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Business paper 1 > Business Activity > Flashcards

Business Activity Flashcards

1
Q

What is an entrepreneur

A

an entrepreneur is someone who takes a risk to set up and start running a business

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2
Q

What is spotting an opportunity

A

the ability to see the need for a particular product or service customers nees

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3
Q

What is entreprise

A

when an entrepreneur spots an opportunity and a gap in the market is identifies that satisfies the customers wants and needs

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4
Q

What are the three purposes of business enterprise and entrepreneurship

A

spotting an opportunity
developing an idea
satisfying customer needs

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5
Q

What are the four characteristics of an entepreneur

A

Risk taking - Real
Determination - De
Confidence - Caff
Creativity - Coffee

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6
Q

What are the three risks of entrepreneurship

A

health
strained relationships
finance

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7
Q

what are the four rewards of entrepreneurship

A

Independence
self satisfaction
changing customer habits
financial

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8
Q

Why does a business need a business plan

A

to reduce risk
to apply for finance

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9
Q

What does a business plan outline

A

the businesses main aims and objectives

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10
Q

What are the 6 main areas of a business plan

A

the idea, the people, market research, finance, competitors, target market

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11
Q

What is a sole trader

A

a business owned by one person

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12
Q

what type of liability does a sole trader have

A

unlimited

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13
Q

is a sole trader incorporated

A

no

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14
Q

What are the benefits of being a sole trader

A

easy to set up
the owner makes all the decisions
business information is kept private
not much start up capital is needed
owner gets all profits

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15
Q

What are the disadvantages of being a sole trader

A

unlimited liability
hard to raise capital
lack of skills
owner may have a high workload
no continuity

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16
Q

what is a partenrship

A

a business owned by two or more people

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17
Q

what type of liability does a parntership have

A

unlimited

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18
Q

what is a deed of partnership

A

a document stating who owns the partnership, how much money each partner has invested and their role in the business

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19
Q

what are the advantages of a partnership

A

easy to set up
shared skills
easier to raise finance
financial information remains private
shared workload
partners make decisions

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20
Q

what are the disadvantages of a partnership

A

shared profits
unlimited liability
can be short of capital
disagreements

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21
Q

what is a private limited company

A

a smaller business that can sell shares to invited people

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22
Q

what is the abbreviation for a private limited company

A

LTD

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23
Q

what type of liability does an LTD have

A

limited

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24
Q

what are the benefits of an LTD

A

limited liability
easier to raise capital
continuity
less workload
shareholders can restrict who can buy shares

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25
Q

what are the disadvantages of an LTD

A

financial information is available
hard to set up - incorporation
capital may be short - not public

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26
Q

what is a public limited company

A

a larger business it can sell shares to the public

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27
Q

what is a share

A

part ownership of a business

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28
Q

what is the abbreviation of a public limited company

A

PLC

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29
Q

what type of liability does a PLC have

A

limited

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30
Q

what are the benefits of a PLC

A

limited liability
easy to raise capital
continuity
less workload

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31
Q

what are the disadvantages of a PLC

A

financial information is available
hard to set up - incorporation
shareholders expect dividends
risk of a takeover

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32
Q

What affect does limited liability have on an owner

A

the shareholders dont need to use their own savings or private possessions to pay off debts if the company fails

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33
Q

what affect does limited liability have on a business

A

people are prepared to invest because their possessions arent at risk so it helps businesses start up and expand

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34
Q

what affect does unlimited liability have on an owner

A

the owners must pay back all the debts of the business they own if it goes bankrupt they sell all assets the business has and if not enough money is raised they sell their private possessions

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35
Q

what effect does unlimited liability have on a business

A

people may be afraid to set up businesses because of the risk this can limit creation and expansion of sole traders and partnerships

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36
Q

what is an asset

A

items owned by the business such as stock ,buildings and vehicles as well as less obvious things such as a good reputation

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37
Q

what is an established business

A

a business that has been trading for some time

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38
Q

what is a start up

A

new businesses that are just beggining

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39
Q

what is a sole trader suitable for

A

start ups
only small finance is needed
low financial risk
require non specialist skills

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40
Q

what is a partnership suitable for

A

start ups of established businesses wanting to grow
needs larger amounts of finance
fairly low financial risk
need wider range of skills
owners who want control of the business

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41
Q

what are LTD’s suitable for

A

start ups and established businesses that want to grow
need larger amounts of finance
have increased financial risk
have owners who want control

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42
Q

what are PLC’s suitable for

A

established businesses
wishes to grow
needs very large amounts of finance
has very high financial risk

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43
Q

what is a business objective

A

the aims of a business

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44
Q

what are the main business aims and objectives

A

maximise profits
survival
growth
providing a service

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45
Q

Why are aims and objectives of businesses always changing

A

they have already achieved their current aim or objective.

46
Q

what is evolving for a business

A

the way a business develops overtime by becoming larger/smaller or selling in different places

47
Q

what type of business may have survival as an objective

A

a new business so it can become established and secure by gaining customers before aiming to make a profit.
a business during a downturn in economic activity or when a market is very competitive

48
Q

what type of business may have profit as an objective

A

new businesses may seek profits to survive
established businesses so they can reinvest or expand
to encourage investors to put money into the business and help it grow

49
Q

what type of business may have growth as an objective

A

new businesses for growth of sales or market share to help them survive
established businesses looking to expand and reduce competition

50
Q

what type of a business may have providing a service as an objective

A

helps a business to get a good reputation so it can attract customers and retain them
help a business survive or increase profits
some owners get satisfaction from running a useful business as well as gaining profits

51
Q

what is a stakeholder

A

groups or individuals who take an interest in a business

52
Q

who are the internal stakeholders

A

the businesses owners and the people who work in the business

53
Q

who are the external stakeholders

A

the local community, suppliers, customers and the government

54
Q

what are the shareholders/owners interests in a business

A

they want:
return on investment
high profits and dividends
growth of business

55
Q

what are the manager/employees interests in a business

A

they want:
rewards
job security
good working conditions
promotion

56
Q

what are the customers interests in a business

A

they want:
value for money
good quality products
good customer service

57
Q

what are suppliers interests in a business

A

they want:
continued profitable trade
financial stability

58
Q

what are banks/investors interests in a business

A

they want:
re-payed loans
growth in profits
profitable business

59
Q

what is the governments interests in a business

A

they want:
paid taxes
jobs provided

60
Q

what is the local communities interest in a business

A

they want:
business success
no taking customers
low noise and pollution

61
Q

what are pressure groups interest in a business

A

they want:
changes for environmental/ethical reasons

62
Q

what are the main problems caused by business activity for stakeholders

A

financial losses, redundancy, poor goods and services, late or missed payments, bad publicity and negative impacts on the local environment and community

63
Q

what are the main benefits of business activity for stakeholders

A

profits, jobs and incomes, goods and services, sales, taxes and prosperity

64
Q

what are the indicators of business failure

A

losses, low sales, poor quality goods and services and a negative impact on the local community

65
Q

what are the indicators of business success

A

profits, growth, sales, returning customers and a positive contribution to the local community

66
Q

what are the benefits for business activity for owners

A

earning profits

67
Q

what are the problems from business activities for owners

A

they may lose money invested if the business fails

68
Q

what are the benefits from business activity for employees

A

employed in the job role and able to earn an income from the business

69
Q

what are the problems from business activities for employees

A

may be redundant if the business doesnt do well or if their job is replaced by automation.
employment conditions may be unfair

70
Q

what are the benefits from business activities for a customer

A

obtain products and services at good prices to satisfy their wants

71
Q

what are the problems from business activities for customers

A

may be sold bad quality goods/services
may be over charged for goods/services
may experience poor customer service

72
Q

what are the benefits of business activity for the suppliers

A

sell their goods to another business and earn their profits from this

73
Q

what are the problems of business activity for the suppliers

A

may lose money if business doesn’t pay for goods provided
cash flow problems in the business may mean a delay in payment of suppliers

74
Q

what are the benefits of business activity for the government

A

receive tax revenue from the owners, workers, suppliers and customers of the business

75
Q

what are the problems of business activity for the government

A

very large companies can become too big to fail the government can be criticised if the business fails and they dont step in to help with survival

76
Q

what are the benefits of business activity for the local community

A

people can earn money from jobs in the business
workers in the area have money to spend in their businesses.

77
Q

what are the problems of business activity for the local community

A

can be affected by road pollution and congestion caused by the business

78
Q

how can an owner contribute to the success of a business

A

investing enough money
using the investment in ways to grow the business and help it success

79
Q

how can an owner contribute to the failure of a business

A

not investing enough to make the business efficient
failing to change the business when the market for its goods/services changes

80
Q

how can an emplyee contribute to the success of a business

A

working hard to produce good quality goods/services at competitive costs

81
Q

how can an employee contribute to the failure of a business

A

producing poor quality goods
demanding high wages - increasing costs
disrupting production by industrial action

82
Q

how can a customer contribute to the success of a business

A

purchasing goods and services
creating a good reputation for the business through recommendation

83
Q

how can a customer contribute to the failure of a business

A

deciding to buy from competitors
publicising instances of poor quality goods/services leading to a bad reputation

84
Q

how can suppliers contribute to the success of a business

A

providing supplies promptly and at competitive prices to help the business produce its goods cheaply and reliably

85
Q

how can supplier contribute to the failure of a business

A

supplying poor goods/services which can lead to quality problems
not supplying components or materials on time causing production delays

86
Q

how can the government contribute to the success of a business

A

giving a business grant so it can pay for investment/ giving planning permission
may be a customer buying goods/services

87
Q

how can the government contribute to the failure of a business

A

increasing taxes - decreasing profits
increasing minimum wage - decreasing profits
refusing planning permission so stopping development or expansion

88
Q

how can the local community contribute to the success of a business

A

providing the business with customers and supporting plans for developments

89
Q

how can the local community contribute to the failure of a business

A

opposing business plans for expansion or preventing production by not supporting its application for planning permission
increased legal costs for the business as it fights for planning permission

90
Q

What is organic growth

A

the internal growth of a business for example by increasing its sales

91
Q

What is capacity

A

how much output it can produce or sell

92
Q

what are the methods of organic growth

A

increasing output
gaining new customers
developing new products
increasing market share

93
Q

how does a business increase output as a method of organic growth

A

using resources more efficiently - using new technology/ training workers
using up spare capacity e.g. unused space
increasing capacity of the business e.g. building a new factory or opening a new shop

94
Q

how does a business gain new customers as a method of organic growth

A

reducing its prices
opening new shops in different locations
better marketing

95
Q

how does a business develop new products as a method of organic growth

A

researching and developing
copying the ideas of other businesses
buying ideas from other businesses

96
Q

how does a business increase market share as a method of organic growth

A

increasing its own sales
taking business from other firms

97
Q

What is external growth

A

the growth of a business by a takeover or merger

98
Q

what is a merger

A

where two or more businesses agree to join to become one business

99
Q

what is a takeover

A

where a business takes a controlling interest in another business e.g. buying more than 50% of it’s shares.

100
Q

what are the four methods of external growth

A

diversification
backwards vertical growth
forwards vertical growth
horizontal growth

101
Q

what is diversification

A

when a business merges or takes over another business with which it has no connection. e.g. a bakery and a clothes shop

102
Q

what is horizontal merger/takeover growth

A

a merger or takeover where the two businesses are involved in a similar operation. e.g. a bakery and a bakery

103
Q

what is forwards vertical merger/takeover growth

A

when a business merges or takes over a business that it supplies goods or services to. e.g. a bakery and a bread shop

104
Q

what is backwards vertical merger/takeover growth

A

when a business merges with or takes over a business that supplies it with goods or services. e.g. a bakery and a flour manufacturer

105
Q

what are the benefits of diversification

A

risk is spread so does not only rely on one businesses success

106
Q

what are the benefits of horizontal growth

A

each factory can specialise in a specific type/method
one factory could be closed if not needed which would reduce costs
it can gain economies of scale which reduced its costs

107
Q

what are the benefits of forwards vertical growth

A

the manufacturer is guaranteed somewhere that will sell what it produces to consumers

108
Q

what are the benefits of backwards vertical growth

A

it guarantees a supplies to make the product

109
Q

What are the three sectors of business ownership

A

private
public
voluntary

110
Q

what is the private sector

A

owned by private individuals - LTD,PLC, sole trader, partnership - objective of profit ,market share and growth

111
Q

what is the public sector

A

controlled by the government - objective of service

112
Q

what is the voluntary sector

A

charities and social clubs - objectives of raising money and service

Business paper 1 (3 decks)

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