Business In The Real World Flashcards
What is a business
An organistaion designed to supply a product or service, this can be profit or non profit
Give two examples of businesses
It could be one person, an electrician or a giant supermarket like ASDA
What is a product
Anything that is satysfying a customers needs, it has to physical. E.g cars, xbox and food
What is a service
Something that a business person does for you in exchange for money like gardening
Why is land a factor of production
Because it’s where you produce the goods, like a farm and without it you cannot make goods
Why is labour a factor of production
Because it’s people who work in a business and without them you cannot run a business
Why is capital a factor of production
Because it’s the money that you need to get your business started and make your idea a reality
Why is enterprise a factor of production
Because it’s the drive or motivation for the owners to start a business and without that you can’t be sucessful in a business and make it long term
What is the primary sector
A sector that extracts raw materials from the planet. For example diamonds and metal. These can also be grown like wheat on farms
What is the secondary sector
Where goods are manufactured into finished goods. For example plastic, metal, which are used to make cars.
What is the tertiary sector
A sector in which they are support services that help a business this include shops, banking and transporting goods
What is an entrepreneur
A person who creates new ideas for a business
What is opportunity cost
Is doing something that makes you not able to do something else. E.g i buy air pods but because of that I can’t afford to but an xbox
What two types of ownership has full liability
Sole trader and partenership
What is a sole trader
A type of business that is run by one person
What are the advantages of being a sole trader
Simple, you have all the control, you keep all the profit, minimal paperwork, fast decision making and can be transferred to a limited company
What types of business have limited liability
LTD and a public limited company
What are the disadvantages of being a sole trader
Hard to raise finance, the business relies on one person and if that person suffers it suffers and is limited to the owners life
What are the advantage of being a private limited company
Easier to raise finance, the company will always exist if the owner dies, original owners can regain control
What is a LTd
A comany whose shares can only be bought if someone is invited to buy some of their business
What is a public limited company
A company whose stocks can be bought on the stock market, publicy and their information is made clear for all to see
What is a companies house
Any limited company or partnership business has to register with Companies House. These records are public and there is usually a fee to register.
What is a deed of partenership
A document that is signed by all of the owners of a business setting out the terms they must abide by and their obligations as owners.
What is a divedend
A sum of money paid regularly by a company to its shareholders out of its profits.
What are the economies of scale
Where the average costs (of production, distribution and sales) fall as the business increases the amount of product that it produces, distributes and sells.
What is a grant
A grant is money given to a business, usually by the government or lottery fund, that does not need to be paid back.
What is a hostile takeover
A takeover of one company (called the ‘target company’) by another (called the ‘acquirer’) that is accomplished without the agreement of the target company’s management. Instead, the acquirer approaches the company’s shareholders directly or fights to replace the management to get the takeover approved.
What is income tax
Tax that someone pays based on their personal income
What is limited liability
When the business owner or owners are only responsible for business debts up to the value of their financial investment in the business.
What are profits
The amount of money made after all the costs
What is share capital
The money raised when a business becomes a public limited company by offering shares in the business in return for capital.
What are shareholders
A part owner of a private of public limited company
What are shares
A percentage portion of a company
What is the stock market
A market where business shares are traded
What is unlimited liability
When business owners or owners are personally responsible for the debt of a business
How is growth an objective/ aim of a business
By growing a business domestically or internationally. It can be made by opening more stores, more employement and opening franchises
How is customer satisfaction an objective/ aim of a business
Because by keeping a customer happy and level of service high you will make customers loyal and come back to buy from you in the future
How is ethics an objective/ aim of a business
By having good standards of behaviour and doing the right thing your customers will be proud and happy that they have bought from you. Examples are fair wages, good conditions and etc
How is survival an objective/ aim of a business
By making a business so that it can last as long as possible, this can be done by making itself a Ltd or PLC. The reason for doing this is so that all the time and money put into the business isn’t wasted
How is making profit an objective/ aim of a business
By making revenue after all the costs of a business have been paid, so that the owner will gain more money and be able to reinvest. If a bussiness’ costs are higher than profit they will lose money
How is maximising profits an objective/ aim of a business
By reducing the costs of a business and or increasing revenue the owner can make the business as efficent as possible with the right balance
How is maintaing sales an objective/ aim of a business
Because by changeing and updating your products your business will not lose interest and keep customer engagement high, so more longevity
How is market share an objective/ aim of a business
Because the more sales that you make in your particular market the more customers will come to you are youre more popualr in that market
How is the value of shares an objective/ aim of a business
If a business is highly valued than they can get lots of funds and the value of their shares is affected by any events that have happened in that business
What is an objective
What you do to get to an aim, what helps achieve the aim. Something that turns the aim into something easier to measure
What is an aim
The main goal of a business
What does an aim have to be
Specific, measurable, achievable, real and time based
What is an aim and objective depend on
The size/age of the business and the amount of competition
Give two things that can make aims change
Technology, interest rates, consumer spending, consumer law, employment law and the enviornment
What is an exchange rate
Exchanging money between countries, e.g converting pounds into euros
What does a smart target stand for
Specific, measurable, attainable, realistic and time based
What are stakeholders
A person/group who is interested or affected by a business
Name 4 examples of stakeholders
The government, employees, suppliers and the local community
How can the local community affect a business
They can stop local development plans. Or help support businesses
How can the government affect a business
Because they se tax rates and make policies for employees and etc
Uncertainty
Happens when there is a lack of information, meaning that the outcomes are hard to predic
Risk
The possibility of something going wrong
What is revenue
The income that a business gets from selling goods or services
What are total costs
Fixed costs plus variable costs
What are fixed costs
Costs that do not change when a busines changes it’s output
What are variable costs
Costs that vary depending on the businesses output level
Why are business plans good
They help organise information and help maximise profits, by identifying problems
How can a business plan help raise finance
It makes it easier to get a loan and investors will be attracted, as they know what they’re paying for
How does a business plan help set up a new business
It helps a inexperienced person know what to do next
What is market research
Who are the customers, why they buy and the size of the market
What are external pressures in a business
Who are the competitors, how are they doing and about the current economy
What are production process in a business plan
Where to setup, organisation and the production methods and quality
What is a business plan
A plan for a business that shows a businesses aims ans how they will achieve it, depending on the, market and etc
What is the formula for average unit costs
Total costs divided by total output
What is organic growth in a business
Growth by iself, for example by selling more of it’s products ans increasing revenue
What is franchising
A big business selling its right to use their name to someone to expand their business without paying as much
What are the disadvantages of franchising
The franchisor loses some control and they have to keep an eye on the franchisee as they can ruin their image
How can you get internal growth in a business
Increasing sales, revenue, employees and branches
What is external growth
Growth that is achieved by merging with another business or with hostile takeovers
What is outsourcing
Using another business to produce something for you, as your business is too busy or doesent want to risk opening another factory
What are the disadvantages of outsourcing
It is usually more expensive then producing the products with your own business
What are the advantages of organic growth
Much more manageable, better for long term growth and will attract more investors, as the business isn’t in for short term growth
What is a merger
When two business join together creating one stronger business
What is a takeover
When a rival business buys a majority of shares of a business and tries to buy the business
What are the disadvantages of external growth
Very hard to manage, as it literally combines two businesses and they have different ways of working and etc, so they have to be very organised
What are the advantages of external growth
Makes one larger business, giving huge short term growth, as it creates a joint business
What are the three impacts of the location of a business.
Sales image and costs
What are the six factors of location, RECIPE
Raw materials, employment, competitors, infrastructure, proximity to target market, finance (E)
What are the advantages of internal recruitment
Quick process, they already have experience in the business, cheaper
Disadvantages of internal recuitment
Small pool of applicants, lack of fresh ideas
External recruitment advantages
Larger pool of applicants, new ideas, fresh skills
Disadvantages of external recruitment
Expensive, can take time for employee to settle in
