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Business activity Flashcards

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1
Q

What are good?

A

Goods are tangible items that can be used and stored.

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2
Q

what are consumer goods?

A

Consumer goods are goods that are used by an end consumer, such as a TV or a sofa.

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3
Q

what are durable and non - durable goods?

A

Durable goods last a long time, eg 3 years or more, and can withstand regular use without wearing out and Non-durable goods do not last for a long time, eg less than 3 years.

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4
Q

wat are producer goods?

A

Producer goods are goods that are used by businesses to either produce other goods, or help in the provision of providing services. An example of a producer good is machinery or tools.

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5
Q

what is a service?

A

Services are intangible actions that cannot be stored. Businesses provide services to customers, who have access to them for a period of time.

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6
Q

what are personal and commercial services?

A

Personal services are services that are provided for individual people.
Commercial services are services usually provided to businesses

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7
Q

what are public sector busineses?

A

The public sector refers to anything that is produced, sold or provided by organisations owned and run by the government. Money from public finances raised in taxes is used to run these businesses.

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8
Q

what are private sector businesses?

A

Private sector organisations are owned by individuals and shareholders .These businesses are driven by profit
The profit from private sector organisations benefits the owners, shareholders and investors. They are financed by private money from shareholders and banks.

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9
Q

what resources are needed to produce goods and services? (CELL)

A

Capital - equipment and money used to provide goods and services. A gym will need fitness equipment and money to pay staff.
Enterprise - the willingness to take risks, make decisions and organise resources. All of these will be needed to open the gym.
Labour - human effort, skills and knowledge. A gym will need staff who can offer advice on health and fitness.
Land - naturally occurring resources, such as land and water. A gym will need land for a physical building.

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10
Q

what is limited liability?

A

Limited liability means that the business owner or owners are only responsible for business
debts up to the value of their financial investment in the business.

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11
Q

what is unlimited liability?

A

Unlimited liability means that the business owner or owners are personally responsible for all of the debts of the business, no matter what the value.

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12
Q

what is a sole trader?

A

A sole trader is a business that is owned and run by one person.
Sole traders have
unlimited liability and the owner is personally responsible for the debts of the business. A sole trader pays
income tax on their earnings.

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13
Q

advantages of sole trading

A

-it is quick and easy to set up as a sole trader
-the business owner has a lot of control over the business and its money
-it gives individuals the opportunity to be their own boss and make all the business decisions
-it has low set-up costs

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14
Q

disadvantages of sole trading:

A

-it has the risk of unlimited liability
-it can involve long work hours and stressful conditions
-there is a high level of responsibility for the owner
-often the owner performs many different roles in the business

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15
Q

what is a partnership?

A

A partnership is a type of business that has a minimum of two owners. They decide to set up and run a business between them.

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16
Q

advantages of partnerships

A

-they are usually quick and easy to set up
-there is shared decision-making by the owners
-there is shared responsibility for debt by the owners
-more funds can be invested compared to a sole trader
-more ideas and skills
-partners can cover for each other during illness and holidays meaning the business doesn’t have to close

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17
Q

disadvantages of partnerships:

A

-they can involve long work hours
conflict amongst owners can occur and -decision making may be slower
-there is the risk of unlimited liability
-one partner may let the others down by not upholding their responsibilities in the business
-profits are shared between all the partners

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18
Q

what are private limited companies?

A

A private limited company can be a small or large business. The owners of a private limited company are known as shareholders.

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19
Q

advantages of a private limited company

A

-the owners have limited liability
-it can improve the status of the business
-any new shareholders have to be invited, which protects the business from outside influence
-if the founder dies, the company still exists and is controlled by the shareholders

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20
Q

disadvantages of private limited companies

A

-there is often more paperwork
-in some instances, other people are able to view the business’ financial information
-it can be very time consuming to set up
-the business may require outside professional help to manage its finances

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21
Q

what is a public limited company?

A

A public limited company can sell its shares on the
stock exchange. A flotation occurs when a private limited company wants to become a public limited company. Because shares are sold to the general public there is often more media coverage of public limited companies.

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22
Q

advantages of public limited companies

A

-shares can be sold to the general public which means there are a large number of potential investors
-more media coverage which is good publicity
-shares can be bought and sold easily

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23
Q

disadvantages of public limited companies

A

-negative media coverage can damage their reputation
-at risk of being taken over as they cannot control who buys their shares
-more regulation than a private limited company which can increase costs
-shareholders get a vote in the business and may have different objectives than the original owners

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24
Q

what are co-operatives?

A

A co-operative is a business that is owned and run by its members. Co-operatives can be owned by the customers, employees or local residents. Co-operatives are set up to benefit their members.

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25
Q

what is a charity?

A

A charity is a non-profit making organisation. Any profit the organisation makes is used to help charitable causes such as poverty, the environment, disease or education. These businesses often raise the majority of their money through donations.

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26
Q

what is a business aim and objective?

A

A business aim is the overall target or goal of the business, whereas business objectives are the steps a business needs to take to meet its overall aims.

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27
Q

what are some financial aims and objectives? (PIGS)

A

Profit maximisation refers to any money left over after all costs have been taken away from any revenue made by a business.
Increased Market share refers to the percentage of the market that a business occupies.
Growth relates to businesses wanting to grow the size and scale of their operations over time.
Survival refers to keeping the business operating for a certain amount of time

28
Q

SMART objectives?

A

S – Specific. This means that objectives must be clear, for example it must state that a business needs to make more profit, reduce waste, reduce environmental impact, increase sales
M – Measurable. A business must be able to measure whether they have met an objective. A business needs to specify an amount.
A – Agreed. Stakeholders in a business must agree about their objectives, this will give objectives a much better chance of succeeding
R – Realistic. Objectives must be realistic for the size and scale of the business.
T – Time-bound. Objectives must have a time limit

29
Q

what is a competitive market environment?

A

A competitive environment is a segment of the market that has a significant number of businesses competing.

30
Q

what is a dynamic environment?

A

A dynamic environment is a business environment that is rapidly changing. In a dynamic market, businesses have to adapt quickly to changes and develop new ideas, products and services to keep up with technology and new trends.

31
Q

what is a stakeholder?

A

A stakeholder is any person, group of people or other organisation that has an interest in the activities of a business.

32
Q

what are shareholders and owners?

A

In a public limited company (PLC), these are people who influence the business’ aims, objectives and strategic activities. In a limited company (Ltd), these are people who make business decisions but need to agree them with the other shareholders. Shareholders are part owners of a private or public limited company.

33
Q

what are managers?

A

Staff who are responsible for implementing the decisions made by the owners and overseeing the work that is required.

34
Q

what are employees?

A

Staff who carry out the day-to-day work of the business.

35
Q

what are customers?

A

People who buy products or services from the business.

36
Q

what are suppliers?

A

Other businesses and organisations that provide products or services to the business, eg a utility company that supplies it with electricity, or a business that provides the seats used when producing a car.

37
Q

what are the local community?

A

People, organisations and businesses that live or are located in the area around the business.

38
Q

what are pressure groups?

A

Groups of people who share a common interest that is related to the business, eg an environmental pressure group may actively promote a shared interest.

39
Q

what are the government?

A

The business will make tax payments to both local and central government.

40
Q

what are economies of scale?

A

Where the average costs (of production, distribution and sales) fall as the business increases the amount of product that it produces, distributes and sells. This reduces the unit cost.

41
Q

what are purchasing economies?

A

buying raw materials in bulk and getting discounts from suppliers

42
Q

what are technical economies?

A

making better use of expensive technology by producing more items meaning the cost of production is spread

43
Q

what are financial economies?

A

banks are more willing to offer lower interest rates to larger businesses

44
Q

why would businesses want to increase market share?

A

This gives the business more power in the market, because the business will have more control over its suppliers and retailers will be more likely to stock its products.

45
Q

what is internal growth?

A

when a business decides to expand its own activities by launching new
products and/or entering new markets. Businesses do this in order to improve their chances of increasing their customers, revenues and profits.

46
Q

what is franchising?

A

Franchising is when one business sells the right to another to use its name, logo and to sell its products.

47
Q

what is a franchisor and franchisee?

A

A franchisor sells a franchise in return for a fee and royalties. A franchisee is someone who purchases a franchise and is able to use an established brand name and their products.

48
Q

Advantages of selling a franchise

A

-faster growth – stores can be opened faster than if the original business was opening them
-economies of scale – the business can achieve cost savings by expanding
-more profits – the franchisor gets an initial fee and a percentage of the profit that each store makes
-more motivated staff – each store owner will be running their own business and keeping the majority of the profit meaning they are more motivated that if they were just the manager of the store

49
Q

disadvantages of selling a franchise

A

-losing control of the business and the risk that one store could damage the reputation of the whole brand.

50
Q

what is e-commerce?

A

E-commerce involves the buying and selling of products online. This is another method of internal growth. There are businesses which traditionally only had physical stores which now have all established successful online stores. This can increase the size of the market, however, it will cost the business to set up and update.

51
Q

advantages of internal growth

A

-it is relatively low risk
-a business can maintain its own values without interference from stakeholders
-higher production means the business can benefit from economies of scale and lower average costs

52
Q

disadvantages of internal growth

A

-it is relatively slow
-there maybe be a long period between
investment and return on investment
-growth may be limited and is dependent on the reliability of
sales forecasts

53
Q

what is external growth?

A

External growth
(inorganic growth) usually involves a
merger or takeover. A merger occurs when two businesses join to form a new (but larger) business. A takeover occurs when an existing business expands by buying more than half the
shares of another business.

54
Q

advantages of external growth

A

-competition can be reduced
-market share can be increased very quickly overnight

55
Q

disadvantages of external growth

A

-it can be expensive to takeover or merge with another business
-managers may lack the experience to deal with the other businesses

56
Q

advantages of being a public limited company

A

-the business has the ability to raise additional finance through
share capital
-the shareholders have
limited liability
-there are increased negotiation opportunities with suppliers in terms of prices because larger businesses can achieve economies of scale

57
Q

disadvantages of being a public limited company

A

-it is expensive to set up, requiring a minimum of £50,000
-there are more complex accounting and reporting requirements
-as shares are publicly traded, there is a greater risk of a hostile takeover by a rival company

58
Q

what is horizontal integration?

A

Horizontal integration occurs when two competitors join through a merger or takeover.

59
Q

what is forward vertical integration?

A

Forward vertical integration occurs when a business takes control with another that operates at a later stage in the supply chain.

60
Q

what is backward vertical intergration?

A

Backward vertical integration occurs when a business takes control of a business earlier in the supply chain.

61
Q

what is conglomerate?

A

Conglomerate integration occurs when businesses in unrelated markets join through a takeover or merger.

62
Q

what is a business plan?

A

A business plan is a document created by a business or entrepreneur that provides details about each element of the business. Creating a business plan means an entrepreneur considers all of the different elements of their business.

63
Q

what is a business plan made up of?

A

-the business idea – what product or service the business will provide
-the business’ aims and objectives
– using the SMART principles

-target market – determined through
market research

-revenue forecast projected costs and
profit

-cash flow forecast sources of finance – long-term and short-term finance
location – where the business will be located

marketing mix– the four Ps (product, price, place and promotion)

64
Q

what is the purpose of planning business activity?

A

Minimising risk
Obtaining finance

65
Q
A

business gcse (6 decks)

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