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GCSE Business Studies > Business Activity > Flashcards

Business Activity Flashcards

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1
Q

Business Activity

A

What a business does to provide its customers with a product/service

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2
Q

Enterprise

A

Spotting an opportunity to provide a product or service that people are willing to buy

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3
Q

Entrepreneur

A

An individual who has the skills and knowledge to set up and run their own business, and is willing to take risks

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4
Q

What are the characteristics of an entrepreneur?

A

Takes risks
Uses their initiative
Is determined
Able to make decisions
Never gives up
Has ideas
Isn’t afraid of failure
Spots an opportunity

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5
Q

Initiative

A

The ability to use your judgement to make decisions and do things without needing to be told what to do

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6
Q

Risks include…

A

Financial, strained relationships and health

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7
Q

Rewards include…

A

Financial, self-satisfaction and independence

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8
Q

Aim

A

Long-term goal

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9
Q

Objective

A

Short-term measurable target

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10
Q

Sole trader

A

A sole trader describes any business that is owned and controlled by one person. However, although the business is owned by one person, it doesn’t stop it from employing other people to work in the business

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11
Q

Partnership

A

Partnership is a business which is owned and controlled by a minimum of two partners
E.g. surgeons, dentists etc

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12
Q

Companies

A

Businesses where the owners are shareholders

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13
Q

Shareholders

A

The owners of private and public limited companies

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14
Q

Shares

A

A unit of ownership in a limited company

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15
Q

Limited liability

A

This is when the responsibility for the debts of the company is limited to the amount that the shareholder has put in

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16
Q

Private limited companies (Ltd)

A

Shares can only be purchased by family and friends

17
Q

Public limited companies (PLC)

A

Shares can be purchased by anyone

18
Q

Advantages of being a private limited company

A

Limited liability - protects the personal wealth of the shareholders
Easier to raise finance as can sell shares
Continuity - the company continues to exist even when shareholders change
Original owners are likely to retain control

19
Q

Disadvantages of being a private limited company

A

Shareholders have to agree about how dividends are distributed
Greater administrative costs than setting up as a sole trader or partnership
Finance limited to “friends and family”
Less privacy - public disclosure of financial information, but not as extreme as for a PLC

20
Q

Advantages of being a public limited company

A

Limited liability - protects the personal wealth of the shareholders
Can raise large sums of finance via the stock exchange
Continuity - business continues to exist even when shareholders change
Borrowing money from a bank will be easier because they will be seen as less of a risk

21
Q

Disadvantages of being a public limited company

A

Greater costs to set up and operate than a Ltd. A PLC must have £50,000 of shares as a minimum
Public can see company information and accounts
May be inefficient because of its size
Risk of company being taken over

22
Q

Stakeholders

A

A stakeholder is an individual or organisation who has a vested interest in the activities and decision making of a business

23
Q

Examples of stakeholders

A

Shareholders or business owners
Managers & employees
Customers
Suppliers
Banks & other financial providers
Local community
Government
Competitors

24
Q

Business Growth

A

The process of a firm getting bigger

25
Q

Organic / Internal Growth

A

When the business grows naturally by selling more

26
Q

External Growth

A

Growth of a business by takeover or merger

27
Q

Merger

A

Two or more firms join to create a new business

28
Q

Takeover (Acquisition)

A

This is when one business buys another business. In case of a limited company, this means buying more than 50% of shares

29
Q

Disadvantages of growth

A

Slower decision making
Control becomes more difficult
Employees may become demotivated
Increased costs
Communication more difficult

30
Q

Types of Growth and Merger

A

Horizontal growth
Backwards vertical
Forwards vertical
Diversification

31
Q

Horizontal growth

A

Taking over a business doing exactly the same job

32
Q

Backwards vertical

A

Taking over a supplier

33
Q

Forwards vertical

A

Taking over who you supply to

34
Q

Diversification

A

Taking over a completely new business

35
Q

How might businesses grow organically / internally?

A

Introducing new products
Opening new stores
Lowering price
Advertising and promotion
Hire more employees
Automation

36
Q

Advantages of External Growth

A

Cost savings
Gain new customers and sales
Eliminate competition
More ideas through combining teams
Spread the risk/ reduce reliance on existing business/market
Quicker than organic growth

GCSE Business Studies (2 decks)

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