business Flashcards
reward
return on your risk
risk
element of something going wrong
CELL meaining
capital
enterprise
land
labour
capital defintion
equipment used, tools and finance
enterprise definiton
you and the skills of your people
land defintion
the site on which you are based
labour defintion
the employees
primary industry
extracting natural resources eg quarries and farmers
secondary industry
convert those resources (from primary industry) into goods eg manufactures
tertiary industry
services eg retailers like my cafe
4 functions
human resources
finance
marketing
operations
HMRC
his majesty revenues custom
sole trader
is the company
unlimited liablity
tell HMRC
tax return
unlimited liablity
high risk as you put everything on the line
limited company what you need to do
filing accounts
coorperation tax
paye as you earn
national insurance
in a limited company how much of each salary is taxed for the company
13 percent
external factors
political
economic
social
technological
legal
ethical
external factors:
political - what it involves
how and to what degree a government invests in the economy. this can include government policy, political stability and foreign trade policy
external factors:
economic - what it involves
this includes economic growth, interest rates , exchange rates, inflation, disposable income
external factors:
social - what it involves
involves shared belief and attitudes of the population includes population growth and age distribution
external factors:
technological factors - what it involves
new ways of producing good and services, new ways distributing them and communicating with target market
external factors:
legal - what it involves
health and safety and equal opportunities, advertising standards and consumer rights and employee rights and equality act 2010
external factors:
ethical - what it involves
stands for ethical principles and morals
percentage change equation
amount of change / old times 100
fair trade products definiton
changes to the way trade works through better prices and decent working conditions and a fairer deal for farmers and worker in developing countries
social responsibility defintion
a moral obligation on a company or an individual to take decisions or actions that is in favour and useful to society.
external cost defintion
costs that are not borne by the person or entity that causes them eg result of market failures such as when a company pollutes the environment without paying for the clean-up costs
non renewable energy defintion
a natural substance that is not replenished with the speed at which it is consumed - finite resource eg fossil fuel
pressure group defintion
a group that tries to influence public policy in the interest of a particular cause
sustainability defintion
the ability to maintain or support a process continuously over time
recruitment process
- job analysis / identify a vacancy
- job description - job title and responsibilities
- person specification eg skills and characteristics
- advertise the vacancy - internally and externally
- shortlist of best applications sent in
- interview - ask everyone same questions - scores and tests (optional)
- offer the job
internal stakeholders
are people whose interest in a company comes through a direct relationship eg employmee, owner, investor
external stakeholder
do not directly work for or with a company but are affected by the actions and outcomes of the business
shareholder
owns a stock in you company
what does SMART stand for
specific
measurable
achievable
realistic
timely
ten key sections of a business plan
- idea
- aims and objectives
- market
- location
- personal / human resource
- buying and production / operations
- premises and equipment
- financial forecast
- marketing
- source of finance
business plan:
idea - what goes in the section
name and legal structure, overview and general concept
business plan:
aims and objectives - what goes in the section
year 1 - survive
immediate and long term achievements you want
business plan:
market - what goes in the section
size of market , customers (ideal) , targeting who and competitors
business plan:
location - what goes in the section
where it will operate and how you use channel distributions
business plan:
human operations / personal - what goes in the section
who will run the business and roles and responsibilities of employees
business plan:
buying production / operations -what goes in the section
buying supplies , raw materials and fineshed products and methods and costs of production
business plan:
premises and equipment - what goes in the section
cot of the premisses and equipment’s in order to run the business and machinery
business plan:
financial forecast - what goes in the section
Cash - create cash flow forecast
Profit - income statement
Net worth - value of the business and statement of financial position
business plan:
marketing - what goes in the section
how you promote, price promotion , product and place
4Ps
business plan:
sources of finance - what goes in the section
how much is required to start ad run the business
investors loans and savings
what are the 4Ps
promotion
price
production
place
reasons to start a business
-to produce a good or service
- to distribute products
- to benefit society
- to fill a gap in the market
- to fulfil a business opportunity
what are goods
tangible
what are services
intangible
what are wants
things that people would like but they can survive if they don’t own the item
what are needs
are needed to survive eg shelter, food and water
opportunity costs
what you give up in order to ain something
two types of private sector
in cooperated and unincorporated
what are forms of unincoroporated business
sole trader
partenrship
what are forms of in cooperated business
public limited company
private limited company
unincorporated meaning
the owner is the business -
no legal difference
unlimited liability
most are sole traders
incorporated meaning
legal difference between the business and the owners
limited liability
most are private limited companies
sole traders defintion
can also employ people but there not business owners
sole trader advantages
quick and easy to set up
sole trader disadvantages
unlimited liablity
partnerships
- owned by one or more people
-have an agreement - contract written down - partners between them own all the business assets and owe all business liabilities
partnership agreements
- how profits are shared
- what each partner invests
- how decisions are made
-what happens if another partner wants to leave or die
partnership advantages
- simple way for two or more people to run a business
- minimal paperwork
-specialists usually part of the business
partnership disadvantages
- unlimited liability
- one partner makes a mistake all pay consequences
- complicated to sell or close
limited company
owners of a company are shareholders (whoever owns the biggest percentage) but is run by directors
limited company advantages
-shareholders are protected
-stable form of structure
-easier to finance
limited company disadvantages
-greater admin costs
-public disclosure of company information
-directors legal duties
continuity
owners change but business continues
net worth equation
share price times number of shares
public disclosure
competitors can see your accounts
3 advantages of using robots to deliver foods
- dont have to pay delivery drivers
- eco friendly - reduce emissions
- USP
USP menaing
unique selling proposition
2 negatives of robots delivering foods
- less jobs available
- able to hack them
- hazard to blind people
-maintain costs and issues
-initial start up costs are high
benefit of ecommerce of a business
don’t have to travel to buy the product
open / can buy from 24/7
larger target audience
disadvantage or ecommerce of a business
initial costs to set up a website
delivery takes longer
increased coemption
stakeholders
are individuals and organisations that are affected the activities of a business
intranets defintion
are communication networks which can only be accessed by an organisations employees
extranets definition
are similar to intrants but can also be accessed by other organisations such as suppliers
e - commerce
the act of buying or selling a product using an electronic system such as the internet
how does e-commerce access markets
-easier to navigate
-less costs
-nation wide
-able to sell during pandemics
- global markets
- easier to buy
-dont have to travel
- everything in one space
information and communications technology
is the computing and communication systems that a business might use to exchange information with stakeholders
public limited companies
a company that commonly offers its shares to the general public via stock exchange
plc menaing
public limited company
does a limited company have unlimited or limited liablity
limited liablity
features of a plc
public limited company
limited liability
must raise 50 000
share capital
minimum of 2 directors
one company sectary
flotation
moving from a private limited company and going public and becoming a public limited company
what does becoming a public limited company
stock exchange access
finance from investors avaiable eg pension funds, investment and banks
what does PLUMS stands for
profit distribution - able to expand profits
L limited liability
U
Mangement - cant control shareholders
Sources of finance - stock exchange excess
why do plc only share 10 - 20 percent of the business
so they have still have most of the control and dont have a say in the running of the business as there a minority share
stock market flotations
the process of a private limited company offering shares on the stock market therefore becoming a public limited company
why become a plc - public limited comapny
advantages
- raise enternal finance
- stock exchange
- enormous amount of finance can be raised
- means expansion projects can be financed by share capital raised from foetation rather than using S-O-F - stable business ownership structure
- bank underwrites floation
- investors sell shares to other investors - higher prestige
- increased media exposure
-increased sales
-increased revenue - shareholders retain limited liablity
- become larger
-econ space
-market share increase
-sales increase
-profit increase
how raising enternal finance happens as a plc
- raise enternal finance
- stock exchange
- enormous amount of finance can be raised
- means expansion projects can be financed by share capital raised from foetation rather than using S-O-F
how having a stable business ownership structure happens as a plc
- stable business ownership structure
- bank underwrites floation
- investors sell shares to other investors
how having a higher prestige happens as a plc
- higher prestige
- increased media exposure
-increased sales
-increased revenue
how becoming larger happens as a plc
- become larger
-econ space
-market share increase
-sales increase
-profit increase
how having a shareholders happens as a plc
retain limited liablity
econ space meaning
economic scale
ethics
refers to whatever a business decision is thought to be morally right or wrong. An ethical decision is made on the basis of what is judged to be morally right
what profit is equivalent too
revenue
what is revue equivalent to
profit
social responsiblity
an approach to managing a business in which the interests of all groups in society are taken into account when making deciosn
external costs
a business activities result in harmful effects on other people not directly involved in production
scarce resources
insufficient products
environmental reporting
business environmental performance to the general public
NGO meaning
non profit organisation
non profit organisation what is it
a business that is set up to persuade objectives that benefit society
can profits be generated in a NGO
yes but they are not anywhere near the main aim
how do NGO often source money
fund raising
are NGO in corotated or unincorporated
both
advantage of an NGO
reduced taxes
example of an NGO
Ikea
business aim
is the overall target or goal
business objective
are smaller targets to reach your aim
profit maximisation
objective of business to achieve the largest profit surplus of revenues over expenditure
financial aims
aims set around money , can have more then one
survival aim
objectives which is to be able to continue trading or giving a service
common aim
starts up to stay in a business neither profit or loss
profit aim
having money left over after costs taken from revenue
sales aim
aim to sell a certain amounts of a product
gives employees a common goal
market share aim
increase market share by a set percent over a year
security aim
able to withstand enough to be financially stable
market leader
set prices for whole market eg Tesco is the market leader of supermarkets
social aim
committing to act ethically
non financial aims and objectives
these aims are not linked to monetary success and personal aims can be linked to social issues
satisfaction aims
turning a hobby or passion into a business
challange aim
starting something from scratch succeed on your own terms
control aim
having control over the decision making and where you want the business to go
4Ds
different people
different market
different stages
different aims and objectives
law
refers to what the business has to do legally eg pay minimum wage or not pollute water supplies
ethical advertising
are the adverts truthful and fair
ethical labour/ employees
paid above minimum wage , more holidays
ethcial supplies and raw material
buying materials from environmentally friendly companies and look after properties
ethical consumers
reward systems is the product actually good
ethical charities
donations
ethical environment
plant a certain amount of trees to offset co2 produced
FROGS meaning
Feature of the business
Rivals of the business
Objectives of the business
Growth of the business
Stakeholders in the business
first objective
survival
second objective
profit maximisation
third objective
growing in positive cash flow
fourth objective
customer satisfaction
fifth objective
become a company (limited)
sixth objective
able to create shareholder value
seventh objective
10 percent return shares every year for shareholders
eight objective
become ethical
ninth objective
environmental and sustainability
shareholder value
price per share increase share of the profits going to the owners (yield)
when can you have shares
when your a limited company
why use SMART
use for objectives
why would customers pay more for ethical products
they know its used for either used to get fair trade products, some goes to charity or other ethical issues
how can you be ethical in turns of products
-sustainable products
-fairtrade products
-pay on time
how can you be ethical in turns of enviroment
-recycle products
-paper packaging
-local produce
how can you be ethical in turns of human resource
-wages above minimum wage
-free training
how can you be ethical in turns of finance
- no money laundering
- fair price for products
how can you be ethical in turns of community
be involved with schools
litter picking
how can you be ethical in turns of marketing
- no false information
- use social media rather then paper save trees
aim
main goal of the business
objective
support the aim but more specific on how your going to achieve it
what two ways can a business change
evolves or reacts
private sector organisation who owns them
are owned by individuals
public sector organisations who owns them
owned by the government
internal factors
- performance of business
- influence of stakeholders
- leadership/ owners
external factors
- state of the economy
- level of the competition
- technology improvements
- new legislation
and pestle
what is pestle
list of external factors
Politics
Economy
Social
Technology
Legal
Ethics
business reactions
SPEW
what does SPEW stand for
Survival or growth focus
Product range increase or decrease
Entre exist a specific market
Workforce increase or decrease
tarif
taxation on imports
shareholders
own a part of a business
may also work in the business
prioritised growing value of shares
example of a stakeholder
dividends
are the part of a companies profits paid out to shareholders each year
types of shareholders
internal
external
connected
internal
in the business
external
not binned by a legal contract to the business
connected
relationship to the business
negotiation
occurs when two sides discuss what they want and try to find a compromise
owners
to whom a business belongs
known as shareholders in a limited company
stakeholder groups
employee
owners / shareholders
local community
government
suppliers
customers
objectives of a employee
secure jobs and higher earnings
objectives of owners and sharehoders
high divenedends and share price
objectives of local community
local jobs, minimise environmental impact on the community
objectives of the government
legal behaviour, taxes paid, growth
objectives of suppliers
paid on time, kept informed of any changes to the business
objectives of the customers
useful accurate information on the product, good service , value for money
economy
made up of millions of individuals consumers many thousands of business and governments.
consumers
individuals who use goods and services produced by the business
economic climate
describes the state of key factors within a country such as the levels of goods and services produced and number of jobs available
improving economic climate
employment increase
production increase
income increase
spending increase
reducing economic climate
employment decrease
income decrease
production decrease
spending decrease
interest rates
refer to the cost of borrowing money or the reward for saving money expressed as a percentage
TED meaning
trend - interest rates high or low
extent - how much
duration - how long
inflation
refers to the rate at which prices are increasing
inflation increases whilst
business costs increase
consumer spending increase
what are factors when choosing where to locate
cost
sales
image
when deciding on where to locate you look at proximity to
market
labour
materials
competitiors
where to locate:
nature of the business
retail
service
maunfacturing
where to locate:
technology
e- commerce and or fixed premisis
where to locate:
retail
close to customers
busy areas
competitors close by
where to locate:
service
close to customers
determined by type of service
sometimes service can be located anywhere
where to locate:
manufacturing
close to customers not important
located closely to raw materials
good transport links
protectionist measures
policies that government used to protect their own business against foreign competion
factors affecting location
costs
proximity to market
type of business
technology
transport links
availability of resource
imports
goods and services purchased from over seas consumer
income elastic products
demand changes to income on more expensive item
non income elastic products
demand not affected by income change
business plan
document setting out what a business foes and what it hopes to achieve in the futre
business planning
process of producing a business plan
loam
amount of money provided to a business for a stated purpose in return for regular repayments including interest charges
uncertainity
occurs when there is a lack of information about a certain situation
risk
possibility of something going wrong
final section of business plan should include
revenue
total costs
fixed costs
variable costs
profit
what does revenue mean
value of its sales
total costs
fixed and variable costs added together
fixed costs
do not change with output (dont change)
variable costs
do not change with output (can change)
profit equation
revenue minus total costs
lack of experience
dont have the necessary skills
what is an example of fixed cost
rent , insurance, utilities
what is an example of variable cost
inventory , raw materials, wages, sale commissions
gross margin
percentage of a company’s revenue that’s retained after direct expenses
gross margin equation
net sales minus COGS over net sales times 100
COGS meaning
cost of goods sold
globalisation
the trend for markets to become worldwide
MNC meaning
multinational company
multinational company
produce goods and services in one country
drawbacks of globalisation
uncertainity
changes
lack of experience
cost
competition
threat of takeover
unemployment
SPICED meaning
strong
pound
impacts
cheap
exports
dear
exchange rates
price of one country in realtion to another
imports
products brought in from another country
falling rates
exports cheaper sell more abroad
imports expensive sell less
rising rates
exports expensive difficulty selling abroad
imports cheaper sell more
expansion
occurs when an enterprise becomes bigger by increasing output and sales
internal growth
organic growth when a business gets bigger by selling more products
organic growth
increases production of sales of its products
external growth
occurs when a business gets bigger by joining or buying other business
intergration
process by which two or more business join together
market capitilisation
company measures the value of its shares
franchise
when a franchisor sells the rights to its products to a franchisee
franchisee
buys a franchise usually in return for a fee and a percentage of turnover
franchisor
sells a franchise usually in return for a fee and percentage turnover
pros of franchising
usually cheaper
faster rate of expansion
cons of franchising
usually slower
more expansion
how can you expand
internal and external
internal expansion ways to do it
-using internet platforms
-open more shops (factories)
-get another firm to carry certain tasks for you - outsourcing
how is using internet platform a negative
hacking
what does CMA meaning
competition and market authority
external expnasion how does it happen
merger and takover
depending on the type of firms this is the type of intergration
merger
two firms join together
takeover
one firm buys 51 percent or more shares of the business
aquasition
gaining a business
one way a business can expand orginacally
merger
economies of scale
occurs when a business unit costs of production fall as its output rises and the business expands
diseconomies of scale
occur when the cost per unit increases as a business expands
outsourcing
occurs when a business uses another business to produce for it
channel of distribution
describes the way in which ownership of a product is transferrered from the producer to the consumer
vertical intergration
when one firm another firm at a ins
