Business And People Flashcards
Define sole trader
A sole trader describes any business that is owned and controlled by one person however it does not stop it from employing other people.
What are the advantages of being a sole trader?
Suitability- suitable for a variety of different businesses
Set up- easy and cheap
Capital- can be set up with very little capital
Financial information- it’s kept private
Ownership- owner keeps all profits
What are the disadvantages of being a sole trader?
Shortage of capital- find it difficult to grow as only have little amount of capital or can’t get a loan from the bank
Illness- no one to run the business resulting in loss of revenue
Hours of work- potentially very long
Shortage of skills- not skilled in all areas so can’t compete with other businesses
Unlimited liability- could lose personal possessions to pay of business debt
Define partnership
Business in which is owned by two more people. They share profits, losses and responsibility for managing it. (Can only have up to 20 partners)
What are the advantages of partnerships?
Different skills to offer
More capital can be raised
Ideas and workload can be shared
Illness won’t stop it from running properly
Easy and cheap to setup
Financial information stays private
Easy to admit another partner if required
What are the disadvantages of a partnership?
Sharing profits
Unlimited liability
Arguments among partners
Shortage of capital
What is a sleeping/limited partner?
Someone who invests in the business but does not have involvement of its day to day running or decision making
What is a deed of partnership?
A legal document which provides information on:
The way in which the business operates
How profits and losses will be shared
How much capital each partner contributed
Signature of all participating partners
Details of partners, e.g where they live
Define public limited company
A company who’s shares can be traded on the stock exchange and can be bought by any members of the public
Define private limited company
A company who’s Shares can only be bought by family or friends and can’t be bought by the general public
What is limited liability?
When the owners of a company will not be personally responsible for any debts the business have. Can only lose the amount of capital invested
What is as shareholder?
Those who own share capital
Define multinational
A company which is based in one country but sells and manufactures in a variety of others
What is a dividend?
Share of the profit each year
Define economies of scale
When unit costs fall as output rises
What are the disadvantages of being a multinational?
Communication problems
High transport costs
Different legal requirements in each country
Fluctuating exchange rates
What are the advantages of multinationals?
Manufacturing can be spread around the world nearer to the markets that they serve
Economies of scale can be obtained
What is a franchisor?
An already established business
Who is the franchisee
The person/business interested in buying the right to use the franchisors product, services and logo
What are the advantages of being a franchise?
Company does all the advertising Have purchasing power Product quickly and inexpensively goes to market Less risk going into the business No competition in the same area
What are the disadvantages of franchises?
Will be using the franchisors name Don't choose what you sell Less room for being entrepreneurial Large amount of initial capital All supplies must be bought from franchisors at a price they determine
What is a royalty payment?
A payment made to the franchisors based on the sale revenue of the franchisee
Advantages of being a PLC
Shares can be offered for general sales
Raise large sums of finance
Additionally funds can easily be raised
Disadvantages of PLC
Financial information is NOT private
Can be easily taken over
Shareholders have little say unless they have a large amount of shares
Advantages of an LTD
Shares can be issued to investors in exchange for money raising shares
If anything happens the business can be sold
Business is seperate from its owners
Disadvantages of an LTD
Financial information is NOT private
Shares cannot be offered for general sale
Lack of capital
What is social enterprise?
A business that makes its money in a sociably responsible way
What is a stakeholder?
An individual or group interested in the business and its activities
Summarise what it is meant by stakeholder conflict
When there are benefits for one stakeholder but drawbacks for another
What are business objectives
What the business is trying to achieve
What are the 5 main business objectives
Profit Increase market share Growth Service Survival (PIGSS)
What is satisfying?
When a business aims to make just enough profit to aim for their future plans
What is the private sector?
A sector including businesses owned by private Individuals. Any business not owned by the government
What is the public sector?
A sector including all of the business and organisations owned and controlled by the government. (Includes public corporations)
What is insolvency?
A term to describe a firm that connot meet its financial commitments
What is a merger?
Where two companies join together to form a new larger business
What is a takeover/acquisition?
The control of another company is achieved by buying majority of its shares
What are the three sectors of business and what do they involve?
Primary- produce raw materials for businesses
Secondary- use the raw materials to manufacture products
Tertiary- provide a service
Give reasons for change in the primary sector
Raw materials used up
Increase use in machinery
Foreign competition
Reasons for change in the secondary sector
Increase use in machinery
Reason for change in the tertiary sector
Rise in population
Increase in wealth
Increased leisure time
More emphasis on customer service
How can a business internally grow?
Opening more shops
Releasing more products
New markets
New factories
What is an unincorporated business?
A business that does no posses a separate legal identity from its owners- they have unlimited liability
What is an incorporated business?
A business that has its own legal identity and has limited liability
What factors affect the location of the business
Nature of the product Access to materials Cost of location Availability to the customers Climate Physical geography Transport Tradition
What is horizontal integration? Include advantages and disadvantages
When an organisation is in the same industry and same stage of production
Advantage- increase economies of scale
Disadvantage- reduces choice for customers
What is backwards vertical integration? Include advantages and disadvantages
Organisation will merge with another organisation in a stage of production below their current operation
Advantage- reduce unit costs
Disadvantages- reduce customer choice
What is forwards vertical integration? Include advantages and disadvantages
When an organisation take over another organisation in a different stage of production to provide an outlet
Advantage- reduces unit cost+ more control over sales
Disadvantages-less choice+ higher costs for customers
What is Diversification/conglomerate integration? Include advantages and disadvantages
Takeover or merge with unrelated business
Advantage- spread risk+ reduces dependency
Disadvantage- lack of understanding for the new market
What is a job description?
Document that describes the duties of a worker
What is a person spec?
A profile of the type of person needed for the job- their skills and qualities
Name the 6 methods of job advertisement
Local newspaper- cheap,for locals
National newspaper-more expensive, bigger audience
Specialist magazine- particular work
Job centre- run by government, free to advertise, display advertisements
The internet- cheap, use your own site
Word of mouth- doesn’t get around a lot of people
What is internal recruitment?
When a vacancy is filled with someone who already works in the organisation
What is external recruitment?
When a vacancy is filled with someone who doesn’t already work in the business
Advantages of internal recruitment
You know how they work
They know how the business works
Advantages of external recruitment
Someone may know the job better outside the organisation
Isn’t the right person suitable at the current workplace
Name three types of selection methods and outline them
Cvs- written document containing information about the person
Application forms- filled in by candidate only giving information directed by employer, easily comparable
References- what they were like at their previous job
What are the benefits of an interview?
Get a sense of the type of person they are
Can tell if they’re interested in the job
What is psychometric testing?
Psychometric testing helps to identify a candidates skills, knowledge and personality
What are the two main types of psychometric testing?
Personality- analyse how your personality fits with the businesses
Aplitude- asses wether or they you’ve got the right skill set for the role
What is a recruitment agency?
Acts as a middle man between an organisation and an individual looking for a job. Main function is to source the most suitable person for a job vacancy.
What does recruitment agency do?
Draws up job description Draws up person spec for employer Advertises post Reviews applications Shortlists candidates Send short listed candidates to employer
Advantages and disadvantages of a recruitment agency
- saves time for business
- using people with experience
- costs money
- communication problems
In what order are maslow’s needs on the hierarchy and outline each one (bottom to top)
Physiological needs- basic needs to stay alive
Safety needs- need to feel safe from physical danger
Social needs- need to be with other people
Esteem needs- need to feel valued by others
Self actualisation needs- need to feel you have used your talents to achieve a goal
Name the monetary methods of motivation
Time rate- paid related to number of hours worked
Overtime- paid extra for working more hours
Piece rate- paid for number of items produced
Commission- paid for number of items they sell
Profit sharing- receive part of profits
Salary- paid monthly
Fringe benefits-company car, discounts
Define job rotation, job enrichment and job enlargement. Include advantages and disadvantages for each
Job rotation: do different jobs \+won't get bored -going from one boring job to another Job enlargement:give more jobs \+variety in work -more work same pay Job enrichment- more challenging tasks/responsibility \+skills improve -time consuming training
Define team working, award schemes and promotions. Give advantages and disadvantages for each
Team work:put into teams \+feel independent -may not work well Award schemes:a worker is recognised \+meet self esteem needs - resentment amongst workers Promotion: higher ranking job \+self actualisation needs -cause competition
What are the advantages and disadvantage of using fear as a non monetary method of motivation
+ scared of punishment so work harder
- people may change jobs in the long run
What is an autocratic leader?
Someone who:
Has full control of decision making
Uses power to control others
Their employees have little to no input in decisions
What is a democratic leader?
Focus power is with the group as a whole
Employees have greater involvement
Emphasis on delegation and empowerment
What is a laizzes-faire leader?
Gives employees little direction
Responsibility lies with the group
Define induction training
Training aimed at introducing new employees to a business and its procedures
Define on the job training
Training whilst remaining in the workplace
Advantages and disadvantages of on the job training
\+individual training \+cheap \+still producing whilst training - lower productivity -lower quality -poor rep -not suitable for groups
Define Off the job training
When employees are taken away from their place of work to be trained
Advantages and disadvantages of off the job training
\+expert training \+can ask questions \+less pressure -expensive -shifts need to be covered
What is staff appraisal?
A review given to an employee from a manager about their current performance and targets for the upcoming year. Also identify is training/support is needed
Advantages and disadvantages of staff appraisal
\+increase self esteem \+motivational \+ work harder to reach targets -demotivating if lots of negatives -cause argue,nuts or resentment
Name the employment laws
Equal pay-men and women paid same
Employment rights-give workers info like pay and working hours
Race relation- everyone treated same(race religion etc..)
Minimum wage-cannot be paid below an amount
Health+safety- safe workplace
Sex- men+ women treated same
Disability-equal ops for disabled
What is an employment tribunal?
A special court of law that deals with disputes involving employers and workers
Define redundancy
When employment is ends because a firm no longer needs the work that was done
What would you want to avoid a tribunal?
Costs
Time away from work
Bad publicity
Why might a business make staff redundant?
Closing down
Moving location
New machinery
Cutting costs
What is a trade union?
an organization that represents the people who work in a particular industry, protects their rights, and discusses their pay and working conditions with employers
What do trade unions try and improve for workers
Pay
Working conditions
Working hours
What is the main benefit of a trade union?
Offers a single point of contact
What are the three types of industrial action
Strike- withdrawing labour
Overtime ban- only work hours stayed on contract
Work to rule- only do what is included in their contract
How does going on strike help?
Customers will complain
Bad press
Lack of services therefore lack of income
Customers switch to competitors
What is ACAS?
An organisation that helps employees settle disputes between workers and employers Advisory Conciliation And Arbitration
What is an organisational chart and how is it a benefit to a business?
Diagrams that show the internal structure of a business
+Motivate employees to reach higher levels in the chart= higher productivity
+easy to see promotion routes
+easy to see lines of communication
What are the advantages and disadvantages of a wide span of control?
\+can work independently \+no one interfering \+more responsibility -hard to communicate with employee in charge -work not appreciated -make mistakes
What are the advantages and disadvantages of a narrow span of control?
+easy to communicate
+don’t make mistakes
-too much pressure
-interfere with work
Advantages of a flat structure
Quicker communication
More accurate message passed on
Ideas can be shared as there are lots of people doing similar work on the same level
Top layer interacts with lower layers more
Advantages of tall structure
Many promotion opportunities
Narrow span of control
Advantages and disadvantages of ICT
+message can be sent directly to a person
+resources can be shared and accessed for free online
+presentation quality is better
-technology is expensive
-technical problems occurring
How is attitude of sender a barrier of communication?
The receiver could not like what they’re hearing so choose to ignore the message
How is language used a communication barrier?
The sender could use language the receiver doesn’t understand and assume they know
How is time of communication a barrier?
If sent when a person is in a rush they may not properly understand the message or the importance of it
How is wrong method of communication a barrier?
If an urgent message was sent by email it may not be screened if the receive doesn’t frequently check their emails
How is feedback not being received a communication barrier?
If the sender doesn’t check the receiver has understood the message work may no be done properly
How is the means of communication a barrier?
If there is a problem with the computer emails may not be received
Advantages and disadvantages of working from home
\+save time and money not travelling \+increase staff without increasing space \+less distractions at home -lack of facilities -more distractions -less work without discipline -miss social aspect
Give examples of the types of communication
One way- leaflet through a door
Two way- conversation
Internal- talking to someone inside the firm
Vertical- talk to someone on the layer below you
Horizontal- talk to someone on the same layer
External- talk to someone outside the firm
Formal- have an official meeting
Informal-communicate during a lunch break
Advantages and disadvantages of verbal communication
+person can check the message has been understood
+points can be emphasised by voice tone/body language
-if a group of people listening all may not hear
-could answer back
-no permanent record
Advantages and disadvantages of written communication
\+record of message \+can reread \+sent to multiple people -can't immediately check if message has been understood -may not be written clearly
Advantages and disadvantages of communicating with images
+like images
+more impact
-can’t check quickly if it’s been understood
