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A-level Business > 3.1 What Is A Business > Flashcards

3.1 What Is A Business Flashcards

1
Q

Why do businesses exist?

A

To provide goods or services

Goods : physical products e.g. burgers / cars

Services : provided by a person or a business

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2
Q

How do suppliers work?

A 
Suppliers sell to businesses 
>
Businesses sell products to other firms 
> 
These firms sell products to customers
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3
Q

What is the difference between a customer and a consumer?

A

Customer - the person buying the product

Consumer - the person using the product

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4
Q

What is adding value?

A

The process of making a product more valuable to the purchaser.

In each stage of the production process more value is added

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5
Q

Name 4 methods of adding value

A
  • Convenience
  • Branding
  • Quality/ design
  • USP
  • Speed and excellent service
  • product features and benefits
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6
Q

What are the three main types of industry which firms operate?

A
  • primary
  • secondary
  • tertiary
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7
Q

What is a business objective?

A

This is the states measurable target of how businesses achieve aims

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8
Q

What is profit maximisation?

A

In order to increase profits companies must:

  • maximise turnover
  • minimise costs

(Normally only large companies can do this)

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9
Q

What is growth?

A

When a company expands their business which can result in economies of scale

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10
Q

What are economies of scale?

A

This is when a company can be more efficient and get better value from their resources

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11
Q

What is survival?

A

Sometimes a priority in several different situations:

  • A new business getting established
  • Times of recession
  • Overcoming other external factors (e.g. terrorist attack, health scare)
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12
Q

What is maximising quality?

A

Minimising waste and therefore costs

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13
Q

What is society?

A

Sponsoring or supporting local clubs / charities / good causes

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14
Q

What is satisficing?

A

Trying to make enough to keep the owners comfortable

Usually the aim of a smaller business

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15
Q

What is market share?

A

Is the total output of sales a business has in a specified market

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16
Q

What does SMART objectives stand for?

A 
S - specific 
M - measurable 
A - achievable 
R - realistic
T - time specific
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17
Q

What is profit defined as?

A

The financial gain that a business makes from proving goods and services

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18
Q

How do you calculate profit?

A

Profit = total revenue - total costs

P=TR-TC

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19
Q

What is return for risk?

A
  • the chance of loss or damage
  • the probability that something goes wrong leading to a loss
  • when a hoped-for outcome does not happen
  • profit is the reward that business people get from taking a risk
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20
Q

Which two ways can profit be used?

A
  • owners may take profit for own benefit

- profits may be retained in the business

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21
Q

What is the public sector?

A

Owned and ran by the government, aim to provide for the public rather than make profit

22
Q

What is the private sector?

A

Owned by private individuals.

Non-profit organisations also part of private

23
Q

What is a sole trader?

A

A single person who owns and runs a business

24
Q

Give 4 facts about sole traders

A
  • most common type of business structure
  • individual owning the business
  • personally responsible for all the business debts
  • unlimited liability
25
Q

Give some advantages of a sole trader

A
  • simple to run
  • profit, entitled to all profits
  • easy to close/shut down
  • quick and easy to set up
26
Q

Give some disadvantages of sole traders

A
  • unlimited liability
  • harder to raise finance
  • time, long hours
  • business suffers if the owner becomes ill
27
Q

What is a partnership?

A

Started and owned by more than one person

28
Q

Give 4 facts about a partnership

A
  • legal partnership agreement covering:
    • how profits are shared
    • how decisions are made
    • what happens if partner was to leave
    • unlimited liability
29
Q

Give some advantages for a partnership

A
  • simple
  • expertise and efforts of more often than one owner
  • partners can provide specialist skills
  • greater potential to raise finance
30
Q

Give some disadvantages for a partnership

A
  • unlimited liability
  • a poor decision by one partner damages the interests of the other partners
  • complicated to sell or close
31
Q

Give 5 key facts about private limited companies (private ltd)

A
  • can’t sell shares to the public
  • don’t have to share prices on stock exchange
  • often small businesses
  • no minimum capital required
  • end name with ‘limited’ or ‘Ltd’
32
Q

Give 5 key facts about public limited companies (PLC)

A
  • can sell shares to the public
  • share prices are on stock exchange
  • shares are sold through stockbrokers, banks and share shops
  • need £50,000 share capital to be listed on stock exchange
  • end their name in PLC
33
Q

What is a not for profit organisation?

A
  • benefit the community
  • have social aims
  • includes charities, housing associations, community development trusts
34
Q

What is unlimited liability?

A

Owner of the business is legally responsible for all the debts of the business

Could potentially loose the businesses items as well as their personal items

35
Q

What is limited liability?

A

Owners of the business only have part responsibility for the debts of the business

They have a legal identity

36
Q

What is a shareholder?

A

The owners of the company or someone who owns a share

37
Q

What are stocks?

A

Stock is a type of security that represents ownership in a corporation

People can have as many stocks/shares as they want or can afford

38
Q

Give 5 reasons why a shareholder would want to invest in a business

A
  • environmental reasons
  • wants to help develop the business
  • to gain more money for the future, venture capitalists
  • interested in the business
  • paid a dividend in return for their investment
39
Q

What are the main roles of shareholders?

A
  • provide funds
  • more shares = more power
  • most shareholders aren’t involved in running the business but depending on how much stock they have can determine whether they make decisions
40
Q

What is a dividend?

A

A dividend is a payment from the accumulated profits earned by a company to shareholders who qualify for the payment.

Can only be paid if the company has enough reserved profit

Is authorised by shareholders

41
Q

Why do share prices move up and down?

A
  • performance of the company
  • speculation and rumours of new product launches
  • current share prices
  • bank interest rates
  • state of the economy
42
Q

What is rights issued?

A

When a company offers its current share holders a right to buy additional shares before they’re released to the public. These are usually at a lower price

43
Q

What are the three sectors in the uk economy?

A
  • Private
  • Public
  • Voluntary
44
Q

Give 4 facts about the Private Sector

A
  • these are business enterprises
  • set up by entrepreneurs
  • provide most goods we use everyday
  • most are small (village shop)
  • come in different forms e.g. sole trader, partnerships, private companies and public companies
45
Q

What is the Public Sector?

What is included in it?

A
  • goods and services produced by the government and owned organisations are in this
  • police, NHS, fire brigade e.c.t.
46
Q

Why does the government organise provisions of goods or services which won’t be suitable for private businesses?

A
  • This is for things like street lights, post boxes

- Some things are too important to be ran by private firms e.g. army, NHS, police

47
Q

What is the Voluntary Sector?

A

Includes charities and societies that exist to help people e.g. Oxfam, cancer research

48
Q

What are the main objectives for the private sectors?

A

Exist to make profit.
Assumed to maximise profits
(Not always true: satisficing)

49
Q

What are the main objectives for the public sectors?

A

The government will have different objectives for different organisations.

  • public service - maximise quality of service they provide
  • financial return e.g. the BBC must pay for themselves and attempt to make a profit to help the country’s finances
50
Q

Define business environment

A

Incorporates all of the internal and external factors that affect how the company functions including employees, customers, management, supply and demand of the business

51
Q

What 5 things are included in a businesses environment?

A
  • safety
  • culture
  • happiness
  • political reasons
  • confidence

A-level Business (4 decks)

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