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business a level > 1.5 entrepreneurs and leaders > Flashcards

1.5 entrepreneurs and leaders Flashcards

1
Q

what’s an unincorporated business?

A
  • no legal distinction between owner and business
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2
Q

what liability does a unincorporated business have?

A
  • unlimited liability
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3
Q

what’s an incorporated business?

A
  • business is a separate legal identity
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4
Q

what liability does a incorporated business have?

A
  • limited liability
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5
Q

who owns an incorporated business?

A
  • shareholders
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6
Q

what are advantages of operating a limited company?

A
  • limited liability
  • easier to raise finance
  • stable form of structure
  • may have tax advantages
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7
Q

what are disadvantages of operating as a limited company?

A
  • greater admin costs
  • public disclosure of company information
  • profits shared between shareholders
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8
Q

what is a sole trader?

A
  • one owner but can employ any number of people
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9
Q

what are legal responsibilities of a sole trader?

A
  • pay income tax
  • pay national insurance contribution
  • must register for VAT after turnover reaches certain point
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10
Q

what liability does a sole trader have?

what does this mean?

A
  • unlimited

- they can lose more money than was originally invested

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11
Q

what are advantages of operating as a sole trader?

A
  • owner keeps all profits
  • owner has complete control
  • simple to set up
  • can be flexible
  • offer a personal service
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12
Q

what are disadvantages of operating as a sole trader?

A
  • owner has unlimited liability
  • may struggle to raise finance
  • usually to small to exploit economies of scale
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13
Q

what are aspects of a partnership?

A
  • more than one owner
  • owners share responsibility and profits
  • usually specialise
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14
Q

what are advantages of operating as a partnership?

A
  • easy to set up and run
  • can specialise
  • more owners can raise more capital
  • doesn’t have to publish financial information
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15
Q

what are disadvantages of operating as a partnership?

A
  • unlimited liability
  • share the profits
  • partners may disagree and fall out
  • limited growth potential
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16
Q

what is a limited partnership?

A
  • where some partners provide capital but take no part in management
  • limited liability
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17
Q

what are characteristics of a limited company?

A
  • separate legal identity
  • limited liability
  • capital raised through shares
  • pay corporation tax
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18
Q

what is an IPO when does this occur?

A
  • initial public offering

- when a private limited company wants to go public they ‘float’ shares on the stock market

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19
Q

what is a franchise?

A
  • the ability to sell under another businesses name
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20
Q

what is franchising?

A
  • franchisor grants a licence (franchisor) to another business (franchisee) to allow it to trade using the brand/businesses format
21
Q

what are advantages of running a franchise?

A
  • still your own business
  • franchisee gets advice and training
  • easier to raise finance
  • easier to build a customer base
22
Q

what are disadvantages of running as a franchise?

A
  • not cheap
  • restrictions on marketing activities
  • ## risk that the franchisor will go out of business
23
Q

what are advantages for a franchisor?

A
  • growth strategy

- cream of ‘above normal’ profits

24
Q

what is liability?

A
  • the extent to which someone is liable for the debts of the business
25
Q

what are advantages of operating as a public limited company?

A
  • limited liability
  • large amounts of money can be raised
  • tend to have lower production costs
  • may be able to create barriers to entry
  • easier to raise finance
26
Q

what are disadvantages of running as a public limited company?

A
  • start up costs can be expensive
  • an outsider could take over the company by buying out majority shares
  • competitors can inspect companies accounts
  • difficult to deal with customers at a personal level
  • under lots of regulations
27
Q

what is a shareholder?

A
  • someone who invests capital in exchange for a part ownership in a company
28
Q

what’s a dividend?

A
  • a share of profits allocated to shareholders
29
Q

what’s a mission?

A
  • a quantitative statement of the businesses aims
30
Q

what’s an aim?

A
  • a long term plan from which business objectives are divided
31
Q

what’s an objective?

A
  • a target which must be achieved in order to realise the stated aim
32
Q

what are business objectives?

A
  • specific intended outcomes of business strategy

- targets which the business adopts in order to achieve its primary goal

33
Q

what’s the hierarchy of objectives?

A
  • mission
  • corporate/strategic
  • functional
  • team
  • individual
34
Q

what does the higher up in the objectives hierarchy mean?

A
  • increasingly strategic
35
Q

what is strategy?

A
  • long term success of a company
36
Q

what is the basis for business objectives?

A 
S- specific 
M- measurable 
A- achievable 
R- relevant 
T- time-bound
37
Q

what percentage of start up business fail within the first few years?

A
  • 60%
38
Q

what is cost efficiency?

A
  • aims to achieve the most cost effective way of delivering goods and services to the required level of quantity
39
Q

what are benefits of cost efficiency?

A
  • low unit costs
  • higher gross profit margin
  • higher operating profit
  • improved cash flow
  • higher return on investments
40
Q

what does KPI stand for?

A
  • key performance indicator
41
Q

what are profit objectives?

A
  • specific level of profit
  • profitability %
  • profit maximisation
  • exceed industry of market profit margins
42
Q

what are business objectives related to revenue?`

A
  • revenue growth
  • sales maximisation
  • market share
43
Q

what resources are often scarce?

A
  • finance
  • time
  • capacity
  • skills/capabilities
44
Q

what is an opportunity cost?

A
  • measures the cost of an action in terms of the next best alternative foregone or sacrificed
45
Q

what is a trade off?

A
  • where having more of one thing potentially results in having less of another
46
Q

what is a risk-reward trade off?

A
  • if encouraged to take higher risks they need to be offered higher rates of potential return
47
Q

what is liquidity?

A
  • how easily assets can be made into cash

- cash is the most liquid asset

48
Q

what is corporate social responsibilities (CSR)?

A
  • when companies integrate social and environmental concerns into their business operations
49
Q

why do firms embrace CSR?

A
  • being a good citizen

- contracting benefits

business a level (24 decks)

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