Brainscape's Knowledge GenomeTM

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


See full index

EDEXCEL A Level Business > 1.5 > Flashcards

1.5 Flashcards

1
Q

What is an entrepreneur?

A

An individual who sets up a business and takes on the risks associated with the business

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

What is the role of an entrepreneur?

A
  • creating and setting up a business
  • running and expanding/developing a business
  • innovation within a business (intrapreneurship)
  • barriers to entrepreneurship
  • anticipating risk and uncertainty in the business environment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is involved in creating and setting up a business?

A

⮕ creating a list of ideas
⮕ trailing different concepts
⮕ market research
⮕ creating a logo
⮕ seeking financial support

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

What is involved in running and expanding/developing a business?

A

⮕ buying stock
⮕ completing the finances
⮕ listing stock for sale
⮕ contacting customers
⮕ chasing payment

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

What is involved in innovation within a business?

A

⮕ taking risks
⮕ being creative or innovative
⮕ solves problems
⮕ focusses on processes to improve productivity
⮕ drives innovation
⮕ understanding trends
⮕ self-confident
⮕ proactive in adding value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is involved in barriers to entrepreneurship?

A

⮕Financial: lack of funding, lack of start up capital
⮕Economical: taxes, recession, inflation, increased cost of living, market entry regulations
⮕Personal: health/family issues, lack of knowledge, lack of self-esteem, being risk averse, fear of failure
⮕Political: trade issues, war, instability within the government

⮕Other barriers:
- entrepreneurship capability
- access to finance
- lack of training

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is involved in anticipating risk and uncertainty in the business environment?

A
  • reactions and responses of competitions
  • reactions of customers not aligning with research

⮕Risk: Quantifiable. Business may be able to calculate the probability and anticipated returns associated with a decision

⮕Genuine Uncertainty: Business do not know the possible outcomes in advance, let alone their probabilities. It occurs in complex systems, such as the economy.

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

What is an entrepreneurial motive?

A

The factor that drives a person to start a business e.g. to be their own boss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is an entrepreneurial characteristic?

A

A quality or trait of the person starting the business e.g. creativity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Examples of possible entrepreneurial motives?

A
  • to be own boss
  • for social reasons - e.g. help community
  • to make a profit
  • more control over working life
  • turn hobby into a revenue generator
  • increase income
  • become independent
  • driven by a personal passion
  • to sell something new
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Examples of entrepreneurial characteristics?

A
  • resilient
  • hard-working
  • determined
  • creative
  • self confident
  • lots of self initiative
  • risk taker
  • positive
  • ambitious
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the financial motives?

A

⮕Profit maximisation: Where an entrepreneur starts a business and their key focus is the financial return of the business. It could be argues that they are more likely to marginalise the needs of other stakeholders

⮕ Profit satisficing: Where an entrepreneur seeks to make just enough profit to maintain their interest in the business (they don’t seek to maximise profit or expand)

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

What are the non-financial motives?

A

⮕Ethical stance: A minority of people may set up a business in support of a moral belief they have
⮕Social Enterprise: Organisations that trade with the aim of improving human and environmental wellbeing
⮕Independence: A lot of people want to be their own boss, therefore, they set up a business to achieve this
⮕Home working: Entrepreneurs set up their business at home; they like the flexibility

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the definition of a business objective?

A

Goals or targets of a business to help it achieve it’s aim

The best objectives are SMART

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Examples of business objectives?

A
  • survival
  • profit maximisation
  • sales maximisation
  • market share
  • cost efficiency
  • employee welfare
  • customer satisfaction
  • social objectives
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is involved in the business objective of survival?

A
  • short-term objective
  • new business
  • may have this objective whilst building a customer base and establishing itself in the market
  • the objective is to reach a sustainable level of sales that allows the business to reach it’s break even point
  • may involve penetration pricing
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is involved in the business objective of profit maximisation?

A
  • when a business makes the most profit possible
  • helps business recoup R&D costs
  • help business maintain high levels of product development and innovation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is shrinkflation?

A

Where a manufacturer keeps the price the same but makes the product smaller

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is involved in the business objective of sales maximisation?

A
  • profit figures tend to be annually so sales figures can be examined on a daily, weekly or monthly bill
  • managers find sales figures more satisfying as targets as profits go to owners and salaries are often linked to sales levels
  • anyone investing - can see sales data and may use it as an indicator of performance
  • often found in sales driven environments e.g. estate agents, car dealership
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is involved in the business objective of market share?

A
  • may be used in a very competitive market where consumers switch between suppliers (super markets)
  • very important for investors to judge how a business is doing against competitors
  • loss in market share - can be indicator of long-term serious financial problems
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is involved in the business objective of cost efficiency?

A
  • common in transport and construction industries
  • may be achieved by:
    → paying minimum wage to unskilled workers
    → subcontracting where economically viable
    → lean production or construction where material, time and process waste is eliminated to save costs
    → increase the perceived value of the product through strong branding
    → lower the quality and price of product
  • lowering the average cost means economies of scale
22
Q

What is involved in the business objective of employee welfare?

A
  • some businesses seek the harmonious relations to their workforce as an objective, they aim to achieve this through employee welfare
  • employees that are satisfied are loyal and hard working, have increased morale, motivation and productivity
  • business also benefits from an enhanced public image as a good place to work - makes recruitment easier
23
Q

What is involved in the business objective of customer satisfaction?

A
  • business who follow this objective will seek to monitor customer service levels through surveys and will focus on quality
  • attempt to identify and understand what customers want and then provide this
  • want to reduce the number of complaints
  • satisfied customers will tell others and reputation and word of mouth are very cheap ways of highly effective marketing to improve sales
  • a customer centres approach will:
    → ensure repeat sales
    → create brand loyalty to prevent customers from switch to similar brands
24
Q

What is involved in the business objective of social objectives?

A
  • also known as corporate social responsibility or CSR objectives
  • may become the USP of the business (e.g. lush/body shop)
  • may involve:
    → reducing impact on the environment
    → fair wages in developing countries
    → helping society
    → compliance with laws to minimise externalities like operating sensible hours so not to noise pollute the local community
25
Q

What is limited liability?

A

The owner of the business has no personal liability for business debts

The owner has a separate legal identity from the business and is NOT liable for payment of the debts from their own personal funds

26
Q

What is unlimited liability?

A

If a business gains debts, goes bust, or is sued this could be a problem for the owner

If there is no money in the business then the owner would NEED to pay using their own savings/finances - they may even have to remortgage their home or sell their car to pay off debts

27
Q

What are the 4 main forms of ownership?

A

Sole trader
Partnership
Private limited company (Ltd)
Public limited company (plc)

28
Q

What is a sole trader?

A

Any business that is owned and controlled by one person.

They pay income tax on any earnings from the business.
Also known as an unincorporated business.

29
Q

Examples of a sole trader?

A

hairdressers, butchers, bakery, florist

30
Q

Advantages of being a sole trader?

A
  • own boss = freedom
  • you gain all the money you make
  • in complete control of decisions and decisions can be made more quickly
  • business is quick and easy to set up (can be transferred to limited company later)
  • minimal paperwork and fewer legalities
31
Q

Disadvantages of being a sole trader?

A
  • lots of responsibility
  • unlimited liability so owners take on all the risk themselves
  • harder to raise finance
  • business suffers if owner becomes ill, loses interest etc
  • must become multi-skilled
  • tend to work long hours (hard to ensure work-life balance)
32
Q

What is a partnership?

A

A business or organisation in which two or more people own the business, and run it for the common goal of making a return.

They pay income tax.

33
Q

Examples of a partnership?

A

Doctors, dentists, estate agents, soliciters

34
Q

Advantages of being a partnership?

A
  • spreads risk across more people (there are more people to share the burden of debt - unlimited liability)
  • raise more finances than sole traders
  • different partners can bring different skills to the business
  • partners are able to share the workload and responsibilities
  • increased credibility with potential customers and suppliers
35
Q

Disadvantages or being a partnership?

A
  • have to share profit
  • less control of the business for the individual
  • disputes over workload
  • problems if partners disagree over direction of business
  • still have unlimited liability if the business haven’t set up a Limited Liability Partnership
36
Q

What is a private limited company (Ltd)?

A

A business that is owned by it’s share holders, run by directors and where the liability of shareholders for the debts of the company is limited.

Must be at least 1: shareholder, director and secretary.
Pay corporation tax on profits.

37
Q

Advantages of an Ltd ?

A
  • owned by one or more shareholders (often family members)
  • profits are only shared between shareholders (received as a dividend)
  • able to raise money by borrowing
  • if company fails, the investors have limited liability
38
Q

Disadvantages of an Ltd ?

A
  • accounts of companies cannot be kept private
  • more difficult/expensive to set up
  • cannot sell shares on the stock exchange, which limits the amount of capital that it can raise
  • legal set up costs are expensive
  • as profits are only shared with shareholders, it is harder to motivate and control workers who do not hold onto shares
39
Q

What is a public limited company (plc)?

A

A company that is able to offer its shares to the public.

Shares are sold to the public on the stock market.
Incorporated business (limited liability)
Run by a board of directors on behalf of shareholders (they make the decisions)

40
Q

Advantages of a plc?

A
  • better access to capital
  • opportunities to easily make acquisitions
  • more prestigious profile, which may enable the business to gain contracts
  • limited liability
41
Q

Disadvantages of a plc?

A
  • once listed on a stock exchange, the company is likely to have a much larger sum of external shareholders, to whom the company directors will be help accountable (greater pressure)
  • financial markets will govern the value of the company through the trading of the company’s shares
  • vulnerable to a hostile takeover
  • expensive to become a plc
  • greater public scrutiny as accounts are published publicly
42
Q

What is franchising?

A

Where a small business owner buys the rights to sell the goods and services of a large, well-established company.

There is usually a set up fee which can be costly.

43
Q

What is a franchisee?

A

This is the small business owner who is buying the rights

44
Q

What is a franchisor?

A

This is the large business who are selling the rights e.g. subway

45
Q

Advantages of franchising?

A
  • the franchisor chooses the franchisees carefully as they know what characteristics are needed to make a successful franchisee
  • the franchisor decides how much money the franchisee must invest in the business
  • the franchisor provides support (management advice and training which help franchisee solve problems)
46
Q

Disadvantages of franchising?

A
  • franchisees do not have freedom of running their own business; bound by rules e.g. can’t vary product price
  • franchisee cannot sell the business without franchisors permission
  • franchisor can end the franchise without consulting franchisee
  • franchisee pays percentage of profits in royalties
  • franchisee will never own the business outright
47
Q

What is social enterprising?

A

A business that trades fro a social and/or environmental purpose.

Not a charity, but achieve the social aim through donations and grants, NOT through trading.

48
Q

What is a lifestyle business?

A

It aims to provide a great quality of life for the owner.

  • owners start a business hoping to sustain a certain lifestyle
  • may start business by doing something they enjoy
  • allows an entrepreneur to live how they want and still run a business
49
Q

What is an opportunity cost?

A

The cost of missing out on the next best alternative when making a decision.
It represents the benefits that could have been gained by taking a different decision.

50
Q

What are the personal opportunity costs of developing a business idea?

A
  • Missing out on the opportunity to earn a regular income
  • Outlay on a lease/building work/fixtured/machinery/staff
  • The wear and tear on the family
51
Q

What are trade offs?

A

Arises when having more of one thing results in having less of another e.g. trading off the start-up of a business against a year’s international travel.

52
Q

What are the risks of changing from entrepreneur to leader?

A
  • additional workload
  • staff may find it hard to accept a new manager
  • authority should be passed down the hierarchy to middle managers without interference form above
  • motivating staff is difficult

EDEXCEL A Level Business (19 decks)

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