3 Flashcards
define sole traders
anyone who owns and runs their own business
define unlimited liability
you are personally responsible for all the debts of the business
define self employed
you work for yourself, make your own tax returns, arrange insurance and manage the entire business
define partnership
where 2 or more people own and run a business together
define sleeping partner
someone who invests money but takes no part in the day to day running
define deed of partnership
lays out rules for running the partnership
private limited companies- good points
- have family and friends will share responsibility become director
- limited liability takes away a lot of risk
- more risks, encourages risk
- more investment
private limited companies- bad points
- all accounts must be made public
- family and friends only brings limited finance
- time consuming
- (AGM) annual general meeting
public limited company- good points
- able to raise funds to buy other businesses to add to it and improve
- publicity which often brings in a lot of business
- can sell on stock exchange
- raise money quickly
public limited company- bad points
- its expensive to issue shares
- shareholders want a dividend
- takeover
MNC (multinational corporations) benefits
- cheaper to manufacture
- trading
- cheap labour
what does SMART stand for
Specific Measurable Achievable Realistic Timed
why produce a business plan
- helps give the business direction
- sets strategies
- helps to communicate to all stakeholders
porters 5 forces model
- degree of rivalry
- threat of new entrants
- threat of substitutes
- bargaining power of buyers
- bargaining power of suppliers
benefits of being in a partnership
- share responsibility
- greater flexibility
- share skills set
drawbacks of being in a partnership
- share profits
- unlimited liability-responsible for all debts and dissolves if someone leaves
- potential disagreements
define limited liability
not personally responsible for business debts and obligations of the corporation.
problem with MNCs
huge pressure on the government to relax their laws
define franchise
is a business system in which private entrepreneurs purchase the rights to open and run a location of a larger company.
benefits of a franchise
- offers training and advice
- established name
- high sales revenue
sectors of the economy
- primary
- secondary
- tertiary
define primary sector
-businesses in primary sector are concerned with the extraction industries. These include farming, foresting, fishing and mining, as well as oil and gas extraction
define secondary sector
-businesses in secondary sector are concerned with manufacturing. That is turning raw materials into semi-finished and finished products.
define tertiary sector
-businesses in tertiary sector are concerned with the output of services
key points of a business plan
- aims and objectives of chosen business
- strengths and weaknesses
- opportunities
- tech/social/political/economic factors
why produce a business plan
- provides direction
- sets strategies(long term) and tactical (short term)
define contingency planning
plan B
contingency planning- what sort of things can go wrong in the next 12 months?
- sales and marketing
- human resources
- operation management
- other outside issues, e.g water leak
Negatives of Porters 5 forces model
- unable to evaluate the long term
- too simplistic it ignores; government, laws and legislation, business ethnics, changing testes
Globalization impacts on customers
- convenient to buy online
- cheaper prices
- shop around
Globalization impacts on producers
- increased sales
- cheap labour
- near more new markets
Benefits of technology
- efficiency
- production
- productivity
- convenience
