements for a franchise and how is it financed
-Have to buy a copy of the license so trading can begin
-franchisee will use there own savings or loans
What is footfall, labour and proximity
Footfall- the number of people passing a particular location in a given time
Labour- staff
Proximity-nearness
What what are the factors that influence business location
- Proximity to-market,materials,labour,competition
- nature of business activity
-technology
-costs
What is bulk gaining products
Bull gaining product- the end product is bigger then the raw materials
-is is sensible to locate closer to market
What is bulk reducing products
Bulk reducing product-the end product is smaller then the raw materials
-they will locate close to materials
Why do business factor in proximity to labour
-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
What is the impact of the internet on location decisions
-e commerce
-cheaper and quicker to launch a business online
-reach uk wide and international customer base
-open 24/7
What is the marketing mix (4 ps)
-Price
-product
-place
-promotion
Each of the 4 ps of the marketing mix effect eachother
How can business use marketing mix to try to gain competitive advantage
-create USP
-develop relationships with customers
-offering product or service that fills gap in market
What is e conmerce
Buying and selling of goods and services using the internet.
What do businesses need to adapt their marketing mix for
-competition
-consumer needs
-technology
What is a wholesaler
A business that buys in bulk from the producer,who then sells smaller quantities to retailers and consumers
What is a retailer
A store(or person) that sells products directly to customers
What are ways of promoting your goods or services
-advertising
-sales promotions
-sponsorships
-leaflets
What is a business plan
A business plan is a written document that describes a businesses aims,objectives,strategies,the market it is is and financial forecast
What is the purpose of business planning
-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
What should be included in a business plan
-the idea
-objectives
-finance required
-market overview
-how it will operate
-cash flow forecast
-forecast revenue,costs and profits
What is the advantage of business planning
-reduces risk
-will help secure finance
-including market research can help reduce risk of failure
What is the disadvantage of business planning
-Sales maybe overestimated
-any plan will require constant updating
-requires time and effort
advantages on plc
-limited liability
-additional sources of finance
-control shareholders
disadvnatages of plc
-shared profits
-legal requirements to publish financial accounts
-no access to stock exchange
