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huda business > Business in the Real World > Flashcards

Business in the Real World Flashcards

1
Q

What is the purpose of a business?

A

To provide a good or service.

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2
Q

What is a business plan?

A

A detailed statement on how the business intends to operate. either at start up or a given period of time.

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3
Q

Why does an entrepreneur start up a business? (3)

A

To produce a good.
To provide a service.
To distribute products.

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4
Q

What are the four factors of production?

A

Land
Labour
Capital
Enterprise.

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5
Q

What is land?

A

The physical land where the business is located and also the natural resources the business may need.

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6
Q

What is labour?

A

Staff needed by the business and the skills and qualifications they have.

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7
Q

What is capital?

A

The machinery and equipment needed by the business to make the products or provide the service.

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8
Q

What is enterprise?

A

The entrepreneur who takes a risk and creates a business using the other 3 factors of production.

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9
Q

What is opportunity cost?

A

Something that is given up in order to do something else. For example, when choosing between two different office locations, they will face opportunity costs for the location they don’t choose.

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10
Q

What are the three business sectors?

A

Primary
Tertiary
Secondary.

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11
Q

What is the primary sector?

A

Businesses that produce or extract raw materials e.g farming, fishing and mining.

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12
Q

What is the secondary sector?

A

Makes or manufactures goods. They take raw materials from the primary sector and turn them into finished goods e.g Heinz or BMW.

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13
Q

What is the tertiary sector?

A

Final stages in the production where services are provided e.g estate agents or hairdressers.

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14
Q

What is an entrepreneur?

A

Someone willing to take risks to start a business.

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15
Q

Characteristics of an entrepreneur? (3)

A

Organised = The entrepreneur will have to arrange all finances and meet deadlines.
Hardworking = Long hours are required to work in the beginning of a business.
Risk-taking = starting a new business comes with a lot of risks, e.g risking money and time.

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16
Q

Objectives of an entrepreneur? (3)

A

Fill a gap in the market
Escape a job they are unhappy with.
Have more flexibility with their working hours.

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17
Q

What are the two types of objectives?

A

Financial
Non Financial

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18
Q

What is financial objective?

A

Links to money such as making a profit or for the business to survive.

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19
Q

What is a non financial objective?

A

Personal satisfaction, challenge or independence.

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20
Q

What 4 types of changes can a business environment experience?

A

Technological Change
Economic Change
Legal Change
Environmental Expectations

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21
Q

What is technological change?

A

Businesses need to keep up with rapid changes in technology.
For example e-commerce and m-commerce

22
Q

What is e-commerce and m-commerce?

A

E-commerce = transaction that takes place on the internet
M-commerce = any business transaction that takes place through a mobile device such as a phone or tablet.

23
Q

What is economic change?

A

Economic factors that can have a big impact on the success of a business.
e.g inflation, interest rates.

24
Q

What is legal change?

A

Businesses will be affected by new legislation.
e.g increasing minimum wage can increase the costs of the business.

25
Q

What are environmental expectations?

A

Businesses have to be aware of how strongly their customers feel about environmental and ethical issues.

26
Q

What do environmental expectations affect?

A

How the business produce, package and transport their products as well as the resources they use.

27
Q

What is a dynamic business?

A

A rapidly changing business environment.

28
Q

What is a sole trader?

A

A business that is owned and run by one person. Even though there is only one person, they may have employees working for them. Usually start ups or small businesses.

29
Q

What is unlimited liability?

A

When the business owner is personally responsible for the debts of the business.

30
Q

Disadvantages of sole traders? (3)

A

Unlimited Liability.
Income Tax on their earnings.
Long and stressful hours.

31
Q

What is a partnership?

A

A business that is run by between 2-20 owners.

32
Q

Where are partnerships usually found?

A

In businesses that provide a professional service. e.g lawyers and doctors.

33
Q

What is a deed of partnership?

A

A document that is signed by all the owners of a business setting out the terms they must abide by and their obligations as owners.

34
Q

What do partners agree on before starting a business? (3)

A

How profits are shared.
What percentage of the business each person owns.
Roles and responsibilities

35
Q

Disadvantages of a partnership? (3)

A

Shared profits.
Risk of unlimited liability.
Conflict amongst the owners.

36
Q

Advantages of a partnership (3)

A

Quick and easy to set up.
Partners bring in more skills and ideas.
Shared responsibility for debt.

37
Q

What is a private limited company (ltd)?

A

Can be a small or large business with limited liability.

38
Q

What are the owners of an ltd called?

A

Shareholders. They have to be invited by the business before they can purchase a share of the business.

39
Q

What do ltds have to pay?

A

Corporation tax - a tax on the profits made.

40
Q

Disadvantages of ltds (3)

A

Have to register with Company House.
More paperwork to do.
May require outside professional help to manage its finances.

41
Q

Advantages of ltds (3)

A

Limited Liability.
Shares in the business can be sold to raise money.
Any new shareholders have to be invited which protects the business from outside influence.

42
Q

What is a public limited company? (plc)

A

Shares are sold to the public on the stock market. The shareholders become part owners of the business and have a say in how it operates.

43
Q

What is ‘floating on the stock exchange’?

A

When a business sells its shares on the stock market.

44
Q

Advantages of a plc?

A

Limited Liability.
You can negotiate with suppliers in terms of prices because larger businesses can achieve economies of scale.
The business can raise any additional finances through share capital.

45
Q

What is economies of scale?

A

The average costs fall as the business increases the amount of product that it produces, distributes and sells.

46
Q

What is share capital?

A

The money raised when a business becomes a plc by offering shares in the business in return for capital.

47
Q

Disadvantages of plc (3)

A

Expensive to set up - minimum of £50,000
Shareholders may clash when making decisions about the business.
Shareholders expect to receive a percentage of the profit as dividends.

48
Q

What are dividends?

A

A sum of money paid regularly by a company to its shareholders out of its profits.

49
Q

What is a not for profit organisation?

A

A business that aims to do something other than make a profit for the owners. e.g helping people or providing a public service.
Any surplus is reinvested back into the business or used in other ways.

50
Q

Example of a not for profit organisation?

A

A charity.
Raise money for good causes.
Businesses with charitable status are funded mainly by donations or are eligible for some sort of grant.

51
Q
A

huda business (2 decks)

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