Business activity Flashcards
What are three purposes of business enterprise and entrepreneurship?
spotting an opportunity
developing an idea
satisfying customer needs
describe spotting an opportunity?
spotting a gap in the market and improving a product or service already provided or producing a product or service more cheaply
describe developing an idea?
designing the product or service and planning production
describe satisfying customer needs?
producing the product or providing the service and marketing the product or service
what is the definition of an entrepreneur?
a person who takes the risk of starting and running a business enterprise
what is the definition of spotting an opportunity?
the ability to see the need for a particular product or service customers’ needs
what are the four main characteristics of entrepreneurs?
creativity
confidence
risk-taking
determination
what is a financial risk of being an entrepreneur?
if the business does not succeed, the risk of losing savings (and other assets) to pay off debts
what is a financial reward of being an entrepreneur?
the potential of making a lot of money
what is a non-financial risk of an entrepreneur?
health - the strain of running a business can cause mental and physical illness.
what are three non-financial rewards of an entrepreneur?
independence
self-satisfaction
making a difference
why should a business plan its activities?
reduce risk of failure
be as successful as possible
what are the five steps that are involved in a business plan?
the idea
the people
market research
finance
competitors
what are aims and objectives?
statements of what the business is trying to achieve
what is a business plan?
a simple plan which sets out details of the product or service being sold and how it will be financed, marketed and details of market research findings
what is finance?
a business word used instead of money. the finance needed to start a business is the money required to buy the resources needed
what are markets?
where a business sells its goods or services
what are resources?
the things a business needs to make it work, including staff and materials
when is a business plan needed?
before the business starts or at a major change within the business
what is a SMART target?
specific
measurable
achievable
realistic
timely
what is the definition of operate?
a term used to explain how a business works
what are the 4 things needed in a business plan to show how the business plans on reaching its targets?
identifying the market (age, gender and income)
identifying the resources
identifying the finance needed
achieve the business’ aims and objectives
what are the four types of business ownership?
sole traders
partnerships
private limited companies
public limited companies
what is a deed of partnership?
a document stating who owns the partnership, how much money each partner has invested and their role in the business
what is a private limited company? (Ltd)
usually a smaller business, it can sell its shares to invited people only
what is a public limited company? (plc)
it can sell shares to anyone who wants to buy
what is a share?
part ownership of a business
what types of ownerships are easy to set up?
sole traders
partnerships
what types of ownerships are easy for the owner(s) to control?
sole traders
partnerships
private limited companies
what types of ownerships have continuity?
private limited companies
public limited companies
what types of ownerships have their information kept private?
sole traders
partnerships
what types of ownerships involve in raising finance?
Ltd
plc
what types of ownerships have limited liability?
Ltd
plc
what types of ownerships may suffer with workload?
sole traders
what is limited liability?
the owners of a business can only lose the money they have invested in a business if it fails
what is unlimited liability?
the owner of a business is responsible for repaying all the debts of a business
what is the effect of limited liability on the owner?
the shareholders of the business do not have to risk their own savings or personal possessions to pay off debt
what is the effect of unlimited liability on the owner?
the business must pay back the debts using the businesses assets
what is the effect of limited liability on the business?
it helps business raise extra finance because investors know that they aren’t going to lose any of their savings or assets
what is the effect of unlimited liability on the business?
can limit the creation and expansion of sole trader and partnership businesses
what is the definition of assets?
items owned by the business such as buildings and vehicles
what is an established business?
a business that has been trading for a long time
what are start-ups?
new businesses that are just beginning
what is a sole trader business suitable for?
start-ups that only need a small amount of finance
what is a partnership business suitable for?
start-ups or existing businesses that want to grow
what are private limited companies suitable for?
start-ups and established businesses wanting to grow
what are public limited companies suitable for?
establishes businesses that want to grow and need large amounts of finance
what are 4 business objectives?
survival
profit
growth
providing a service
what is the definition of evolving?
refers to the way a business develops and changes over time, by becoming bigger or smaller and by selling different goods and services or a wider range, as well as selling in different places and in different ways
what are stakeholders?
groups or individuals who have an interest in a business
what is the definition of external stakeholder?
the local community, suppliers, customers and government
what is the definition of internal stakeholdrs?
the business owners and the people who work in the business
what are the roles of owners?
provide finance to start up and expand
may manage or run the business
what are the objectives of owners?
make profit
what are the roles of employees?
produce goods and services
what are the objectives of employees?
satisfaction of earning income
what are the roles of customers?
buy goods and services
what are the objectives of customers?
enjoy the benefits provided by goods and services
pay affordable prices
what are the roles of suppliers?
sell goods for resale and components and materials needed to manufacture goods or provide services
what are the objectives of suppliers?
make sales
earn profit
what are the roles of the government?
help businesses, workers and communities
what are the objectives of the government?
encourage business as this leads to high employment and prosperous communities
this increases the taxes paid to the government
what are the roles of the local community?
provide workers
monitor and influence business activities
what are the objectives of the local community?
have a local area which is prosperous, healthy and safe
a positive and a negative to owners of business activity?
earn profits if the business is successful
may lose money invested in the business
a positive and a negative to employees of business activity?
able to earn an income
may be made redundant
a positive and a negative to suppliers of business activity?
sell their goods to another business and earning profit from doing so
may lose money if the business does not pay for goods supplied
a positive and a negative to the government of business activity?
receive tax revenue
very large companies may become ‘too big to fail’ - the government may be criticised if they do and the government doesn’t step in to help
a positive and a negative to the local community of business activity?
people in the community can earn money from jobs
the community can be affected by negative externalities such as pollution and road congestion
what does business failure mean?
that can be indicated by losses, low sales, poor quality goods and services
what does business success mean?
this may be measured in terms of profit, growth, sales, returning customers and a positive contribution to the local community
what is the definition of capacity?
for a factory or shop, capacity refers to how much output it can produce or sell
what is the definition of organic growth?
concerned with the internal growth of a business, for example, by increasing its sales
what are four types of organic growth?
increasing output
gaining new customers
increasing market share
developing new products
what is the definition of external growth?
the growth of a business by takeover or merger
what is backwards vertical growth?
what a business merges with, or takes over, a business that supplies it with goods or services
what is diversification?
what a business merges with or takes over another business with which it has no connection
what is forward vertical growth?
when a business merges with, or takes over, a business that it supplies goods or services to
what is horizontal growth?
a merger or takeover where the two businesses are involved in a similar operation
what is a merger?
where two or more businesses agree to joint to become one business
what is a takeover?
where a business takes a controlling interest in another business, for example, by buying more than 50% of the shares in it
