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Yr 10 Mock > Business > Flashcards

Business Flashcards

1
Q

Define invention

A

The creation of new products or processes usually as a result of extensive research

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2
Q

Define innovation

A

The practical application of an idea or invention into a good or service that customers will pay for

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3
Q

Define risk

A

Any situation which brings exposure

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4
Q

Give examples of risks a business may face

A

Failure, financial loss and lack of security

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5
Q

What is the general rule of thumb when it comes to how many years a business will operate with no profit?

A

3 years

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6
Q

What should a business owner avoid doing when starting a business?

A

Putting too much money, into the business, that they can’t afford to lose

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7
Q

Why is lack of security a risk for business?

A

Being self employed means there is no regular income, not set hours, no assets paid for (cars and houses) and no holiday days

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8
Q

List some non-financial rewards from business success

A

Being a household name, winning awards, growing their business and create ne opportunities

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9
Q

List some financial rewards from business success

A

Profit, business sucess and independence

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10
Q

Why could being independent be seen as good?

A

Make your own hours, providing jobs to others, a sense of achievement and doing something you’re passionate about

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11
Q

True or False? Risk is unavoidable

A

True

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12
Q

Before making a decision what must a business do?

A

Balance the risk of any decisions against the potential rewards (risk reward assessment)

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13
Q

Define business

A

An individual or organization whose aim is to satisfy the needs or wants of consumers by providing goods and/or services that they will buy

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14
Q

What are the three purposes of business activity?

A

To meet customer needs, produce goods/services and to add value and give a reason to buy

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15
Q

Define a market orientated business

A

A business that provides products because consumers want them

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16
Q

What do market orientated businesses look for?

A

Gaps in the market

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17
Q

What are the four customer needs?

A

Price, quality, convenience and choice

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18
Q

Define price

A

The amount that someone is willing to pay for a good or a service

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19
Q

Define quality

A

The percieved standard of a good or a service

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20
Q

Define convenience

A

How easy it is for a customer to obtain a product or service

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21
Q

Define choice

A

Refers to giving customers a number of options

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22
Q

What is the best way to get customers to buy?

A

Know who the customers are

Identify what those customers needs are

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23
Q

Define market research

A

The organised gathering, recording and analysis of data in order to better understand the behaviour of customers

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24
Q

Why do business undergo market research?

A

Identify a gap in the market
Inform business decisions
Reduce the business risks
Understand customer needs

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25
Q

What are the two methods of market research?

A

Primary and secondary research

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26
Q

Define primary research

A

New information collected first hand

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27
Q

Define secondary research

A

Existing information collected by someone else

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28
Q

Give examples of primary research

A

Surveys

Focus groups Questionnaires

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29
Q

Give examples of secondary research

A

The internet, market reports and government reports

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30
Q

What is quantitative data?

A

Data expressed in quantities (stats)

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31
Q

What is qualitative data?

A

Data expressed in quality (opinions)

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32
Q

Define market segmentation

A

The process of dividing a market into smaller groups that contain consumers with similar needs, wants or characteristics

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33
Q

What are the ways a market can be segmented?

A

Behaviour
Geographical location
Demographic
Psychographical

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34
Q

Define a gap in the market

A

An unmet consumer need that provides an opportunity for businesses to increase their sales

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35
Q

What can a market map help identify?

A

The competition and how they compare

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36
Q

What is a unique selling point?

A

One way in which a business can gain a competitive advantage over other businesses

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37
Q

What two things must a business need?

A

Aims and objectives

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38
Q

What are business aims?

A

The long-term outcome that is desired from undertaking business activity

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39
Q

What are business objectives?

A

The short-term specific targets that are set to help a business achieve its overall aims

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40
Q

Give examples of financial aims?

A 
Survival
Sales
Profit
Market Share
Financial Security
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41
Q

Define profit

A

The difference between the amount recieved for selling products and services and the cost of making or providing them

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42
Q

How could a business increase revenue?

A

Sale more

Increase prices

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43
Q

Define market share

A

The proportion of sales within a market that are accounted for by a particular company or product

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44
Q

Give examples of non-financial aims?

A

Social (society improvement)
Personal satisfaction
Challenge
Independence

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45
Q

What makes aim and objectives differ?

A

The purpose of the business
The size of the business
The age of the business

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46
Q

Why is cash important to a business?

A

It’s needed to pay suppliers, overheads and employees

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47
Q

Define insolvency

A

A situation where a business is not able to pay the debts that it owes

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48
Q

Define cash inflows

A

Cash that is coming into the business

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49
Q

Give examples of cash inflows

A

Sales
Loans
Grants

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50
Q

Define cash outflows

A

Cash that is leaving the business

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51
Q

Give examples of cash outflows

A

Materials
Rent
Wages

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52
Q

Define net cash flow

A

The difference between the cash flowing into an out of a business, over a given time period

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53
Q

What is the net cash flow formula?

A

Net Cash Flow = Inflow - Outflow

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54
Q

Define cash flow forecast

A

A financial document that estimates the amount of cash coming into and out of a business over a given period of time

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55
Q

What can a business do by producing a cash flow forecast?

A

Identify problems before they happen
Plan how to use excess cash
Compare their forecast to their actual cash flow to monitor the business
Support applications for any borrowing

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56
Q

What three things makes up a cash flow forecast?

A

Receipts, payments and net cash flow

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57
Q

Define receipts

A

Cash that the business expects to recieve

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58
Q

Define payments

A

Cash that the business expects to send

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59
Q

What is cash needed to spend on?

A 
Stock
Premises
Staff
Equipment
Marketing
Overheads
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60
Q

Give examples of internal sources of finance

A

Personal Savings

Retained Profit

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61
Q

Give examples of external sources of finance

A 
Overdraft
Share Capital
Trade Credit
Crowd-funding
Loan
Venture Capital
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62
Q

What is retained profit?

A

Profit kept

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63
Q

What are the pros of retained profit?

A

No interest

Doesn’t have to be repaid

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64
Q

What are the cons of retained profit?

A

A new business won’t have any

Limited to how much previous profit has been retained

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65
Q

What is personal savings?

A

Cash invested by an owner

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66
Q

What are the pros of personal savings?

A

No interest

Doesn’t have to be repaid

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67
Q

What are the cons of personal savings?

A

Owner must be willing to invest the amount

68
Q

What is an overdraft?

A

When a bank allows more money to be spent than there is in a bank

69
Q

What are the pros of an overdraft?

A

Flexible

Cheaper source of short-term finance

70
Q

What are the cons of an overdraft?

A

High interest
Agreed in advance
Expensive if used over long-term

71
Q

What is trade credit?

A

A source of finance provided by supplies where it allows goods to be paid for at a later date

72
Q

What are the pros of trade credit?

A

Discounts for early payments

Allows to “buy now and pay later”

73
Q

What are the cons of trade credit?

A

It may not be available from all suppliers

Additional charges may be incurred if payment not made on time

74
Q

What is a loan?

A

An amount of money that is borrowed for a fixed period of time that must be paid back plus an agreed rate of interest

75
Q

What are the pros of a loan?

A

Regular repayments help with budgeting

Large purchases can be made

76
Q

What are the cons of a loan?

A

Interest

Lenders may ask for security

77
Q

What is share capital?

A

The money raised by selling additional shares

78
Q

What are the pros of share capital?

A

The money does not have to be paid back

Large amounts can be made

79
Q

What are the cons of share capital?

A

Only available in Ltd’s or Plc’s
Involves costs
Future profits have to be shared with more owners
Shares sold may earn value after sold

80
Q

What is venture capital?

A

Money that is invested by specialist investors

81
Q

What are the pros of venture capital?

A

Venture capitals provide experience and business contacts

Large sum of money

82
Q

What are the cons of venture capital?

A

Costs high
Danger of control of the business being lost
Loss profits

83
Q

What is crowd-funding?

A

Money that is raised by a large number of people

84
Q

What are the pros of crowd-funding?

A

Providing access to large amounts of money quickly

Raising awareness of a new business or product

85
Q

What are the cons of crowd-funding?

A

Providing cheap or free products costs money

New product ideas could be copied unless properly protected

86
Q

What factors affect which source of finance is appropriate?

A

Age of the business

How long the finance is required for

87
Q

Define short-term sources of finance

A

Finance required for 12 months or less

88
Q

Give examples of short-term sources of finance

A

Overdrafts

Trade credit

89
Q

Define long-term sources of finance

A

Finance that is required for more than a year

90
Q

Give examples of long-term sources of finance

A 
Personal Savings
Loans
Venture Capital
Crowd-funding
Share Capital
Retained Profit
91
Q

Define liability

A

Being legally responsible for any debts or financial commitments of a business

92
Q

What are the two types of liability?

A

Unlimited and limited liability

93
Q

What does unlimited liability mean?

A

The owner is responsible for all debts

94
Q

What does limited liability mean?

A

The business is responsible for all debts, not the owner

95
Q

Give examples of types of businesses

A

Sole Trader
Partnership
Limited Company

96
Q

What are unincorporated businesses?

A

Businesses that are not a separate legal entity (legal action is taken against owner)

97
Q

What are incorporated businesses?

A

Businesses that are a separate legal entity (legal action is taken against business)

98
Q

What are the pros of sole traders?

A 
Owner makes all decisions
Usually small - so little captial needed
Very easy to setup
Can respond quickly to changes in customer needs
Individualised services can be provided
Accounts can remain private
99
Q

What are the cons of sole traders?

A 
High costs
Difficult for the owner to take holidays
Long hours
Illness can cause problems
Unlimited liability
Extra capital may be hard to raise
100
Q

What is the deed of a partnership?

A

An agreed legal document that outlines the rules by which a partnership will be run

101
Q

What is included in a deed of partnership?

A

Who the partners are
How much each partner has invested
How profit is shared
The process when a partner leaves or joins

102
Q

What is a limited partnership?

A

When at least one partner does not play an active role in the business

103
Q

What are the pros of partnerships?

A 
Easy to setup
Responsibilities are shared
Allows family ownership of the business
Acounts can remain private
Capital can be obtained from partners
Usually small - so need less capital
104
Q

What are the cons of partnerships?

A

Possible disagreements
External capital may be difficult to obtain
Ordinary partners have unlimited liability
Possible legal costs of drawing up a deed

105
Q

What are dividends?

A

Profit left over that is paid to shareholders

106
Q

What are the pros of ltd’s?

A

Shares can be sold
Limited liability
Finance can be raised by selling shares
Staff are likely to have specialist skills
Extra capital makes growth easier
Likely to have more staff so easier to cope with absences

107
Q

What are the cons of ltd’s?

A

Accounts are not private
Shares can only be sold privately
Profits shared
Decisions may take longer

108
Q

What are the pros of franchising?

A 
Free advertising
Easier to borrow
Most problems will have been overcome
Good chance of success
Training provided
Franchisor will provide support and help
109
Q

What are the cons of franchising?

A 
Can't make decisions
Cannot sell the franchise without the agreement of the franchisor
Have to pay royalties to the franchisor
Have to buy supplies from franchisor
Risk that franchise can be removed
110
Q

What determines where a business chooses to locate?

A

The type of business activity
Proximity to resources and competitors
The nature of the permises required

111
Q

What must a business locate close to?

A

It’s competitors
It’s labour
It’s market
It’s materials

112
Q

What has the internet done to business location?

A

Removed the need of it

113
Q

Why has the internet removed the need of business location?

A

It gave businesses access to a wider range of customers and removed the need for large physical presmises

114
Q

What is marketing about?

A

Identifying your customers and then finding out what they want

115
Q

What are the four p’s?

A

Product
Price
Place
Promotion

116
Q

What are methods of promotion?

A

Advertising
Branding
Sales Promotion
Public Relations

117
Q

What does place refer to?

A

Where a product is sold and how it gets there

118
Q

Define business plan

A

A formal document outlining what a business wants to achieve and how it intends to do be sucessful

119
Q

What should a business plan include?

A 
Marketing Mix
Business Idea
Market Research
Aims and Objectives
Financial Forecasts
Sources of Finance
Location
120
Q

What two financial forecasts can be used in a business plan?

A

Break-even Calculations

Cash Flow Forecast

121
Q

Why should a business do businesses plan?

A

Survival
Finance
Risks
Objectives

122
Q

What is the first priority for a business?

A

Survival

123
Q

What are the reasons for a business to fail?

A

Poor Plans
Not Knowing The Market
Poor Financial Control

124
Q

What is the most common cause of business failure?

A

Running out of cash

125
Q

Define stakeholder

A

People or groups who have an interest in the activites of a business as they may be affected by them

126
Q

Give examples of stakeholders

A 
Customers
Suppliers
Owner
Employees
Local Authorities
127
Q

What are the two types of stakeholders?

A

Internal and external stakeholders

128
Q

Define an internal stakeholder

A

People or groups who are directly involved in the daily activites of a business

129
Q

Define an external stakeholder

A

People or groups who are not involved in the daily activites of a business, but are affected by them

130
Q

What actions may stakeholder groups take?

A

Protests
Boycotts
Negative Publicity

131
Q

Give an example of stakeholder groups that may have conflict

A

Owners & Managers - Profit-related objectives

Customers - Non-profit related objectives

132
Q

How do businesses resolve conflict?

A

Identify the cause
Identify solutions
Negotiate
Agree on a solution

133
Q

What are the benefits of meeting stakeholder needs?

A

Improved relationships
Access to a wider network of contacts
Improved reputation

134
Q

What are the drawbacks of meeting stakeholder needs?

A

Time consuming

Risk of upsetting other stakeholders

135
Q

Where is technology used in business?

A

Payments
Social Media
Communication
E-commerce

136
Q

How does technology affect sales?

A

Customers will:
Have more infomation
Have access to much wider range of products
Will share their experiences

137
Q

How does technology affect costs?

A

Better technology means more efficient production so less staff but also equipment is expensive and staff will need training

138
Q

How does technology affect marketing?

A

More customers

More information, so firms need to be competitive

139
Q

What is the purpose of legislation?

A

Consumer Protection
Employee Protection
Prevent Exploitation

140
Q

What does the equality act prevent?

A

Gender, religious, sexual orientation, disability, race and age discrimination

141
Q

Whats the impact of complying with laws?

A

Time costs

Financial costs

142
Q

Whats the impact of not complying with laws?

A 
Fines
Legal costs
Loss of revenue
Cost of replacing products
Bad publicity
Difficulties in recruiting
143
Q

Define economy

A

The production and consumption of goods and services within a country

144
Q

What does the economic climate refer to?

A

Consumer Income
Business Confidence
Business Investment
Job Vacancies

145
Q

What are the four different climates of the business cycle?

A

Recession
Recovery
Boom
Slump

146
Q

What are the economic factors?

A 
Interest Rates
Exchange Rates
Inflation
Unemployment
Taxation
147
Q

Define interest rates

A

The amount charged by a lender for borrowing a sum of money

148
Q

Who sets the base interest rate?

A

The Bank of England

149
Q

How does interest affect consumers?

A

Higher mortgage payments

Borrowing less money

150
Q

How does interest affect business spending?

A

Reduce investment
Reduce production
Look to save money

151
Q

Define exchange rate

A

The price of one currency expressed in terms of another currency

152
Q

Define inflation

A

A general and sustained increase in price levels

153
Q

How does inflation affect businesses?

A

Reduced sales
Lower investment
Lower wages
Harder to compete with foreign firms

154
Q

Define unemployment

A

People who are able, available, willing and actively seeking work, but do not currently have a job

155
Q

What are the positive effects of unemployment?

A

Larger pool of people - wider choice when recruiting

Wage don’t need to be as attractive

156
Q

What are the negative effects of unemployment?

A

Incomes lower - less customer spending

157
Q

Define taxation

A

A financial charge imposed by a government to fund various public expenditures

158
Q

Give examples of taxes

A 
Income Tax
Corporation Tax
Value Added Tax
National Insurance
Council Tax
159
Q

Define direct tax

A

Tax paid directly to the government

160
Q

Define indirect tax

A

Tax collected by other organisations and paid indirectly to the government

161
Q

Give examples of direct uk taxes

A

Income tax and corporation tax

162
Q

Give examples of indirect uk taxes

A

Value added tax and landfill tax

163
Q

How does taxation affect bussines?

A

Reduction of profit - more money a business has to spend

Reduction of revenue - less consumer income

164
Q

How do business respond to changes in legislation?

A

Increase minimum wage -
Reduce staff
Increase prices

Stricter health and safety rules -
Withdraw products
Make changes to products

165
Q

How do business respond to changes in economic climate?

A

Making changes to the product
Targeting different customers
Changing prices

Yr 10 Mock (8 decks)

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