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Business S4 nat 5 mr fernandez > Business Checkpoint test revision > Flashcards

Business Checkpoint test revision Flashcards

1
Q

What is maximising profit?

A

Selling goods or services for a high profit margin (high price/low cost)

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2
Q

Why do consumers buy goods or services?

A

To satisfy their needs and wants

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3
Q

What is a want?

A

Something you have in order to make your lives more comfortable and enjoyable and it is not essential.

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4
Q

What is a need?

A

Needs are essentials for survival.

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5
Q

Goods are what?

A

Tangible which means the product can be seen or touched

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6
Q

Services are what?

A

Intangible and cannot be seen or physically touched. They are things that are done for you in exchange for some sort of transaction. Both goods and services can be durable.

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7
Q

What are factors of production used for and what are they?

A

They are used to make a good or provide a service and a number of ingredients and resources are needed. They are Land, Labour, Capital and Enterprise (CELL).

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8
Q

What are the three sectors of industry?

A

Primary, secondary and tertiary

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9
Q

What is the Primary sector?

A

The extraction of raw materials to make the product.

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10
Q

What is the Secondary sector?

A

The manufacturing sector where you convert the raw materials into goods.

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11
Q

What is the Tertiary sector?

A

This is the retail sector which is selling the goods or services.

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12
Q

3 Famous entrepreneurs?

A

Steve jobs (apple), Elon Musk (Tesla and space x), Alan sugar (Tiny computers and the apprentice).

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13
Q

Skills an entrepreneur needs?

A

Communication skills, takes risks, doesn’t give up easily, good decision making skills, good leader ship skills, invests their own money

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14
Q

What is a gap in the market?

A

Spotting a gap in the market means that you have come up with and idea for a product or service which is not available in the marketplace.

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15
Q

5 Gaps in the market?

A

A product or service that other companies don’t sell, a business has closed down so somebody else can open up, it is not available online, there are not enough of the product or service in that area, a festival or season.

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16
Q

What is the Princes trust?

A

It provides support for young entrepreneurs 18-30 living in the UK.

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17
Q

Sources of help and advice?

A

Banks (financial advice), Lawyers (legal advice), Entrepreneurs (give advice on their business), the internet.

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18
Q

The business cycle?

A

People have needs and wants.
An entrepreneur creates an organisation to provide goods and services to fulfil their needs and wants.
Consumers use their income to go and buy these needs and wants.
This creates wealth for the business and employees so the business can employ more or grow the business.
There are more people with money to spend and want other needs and wants.

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19
Q

What is a business plan?

A

A document that outlines the objective of a business and how it intends to achieve these objectives.

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20
Q

What is included in a business plan?

A

General details, factors of production (CELL), Sectors of industry, sectors of economy, marketing info, finance, operations.

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21
Q

What are the 4P’S

A

Product (what you will sell, packaging, branding), Price (what price will cover costs and make a profit), Place (where is best to get the most customers) , promotion (how will you make customers aware of your product?)

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22
Q

What are the sectors of economy?

A

Private (sole trader, partnership, limited company), public (local council, scottish government, national) , third/voluntary (charities, social enterprise).

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23
Q

Why is finance required for a business?

A

To be able to cover their cost, pay taxes, share profit with investors and grow the business.

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24
Q

Business costs include fixed costs such as?

A

Wages heating electricity and insurance.

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25
Q

Variable of direct costs are?

A

Raw materials, cost of production, direct wages.

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26
Q

Sources of finance are?

A

Yourself and what you have in your savings, family and friends, the bank.

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27
Q

What is land?

A

The natural resources that businesses use

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28
Q

What is Labour?

A

The workforce or employees of a business

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29
Q

What is Enterprise?

A

The business ideas that the owner has to make the business successful

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30
Q

What is capital?

A

The man-made tools and machinery, equipment and money used to operate the business

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31
Q

What is an entrepreneur?

A

A person who combines the factors of production to set up a business to earn profit

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32
Q

What are the sources of finance?

A

Dept factoring, short term bank loan, hire purchase, mortgage, grant, trade credit, retained profits, additional capital, leasing, bank overdraft, long term bank loan.

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33
Q

What is a sole trader?

A

A sole trader is a one-owner business (it is owned and controlled by one person).

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34
Q

What is interest rate?

A

Interest rate is the extra money that is paid to the lender for the money borrowed from them

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35
Q

Private sector=

A

Sole traders, partnerships, private limited company, public limited company

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36
Q

Public sector=

A

central government, local government

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37
Q

third sector=

A

charities, social clubs

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38
Q

Unlimited liability

A

When the owner of a business can loose everything including their personal belongings if the business goes into dept.

39
Q

Limited liability

A

The owner can only lose up to the value of the share that they have in their company

40
Q

Dept factoring meaning

A

When customers who buy on credit fail to pay on time or attempt not to pay at all the business can use a factoring service.
Advantage= The factor will buy the depts of the business and they will then attempt to recover payment from the customers
negative= The factor charges the business a fee for their services.

41
Q

Loan meaning

A

A loan is when you are borrowing money because you dont have enough
postive= you dont always have to pay it back
negative= you might have to pay intrest

42
Q

Short-term bank loan meaning

A

Short term bank loans are loans that are meant to be under a year or even less.
positive= The loan may be used to buy an essential piece of equipment or to obtain extra cash to pay bills.
negative= The loans can be more difficult to obtain and the interest rate to be paid normally is higher.

43
Q

Hire purchase meaning

A

Hire purchase is a loan option that allows you to pay for a new or used car in monthly instalments.
Positive= a deposit is required followed by payments over a few years.
Negatives= The business will never actually own the asset

44
Q

Mortgage meaning

A

A mortgage is an agreement between you and a lender that gives the lender the right to take your property if you fail to repay the money you borrowed
positive= The business is given a long period of time to pay the mortgage back
Negative= Interest has to be paid as well

45
Q

Bank overdraft meaning

A

This is where customers can overdraw (draw money) from their bank.
positive= Even if they have no money in their bank they can still buy things
negative= Interest is charged daily.

46
Q

Grant meaning

A

It is a sum of money given to an individual or business for a specific project or purpose.
Positive= In most cases the money does not have to be repaid.
Negative= Usually the business is told what the money must be used for.

47
Q

Leasing meaning

A

There is a temporary transfer of assets such as business equipment or vehicles from one person or business to another.
Positive = The leasing system will replace the asset every couple of years.
Negative = The business will never actually own the asset.

48
Q

Trade credit meaning

A

An arrangement to buy goods and or services on account without making immediate cash or check payments.
Positive = This gives the firm time to sell the products at a higher price and earn profit.
Negative = The firm will lose the cash discount if they take too long to pay..

49
Q

Retained profits meaning

A

A business can use its profits to purchase machinery and equipment.
Positive = There is no interest to be paid and the business will own the assets straight away.
Negative = When a business spends all of its profits it can run into cash flow problems

50
Q

Additional capital meaning

A

You put in your own money into your business from your savings and lend it to your business.
Positive= The business does not need to pay back the money
Negative= The owners are now risking more of their own personal money

51
Q

What is the private sector

A

Sole traders, partnerships, private limited company (Ltd), Public limited company (Plc)

52
Q

What is the public sector

A

Central government and local government

53
Q

What is the third sector

A

Charities and social clubs

54
Q

Features of a sole trader?

A

One person owns and runs the business, owner is responsible for all the business debts, relatively easy to set up, business accounts are kept private.

55
Q

Negatives of a sole trader?

A

Work may stop or business may close if owner is ill, difficult for owner to get time off, may be limited finance available, if owner dies the business may cease trading, no one to help you make decisions.

56
Q

Positives of a sole trader?

A

Owner gets to make all the decisions, owner keeps all the profits, you dont have to pay for extra costs and employees, no one is going to stop your decisions.

57
Q

Features of a partnership?

A

Between 2 and 20 people own and run the business, partners are responsible for the depts of the business, partnerships aim to earn a profit, survival and growth

58
Q

Positives of a partnership?

A

Partners bring different skills and knowledge, easier for partners to take time off, workload can be shared between partners, may be easier to obtain loans from banks, partners can specialise in different aspects of the business, more capital (money) available.

59
Q

negatives of a partnership?

A

Disagreement and arguments between partners, profits have to be shared, partners are responsible for the depts of the business.

60
Q

What is a private limited company?

A

This is a company whose shares are owned privately.

61
Q

Features of a private limited company?

A

Usually a family owned business, private shareholders own the business, final accounts must be prepared and made available to interested parties, shareholders appoint directors to run the company, company name ends with LTD.

62
Q

Positives of a private limited company?

A

Owners have limited liability so they cant loose personal belongings, cannot sell shares on the market, control of the company remains within the family and not lost to outsiders, easier to raise finance from banks and other lenders.

63
Q

Negatives of a private limited company?

A

Cannot sell shares on the stock market, profits have to be shared between shareholders.

64
Q

Aims of all three (Private limited companies, sole traders and partnerships)?

A

Survival and growth, the company aims to maximise profits.

65
Q

What is a Public limited company?

A

A public limited company (plc) is a company whose shares are available for purchase by the public on the Stock Market.

66
Q

Public limited company aims?

A

They aim to maximise profit, growth and survival.

67
Q

Public limited company negatives?

A

Costly and fairly complicated to set up, they have no control over who buys shares on the stock market, members of the public must be able to access all financial records,

68
Q

Public limited company positives?

A

Members of the public can buy shares in the company on the stock exchange, can become very powerful and dominant businesses,easy to borrow huge amounts of money from bank and other lenders, public limited companies tend to be large, limited liability shareholders can only lose the value of their shares.

69
Q

Public limited company features?

A

name of the company ends with the letters plc, owned by shareholders by board of directors,

70
Q

What are 3 examples of ways to make a product more expensive?

A

Make it seem as if you are giving it to them for an amazing price, test it against other products like yours and show how yours is better, show what can happen if you don’t use/purchase the product.

71
Q

How do you add value to the primary sector?

A

You add value by carrying out an activity that requires equipment, skills, qualifications and/ or a license. e.g a fisherman can add value to the fish the catch by using a million pounds boat and a fishing license that the customers do not have or want.

72
Q

How do you add value to the secondary industry

A

The customers pay more than the price paid for the raw materials because the manufacturer uses machinery and skills that the customers dont have to create the finished product. E.g the sale price of car is significantly higher than the cost of the individual parts to create it.

73
Q

What is the negative cycle

A
  1. BUSINESS LOSES PROFIT
  2. BUSINESS COSTS (the prices of the products/ services they produce lower so they loose profit).
  3. they cant afford wage so LOWER NUMBER OF EMPLOYEES.

4.EMPLOYS LOSE MONEY there is not enough money for employees so theyre pay gets lowered.

  1. Cant afford basic NEEDS AND WANTS.
  2. Not enough money to go SHOPPING.
  3. Business either loses more profit or closes down.
74
Q

What is a franchisor

A

This is who owns the original business

75
Q

Franchisee

A

This is who has bought the right to use the original business name and enter into trade selling its products.

76
Q

What is important to customers

A

Good quality products, attractive packaging, durability, up-to-date fashionable products, good prices, good image, easily available, guarantees with the product, good after-sales service, friendlyness.

77
Q

What is customer service

A

Customer service is the provision of service to customers before, during and after a purchase.

78
Q

what are 3 Factors which affect whether goods or services meet customers needs?

A

realiablity/quality of the product, courtesy and attitude of staff, dealing with complaints.

79
Q

3 ways on how to provide good customer service (people)?

A

Friendly/welcoming, give good suggestions, well presented.

80
Q

3 ways on how to provide good customer service (physical evidence)?

A

Clean place, decorated to suit business, disabled access.

81
Q

3 ways on how to provide good customer service (process)?

A

Speedy delivery, taking orders promptly, options for payment.

82
Q

What is PESTEC?

A

All of the external factors that can effect the business positively or negatively.

(Businesses tend to not be able to influence these external factors).

83
Q

P for PESTEC?

A

Political= influence on government.

-Can make a business change to meet requirements of the law. (increase costs, reduce profits)

-This means higher taxes and costs and lower profits

84
Q

1st E for PESTEC?

A

Economic= Interest rates, employment and exchange rates.

1) Interest rates.
-high bank interest rate more difficult to borrow money = less development of growth.

2) Employment rates.
-high employment = difficult to get stuff
-high wages = low profit which means cant develop.

3) Exchange rates.
-Effect how expensive it is to buy things abroad or how much money you can make from selling goods abroad.

high x rate (1 pound - 1.79 euros) = better for buying worse for selling

Low x rate (1 pound - 1 euro) = better for selling but worse for buying.

85
Q

S for PESTEC

A

Social-culture= trends, culture, demographic.

-trends = needs and wants
-culture = religion
-demographic = age gender etc.

86
Q

E for PESTEC?

A

Environmental = weather and protest groups

-Weather = manufacture, distribution.

86
Q

T for PESTEC?

A

Technological = new tech
-new tech = manufacture, sales outlet, payment methods.

87
Q

C for PESTEC?

A

Competitive= the 4 P’s
Product, price, place promotion = need to match or be better

88
Q

WHAT DOES PESTEC STAND FOR?

A

Political
Economic
Social
Technological
Environmental
Competitive

89
Q

What is cash flow statements for?

A

Cash flow allows you to see how much money is going in or out of the business.

This can help identify problems of overspending or the opposite.

90
Q

Issues to look for in a cash flow statement?

A
  • If money is decreasing then falling trend in the opening or closing balance.
  • Any sort of negative opening or closing balance.
91
Q

Cash flow solutions?

A

Cutting costs (reducing hours etc), finding a cheaper supplier, lease or higher purchase rather than buying outright, increase profits.

92
Q

In a cash flow graph what does the break even do?

A

It allows you to identify how many units you must sell to avoid making a loss.

Business S4 nat 5 mr fernandez (4 decks)

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