Business Activity Flashcards
What is an entrepreneur
an entrepreneur is someone who takes a risk to set up and start running a business
What is spotting an opportunity
the ability to see the need for a particular product or service customers nees
What is entreprise
when an entrepreneur spots an opportunity and a gap in the market is identifies that satisfies the customers wants and needs
What are the three purposes of business enterprise and entrepreneurship
spotting an opportunity
developing an idea
satisfying customer needs
What are the four characteristics of an entepreneur
Risk taking - Real
Determination - De
Confidence - Caff
Creativity - Coffee
What are the three risks of entrepreneurship
health
strained relationships
finance
what are the four rewards of entrepreneurship
Independence
self satisfaction
changing customer habits
financial
Why does a business need a business plan
to reduce risk
to apply for finance
What does a business plan outline
the businesses main aims and objectives
What are the 6 main areas of a business plan
the idea, the people, market research, finance, competitors, target market
What is a sole trader
a business owned by one person
what type of liability does a sole trader have
unlimited
is a sole trader incorporated
no
What are the benefits of being a sole trader
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
What are the disadvantages of being a sole trader
unlimited liability
hard to raise capital
lack of skills
owner may have a high workload
no continuity
what is a partenrship
a business owned by two or more people
what type of liability does a parntership have
unlimited
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 are the advantages of a partnership
easy to set up
shared skills
easier to raise finance
financial information remains private
shared workload
partners make decisions
what are the disadvantages of a partnership
shared profits
unlimited liability
can be short of capital
disagreements
what is a private limited company
a smaller business that can sell shares to invited people
what is the abbreviation for a private limited company
LTD
what type of liability does an LTD have
limited
what are the benefits of an LTD
limited liability
easier to raise capital
continuity
less workload
shareholders can restrict who can buy shares
what are the disadvantages of an LTD
financial information is available
hard to set up - incorporation
capital may be short - not public
what is a public limited company
a larger business it can sell shares to the public
what is a share
part ownership of a business
what is the abbreviation of a public limited company
PLC
what type of liability does a PLC have
limited
what are the benefits of a PLC
limited liability
easy to raise capital
continuity
less workload
what are the disadvantages of a PLC
financial information is available
hard to set up - incorporation
shareholders expect dividends
risk of a takeover
What affect does limited liability have on an owner
the shareholders dont need to use their own savings or private possessions to pay off debts if the company fails
what affect does limited liability have on a business
people are prepared to invest because their possessions arent at risk so it helps businesses start up and expand
what affect does unlimited liability have on an owner
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
what effect does unlimited liability have on a business
people may be afraid to set up businesses because of the risk this can limit creation and expansion of sole traders and partnerships
what is an asset
items owned by the business such as stock ,buildings and vehicles as well as less obvious things such as a good reputation
what is an established business
a business that has been trading for some time
what is a start up
new businesses that are just beggining
what is a sole trader suitable for
start ups
only small finance is needed
low financial risk
require non specialist skills
what is a partnership suitable for
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
what are LTD’s suitable for
start ups and established businesses that want to grow
need larger amounts of finance
have increased financial risk
have owners who want control
what are PLC’s suitable for
established businesses
wishes to grow
needs very large amounts of finance
has very high financial risk
what is a business objective
the aims of a business
what are the main business aims and objectives
maximise profits
survival
growth
providing a service
Why are aims and objectives of businesses always changing
they have already achieved their current aim or objective.
what is evolving for a business
the way a business develops overtime by becoming larger/smaller or selling in different places
what type of business may have survival as an objective
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
what type of business may have profit as an objective
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
what type of business may have growth as an objective
new businesses for growth of sales or market share to help them survive
established businesses looking to expand and reduce competition
what type of a business may have providing a service as an objective
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
what is a stakeholder
groups or individuals who take an interest in a business
who are the internal stakeholders
the businesses owners and the people who work in the business
who are the external stakeholders
the local community, suppliers, customers and the government
what are the shareholders/owners interests in a business
they want:
return on investment
high profits and dividends
growth of business
what are the manager/employees interests in a business
they want:
rewards
job security
good working conditions
promotion
what are the customers interests in a business
they want:
value for money
good quality products
good customer service
what are suppliers interests in a business
they want:
continued profitable trade
financial stability
what are banks/investors interests in a business
they want:
re-payed loans
growth in profits
profitable business
what is the governments interests in a business
they want:
paid taxes
jobs provided
what is the local communities interest in a business
they want:
business success
no taking customers
low noise and pollution
what are pressure groups interest in a business
they want:
changes for environmental/ethical reasons
what are the main problems caused by business activity for stakeholders
financial losses, redundancy, poor goods and services, late or missed payments, bad publicity and negative impacts on the local environment and community
what are the main benefits of business activity for stakeholders
profits, jobs and incomes, goods and services, sales, taxes and prosperity
what are the indicators of business failure
losses, low sales, poor quality goods and services and a negative impact on the local community
what are the indicators of business success
profits, growth, sales, returning customers and a positive contribution to the local community
what are the benefits for business activity for owners
earning profits
what are the problems from business activities for owners
they may lose money invested if the business fails
what are the benefits from business activity for employees
employed in the job role and able to earn an income from the business
what are the problems from business activities for employees
may be redundant if the business doesnt do well or if their job is replaced by automation.
employment conditions may be unfair
what are the benefits from business activities for a customer
obtain products and services at good prices to satisfy their wants
what are the problems from business activities for customers
may be sold bad quality goods/services
may be over charged for goods/services
may experience poor customer service
what are the benefits of business activity for the suppliers
sell their goods to another business and earn their profits from this
what are the problems of business activity for the suppliers
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
what are the benefits of business activity for the government
receive tax revenue from the owners, workers, suppliers and customers of the business
what are the problems of business activity for the government
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
what are the benefits of business activity for the local community
people can earn money from jobs in the business
workers in the area have money to spend in their businesses.
what are the problems of business activity for the local community
can be affected by road pollution and congestion caused by the business
how can an owner contribute to the success of a business
investing enough money
using the investment in ways to grow the business and help it success
how can an owner contribute to the failure of a business
not investing enough to make the business efficient
failing to change the business when the market for its goods/services changes
how can an emplyee contribute to the success of a business
working hard to produce good quality goods/services at competitive costs
how can an employee contribute to the failure of a business
producing poor quality goods
demanding high wages - increasing costs
disrupting production by industrial action
how can a customer contribute to the success of a business
purchasing goods and services
creating a good reputation for the business through recommendation
how can a customer contribute to the failure of a business
deciding to buy from competitors
publicising instances of poor quality goods/services leading to a bad reputation
how can suppliers contribute to the success of a business
providing supplies promptly and at competitive prices to help the business produce its goods cheaply and reliably
how can supplier contribute to the failure of a business
supplying poor goods/services which can lead to quality problems
not supplying components or materials on time causing production delays
how can the government contribute to the success of a business
giving a business grant so it can pay for investment/ giving planning permission
may be a customer buying goods/services
how can the government contribute to the failure of a business
increasing taxes - decreasing profits
increasing minimum wage - decreasing profits
refusing planning permission so stopping development or expansion
how can the local community contribute to the success of a business
providing the business with customers and supporting plans for developments
how can the local community contribute to the failure of a business
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
What is organic growth
the internal growth of a business for example by increasing its sales
What is capacity
how much output it can produce or sell
what are the methods of organic growth
increasing output
gaining new customers
developing new products
increasing market share
how does a business increase output as a method of organic growth
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
how does a business gain new customers as a method of organic growth
reducing its prices
opening new shops in different locations
better marketing
how does a business develop new products as a method of organic growth
researching and developing
copying the ideas of other businesses
buying ideas from other businesses
how does a business increase market share as a method of organic growth
increasing its own sales
taking business from other firms
What is external growth
the growth of a business by a takeover or merger
what is a merger
where two or more businesses agree to join to become one business
what is a takeover
where a business takes a controlling interest in another business e.g. buying more than 50% of it’s shares.
what are the four methods of external growth
diversification
backwards vertical growth
forwards vertical growth
horizontal growth
what is diversification
when a business merges or takes over another business with which it has no connection. e.g. a bakery and a clothes shop
what is horizontal merger/takeover growth
a merger or takeover where the two businesses are involved in a similar operation. e.g. a bakery and a bakery
what is forwards vertical merger/takeover growth
when a business merges or takes over a business that it supplies goods or services to. e.g. a bakery and a bread shop
what is backwards vertical merger/takeover growth
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
what are the benefits of diversification
risk is spread so does not only rely on one businesses success
what are the benefits of horizontal growth
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
what are the benefits of forwards vertical growth
the manufacturer is guaranteed somewhere that will sell what it produces to consumers
what are the benefits of backwards vertical growth
it guarantees a supplies to make the product
What are the three sectors of business ownership
private
public
voluntary
what is the private sector
owned by private individuals - LTD,PLC, sole trader, partnership - objective of profit ,market share and growth
what is the public sector
controlled by the government - objective of service
what is the voluntary sector
charities and social clubs - objectives of raising money and service
