1.5 Flashcards
Why do new business ideas come about?
Technology, changes in consumer wants, products and services becoming obsolete
How do new business ideas come about?
Adapting existing products, original ideas,
What are some of the risks of setting up a business?
Risk of failure, financial loss, lack of security
What are some of the rewards of setting up a business?
Pursue an interest, financial rewards, be their own boss, dissatisfaction with their current job
What is the role of enterprise?
Quality, USP, Convenience, branding, design
What are the roles of the entrepreneur?
Hardworking, risk taking, innovation, organised
What are some of the main aims of a business?
Survival, profit, market share, growth
What are some of the main objectives a business may have?
Maximise shareholder value, social and ethical, customer satisfaction
What determines what objectives a business may have?
Size, competition, type
What are the advantages of a sole trader?
Easy to set up, they are their own boss, they can decide what to do with the profit
What are the disadvantages of a sole trader?
Unlimited liability, hard to raise finance, full responsibility, work load
What are the advantages of a partnership?
More experience and ideas, easier to raise money, easy to retain employees
What are the disadvantages of a partnership?
Sharing profit, unlimited liability, disagreements between partners, each partner is liable for the other
What are the advantages of a private limited company?
limited liability, keeping control, easy to raise finance
What are the disadvantages of a private limited compnay?
Huge cost, company is legally obliged to publish their accountss
What are the advantages of a public limited company?
Selling shares on the stock exchange, easy to raise money, limited liability
What are the disadvantages of a public limited company?
Owners havea little say over how the business ir run, anyone can take over the company, the compnaies accounts must be public
What are some examples of non profit organisations?
Charities, social enterprise, unincorporated association
What are some advantages of franchising?
Doesn’t need lots of investment, not concerned with diseconomies of scale, increases brand awareness
Disadvantages of franchising
The franchisee does not have complete control over the operations, a single franchise can ruins a brand image
What is opportunity cost?
The cost of the lost opportunity to consume something else
