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Business > Business in the real world > Flashcards

Business in the real world Flashcards

1
Q

Business plan

A

A detailed statement of how the business intends to operate, either at start-up or during a given period of time. Business plans are based on forecasts and so cover only a short time.

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2
Q

Tangible

A

an asset that has physical substance

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3
Q

Need

A

The human wants that are essential to survival; clothing, food, shelter, warmth or water.

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4
Q

Want

A

Things that people would like to have; not limited to the things they need to survive.

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5
Q

Land

A

the natural resources used to create a good or service

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6
Q

Labour

A

the effort that people contribute to the production of goods and services

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7
Q

Capital

A

resources or machinery needed for the production of a good or service

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8
Q

Enterprise

A

the entrepreneur that takes the first risk of starting a business

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9
Q

Market share

A

The proportion of the whole market for a product that is held by the business.

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10
Q

Market growth

A

The percentage growth in the size of the market, measured over a specific period.

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11
Q

Stakeholder

A

Those with an interest in the way that a business operates.

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12
Q

Shareholder

A

Those people who own shares in a limited company; each shareholder is a part owner of the business.

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13
Q

Franchising

A

The sale of the rights to use/sell a product by a franchisor to a franchisee. A fixed amount is paid in return.

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14
Q

External growth

A

The growth of a business by joining with another by merger or takeover.

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15
Q

Merger

A

When two or more businesses agree to join together.

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16
Q

Takeover

A

One business takes control of another.
e.g: through 51% or more shares

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17
Q

Backward Vertical

A

when a business takes control of another business that operates at an earlier stage in the supply chain

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18
Q

Forward Vertical

A

occurs when a business takes control of another that operates at a later stage in the supply chain

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19
Q

Horizontal

A

occurs when two competitors join through a merger or takeover.

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20
Q

Conglomerate

A

occurs when businesses in unrelated markets join through a takeover or merger

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21
Q

Diversification

A

occurs when businesses in unrelated markets join together through a takeover or merger

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22
Q

Primary sector

A

A business that extracts the earth’s natural resources.

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23
Q

Secondary sector

A

A business that uses raw materials to manufacture goods or construct items.

24
Q

Tertiary sector

A

A business that provides services to consumers or other businesses.

25
Q

External factors (TELE)

A

Technology
Economy
Legislation
Environment

26
Q

Limited liability

A

The owners are not responsible for the debts of the business. The limit of their liability for the business’ debts is the amount they invested.

27
Q

Unlimited liability

A

When the owner(s) are responsible for all the debts of the business. Their personal funds would be used to settle the business’ debts if the business’ funds were insufficient.

28
Q

Opportunity cost

A

The cost of making one choice concerning the use of limited resources at the expense of an alternative choice.

29
Q

Sole traders

A

A business that is owned and operated by one person.

30
Q

Public limited company (plc)

A

A business that is owned by shareholders. Anyone can buy shares in the business. Shareholders have limited liability.

31
Q

Private limited company (ltd)

A

A business that is owned by shareholders; the shares are not available to the general public. Shareholders have limited liability.

32
Q

Partnerships

A

A business that is owned and operated by a group of between 2 or more people.

33
Q

Factors of ownerships structures (PLUMS)

A

Profit distribution
Liability
Unlimited Liability
Management and Control
Sources of finance

34
Q

PLUMS in Sole trader

A

P - 100% yours
LU - Unlimited Liability
M - Full control (no support)
S - No access to share capital

35
Q

PLUMS in Partnerships

A

P - Shared through ‘Deeds of Partnership’
LU - Unlimited Liability
M - Shared through ‘Deeds of Partnership’
S - Access to each others finance

36
Q

PLUMS in Private Limited Company

A

P - Shareholders receive dividends
LU - Limited Liability
M - Founder (divorce less likely)
S - Access to share capital from KNOWN shareholder

37
Q

PLUMS in Public Limited Company

A

P - Shareholders receive dividends
LU - Limited Liability
M - Directors manage (divorce more likely)
S - Access to STOCK EXHANGE

38
Q

Aim

A

The intention to reach a goal.

39
Q

Examples of aims

A

Maximise profit
Gain independence
Personal satisfaction
Survival

40
Q

Objective

A

A specific statement that defines a precise goal that can be measured and delivered within a given time.

41
Q

Factors for Location (RECIPF)

A

near to Raw Materials
near to Employment
Competitors
Infrastructure
Proximity 2 target market
Finance (New or Established business)

42
Q

Pros of Business Plans

A
  • Help understand finance
  • Increase chances of obtaining external finance
  • Gaps within your company
43
Q

Cons of Business Plans

A
  • Reality can be different
  • Is the plan even good?
44
Q

Economies of scale

A

The cost advantage of producing on a large scale. As output increases the unit cost decreases.

45
Q

Diseconomies of scale

A

When a business grows too large, leading to a possible increase in unit cost.

46
Q

Technical economies of scale

A

The benefits that large businesses gain from having the funds to invest in expensive machinery that brings cost savings.

47
Q

Internal Growths (I-FONE)

A
  • Franchising
  • Outsourcing
  • New stores
  • E-commerce
48
Q

Pros of Franchising

A
  • Additional revenue stream
  • Less risk as other businesses pays your say to day costs
49
Q

Cons of Franchising

A
  • Lose control of sales
  • Inconsistent quality
50
Q

Pros of outsourcing

A
  • May reduce costs (machinery)
  • Specialists (so better quality)
51
Q

Cons of outsourcing

A
  • More risk as less control over production
  • Possibly not great quality
52
Q

Pros of New stores

A
  • Replicate look and feel of original stores
53
Q

Cons of New stores

A
  • New costs
54
Q

Pros of E-commerce

A
  • 24/7 open
  • cheaper (less rent)
55
Q

Cons of E-commerce

A
  • High initial costs
  • cheaper (less rent)

Business (4 decks)

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