Business Activity Flashcards
What are four characteristics of an entrepreneur?
Determination
Risk taking
Creativity
Confidence
What are two risks of becoming an entrepreneur?
- can lose savings to pay off debts if business doesn’t succeed
- can cause mental and physical illness from the stress of running a business
What are two rewards of becoming an entrepreneur?
- potential to make lots of money
* independence, and self satisfaction
What should be included on a business plan?
- Aims and Objectives
- market research
- competitors
- finance
What are the four types of business ownership?
- sole trader
- partnership
- private limited company
- public limited company
What is a partnership?
A company owned from between 2-20 people
What is a sole trader?
A business owned by one person
What is a private limited company?
A business that can only sell shares to invited people only.
What is a public limited company?
A company which can sell shares to anyone one who wants to buy.
What is a deed of partnership?
A document stating who has majority control of the partnership, how much money each partner has invested, and what their role is.
What is limited liability?
Where the owner of a business can only lose money they invested if the business fails
What is unlimited liability?
Where the owner of a business is responsible to pay for all debts if a business fails
What are four business objectives?
- growth
- profit
- survival
- providing a service
What are the six stakeholders?
- owners
- employees
- customers
- suppliers
- government
- local community
What is backward vertical growth?
When a business merges/takes over a business that supplies goods/services
What is diversification?
When a business merges/takes over another business with which has no connection
What is external growth?
Growth of a business by takeover/merger
What is forward vertical growth?
When a business merges/takes over a business that it supplies goods/services to
What is horizontal growth?
A merge/takeover where two businesses are involved in a similar market
What is a merger?
Where two or more businesses agree to join and become one business
What is a takeover?
Where a business takes control of another business by buying at least 51% of shares
What are the three purposes of business enterprise and entrepreneurship?
- spotting an opportunity •developing an idea
* satisfying customer needs
What is an entrepreneur?
A person who takes the risk of starting and running a business
What is spotting an opportunity?
The ability to see the need for. Particular product/service customers need (spotting a gap in the market)
How and why may business objectives evolve?
- they’re at different stages of development
- owners have different motivations
- influenced by different market conditions
Benefits of business activity for stakeholders?
- profit
- jobs/incomes
- goods/services
- sales
- taxes
What are problems caused by business activity for stakeholders?
- financial loss
- redundancy
- poor goods/services
- bad publicity
- late/missed payment
What are some examples of organic growth?
- increasing output
- gaining new customers
- developing new products
- increasing market share
