Business Activity Flashcards
Difference between a business and an organisation?
on organisation is a group that’s been formed for a purpose and a business is an organisation that produces goods and services
what are goods?
physical products (tangible)
what are services?
non-physical products
what are consumer goods?
products sold to ordinary people
what are producer goods?
products produced and sold by one business to another
needs and wants
needs are the requirements for human survival.
wants are people’s desires for goods & services
Private sector
business owned by individuals or groups of individuals
Public sector
business owned by central or local governament
social enterprise
privately owned but non-profit to provide services and opportunities for others
private enterprise
a business owned privately with the main objective of making profit
public enterprise
government owned businesses which provide goods and or services
types of stakeholders
owners
employees
managers
investors
financiers
customers
government
local community
suppliers
What is a stakeholder
someone with interest in the operation of a business
factors affecting the business environment
competition
economic climate
government policies and legislation
trends
demand patterns
world affairs
social factors
business objectives
goals or targets set by the business
importance of clear objectives
employees need smth to work towards
for motivation so the business doesn’t drift
help in decision making
easier to asses the business’ performance
Financial objectives
survival
profit
increase market share
financial security / stability
sales
Non-financial objectives
social objectives
personal satisfaction
challenge
independence and control
why might business objectives change
market conditions
technology
performance
legislation
internal reasons
large business
a business employing >250 people
small business
a business employing <250 people
revenue
money from sales
who is an entrepreneurs
someone who takes a risk and sets up a business
roles of an entrepreneur
innovation
organisation
decision-making
risk-taking
incorporated business
business that’s a separate legal identity from the owner
unincorporated business
where there’s no difference between the owner and the business
sole trader
business owned by a single person
features of a sole trader
simplest form of a business organisation
owned by one person but can employ any number of people
most are found in the tertiary sector
unlimited liability
no legal requirements
adv of sole proprietorship
owner keeps all profit
independence
easy to set up & no legal requirements
flexibility
can offer personal services
disadv of sole proprietorship
unlimited liability
may struggle to raise finance
too much responsibility
long hours
can’t exploit economies of scale
no continuity
what’s a partnership?
business owned between 2-20 people
features of a partnership
2-20 people
no legal formalities
shared responsibility & profits
deed of partnership
binding legal document stating the formal rights of partners
adv of partnerships
easy to set up
more capital raised
shared responsibility
partners can specialize in their area of expertise
financial info not published
disadv of partnerships
unlimited liability
profit has to be shared
they may disagree and fall out
any decision is legally binding on all
tend to be small
limited partnership
partnership where some contribute capital and enjoy shares without participating in the running of the business
what’s a franchise
structure in which a business allows another operator to trade under their name
the franchisor offers…
a licence
a start-up package
training
materials
an exclusive area to operate in
adv to franchisor
fast method of growth
cheaper method of growth
some risk taken by frnchisee
franchisees are more motivated
disadv to franchisor
profit shared
poor franchises might damage the business’ reputation
cost of supporting franchises can be high
adv to franchisee
less risk
back-up support is given
predictable set-up costs
marketing may be organised
disadv to franchisee
profit shared
strict contracts
lack of independence
can be expensive
