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Business > Business in the real world > Flashcards

Business in the real world Flashcards

1
Q

What are the 6 reasons for starting a business?

A
  • To produce a good
  • To provide a service
  • To distribute products
  • To benefit society
  • To fill a gap in the market
  • To fulfil a business opportunity
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2
Q

What is a ‘good’?

A

Goods are tangible items that can be used and stored. Businesses make goods and sell them to customers, who then own them. This includes computers, food and clothes.

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3
Q

What is a ‘service’?

A

Services are intangible actions that cannot be stored. Businesses provide services to customers, who have access to them for a period of time. Examples include hairdressing, train journeys and internet access.

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4
Q

What is the difference between a want and a need?

A

Wants are things that people would like to have but can survive without.

Needs are things required in order to survive.

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5
Q

What four factors of production does a business need?

A

Land - This includes the physical land where the business is located and also the natural resources that a business might need.

Labour - This includes the staff needed by the business and the skills and qualifications they have.

Capital - This is the machinery and equipment needed by the business.

Enterprise - This is the entrepreneur who takes a risk and creates the business.

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6
Q

What is opportunity cost?

A

An opportunity cost is something that is given up in order to do something else.

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7
Q

What is the primary sector?

A

The primary sector is made up of businesses that produce or extract raw materials.

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8
Q

What is the secondary sector?

A

Makes or manufactures goods.

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9
Q

What is the tertiary sector?

A

This sector provides services.

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10
Q

What are the four Business Functions?

A
  • Marketing
  • Operations
  • Human Resources
  • Finance
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11
Q

What four characteristics do entrepreneurs need?

A
  • Hardworking
  • Organised
  • Innovative
  • Willing to take a risk
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12
Q

Why may an entrepreneur want to run their own business?

A
  • To be their own boss and have the independence and freedom to make their own decisions
  • To have more flexibility with their working hours
  • To follow an interest or hobby such as opening a book shop or a football memorabilia website
  • To increase their income and improve their quality of life
  • To fill a gap in the market
  • To escape a job they are unhappy with
  • To fulfil an ethical or social goal
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13
Q

What are financial objectives?

A

Financial objectives link to money, such as making profit, a certain amount of sales or business survival.

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14
Q

What are non-financial objectives?

A

Non-financial objectives link to things other than money, such as personal satisfaction, challenge or independence.

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15
Q

What changes could occur in the business enviroment?

A
  • Technological change
  • Economic change
  • Legal change
  • Environmental expectations
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16
Q

What is a sole trader?

A

A sole trader is a business that is owned and run by one person. There is only one owner, but they may have employees who work for them.

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17
Q

What are features of a sole trader?

A

Sole traders have unlimited liability and the owner is personally responsible for the debts of the business. A sole trader pays income tax on their earnings.

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18
Q

What are advantages of a sole trader?

A
  • Quick and easy to set up
  • Make own decisions
  • Keep the profits for yourself
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19
Q

What are disadvantages of a sole trader?

A
  • Risk of unlimited liability
  • Works for long hours
  • High levels of responsibility
20
Q

What is a partnership?

A

A partnership is a type of business that has between 2 and 20 owners. They decide to set up and run a business between them.

21
Q

What is a ‘deed of partnership’?

A

In a partnership, the owners agree a set of rules. These are outlined in a document called a deed of partnership.
e.g. What percentage of profits are allocated to each person / role.

22
Q

What are some advantages of a partnership?

A
  • It is usually quick and easy to set up.
  • There is shared decision-making by the owners.
  • There is shared responsibility for debt by the owners.
  • Partners bring more skills and ideas.
  • There is more capital available to invest.
23
Q

What are some disadvantages of a partnership?

A
  • It can involve long work hours
  • Profits have to be shared between the partners
  • Conflict amongst owners can occur
  • There is the risk of unlimited liability
  • One partner may let the others down by not upholding their responsibilities in the business
24
Q

What is a private limited company?

A

A private limited company has limited liability.

25
Q

What is a shareholder?

A

The owners of a private limited company are known as shareholders. Shareholders have to be invited by the business before they can purchase a share of the business.

26
Q

What is corporation tax?

A

Private limited companies pay corporation tax. Corporation tax is a tax on the profits of a business.

27
Q

What are advantages of a private limited company?

A
  • The owners have limited liability
  • It gives individuals the opportunity to be their own boss
  • Any new shareholders need to be invited
  • Shares in the business can be sold to raise money
28
Q

What are disadvantages of a private limited company?

A
  • In some instances, other people are able to view the business’ financial information
  • It can be very time consuming to set up
  • The business may require outside professional help to manage its finances
  • Shareholders will expect to receive a percentage of the profits as dividends
29
Q

What is the stock market?

A

A centralised market where business shares are traded.

30
Q

What is a public limited company?

A

A private limited company that has decided to sell shares to the public on the stock market.

31
Q

What are advantages of a Public Limited Company?

A
  • The business has the ability to raise additional finance through share capital
  • The shareholders have limited liability
  • Increased negotiation opportunities with suppliers in terms of prices (because the business is larger)
32
Q

What are disadvantages of a Public Limited Company?

A
  • It is expensive to set up, requiring a minimum set up cost of £50,000
  • There is a greater risk of a hostile takeover by a rival company
  • Shareholders will expect to receive dividends
  • Shareholders may clash when making decisions
33
Q

What is a not-for-profit organisation?

A

A not-for-profit organisation is a business that aims to do something other than to make profit for the owners, such as providing a public service or helping people.

34
Q

What are 6 financial aims and objectives?

A
  • Business Survival
  • Profit maximisation
  • Growth
  • Market share
  • Increasing shareholder value
35
Q

What are examples of non-financial aims and objectives?

A
  • Social and ethical concerns
  • Customer satisfaction
36
Q

What rule do businesses use to set objectives?

A

S – Specific
M – Measurable
A – Agreed
R – Realistic
T – Time-bound

37
Q

What are examples of ways a business could judge their success?

A
  • Number of employees
  • Customer satisfaction / reviews
  • Market share
  • Social media followers or engagement
  • Revenue
  • Cost savings
  • Profit
  • Number of new stores opened
  • Share value
  • Environmental impact
38
Q

What is a stakeholder?

A

A stakeholder is any person, group of people or other organisation that has an interest in the activities of a business.

39
Q

What is an internal stakeholder?

A

Internal stakeholders work within a business, either making decisions or carrying them out.

40
Q

What is an external stakeholder?

A

External stakeholders do not work within a business but are affected by its activities.

41
Q

What are Shareholders / Owners

A

These are people who influence the business’ aims, objectives and strategic activities.

42
Q

What are managers?

A

Staff who are responsible for implementing the decisions made by the owners and overseeing the work that is required.

43
Q

Who are employees?

A

Staff who carry out the day-to-day work of the business.

44
Q

Who are Customers?

A

People who buy products or services from the business.

45
Q

Who are Suppliers?

A

Other businesses and organisations that provide products or services to the business.

Business (1 decks)

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