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GCSE BUSINESS > Business In The Real World > Flashcards

Business In The Real World Flashcards

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1
Q

What is a business?

A

An organisation that trades it’s products and services for money.

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2
Q

What is a product?

A

Anything that is capable of satisfying customer needs, it is tangible and can be touched

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3
Q

What is a service?

A

A service is an act that a business person carries out for you in exchange for money

Example: gardening, hairdresser

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4
Q

What are the 4 factors of production?

A

Land– somewhere to produce the goods e.g. a farm
Labour– people to work in the business e.g. farm workers
Capital– money to get the business started
Enterprise– This is the drive or motivation from the owners to start a business

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5
Q

What is an opportunity cost?

A

The cost of not selecting an alternative decision ( that idea had the opportunity to do better so it is not literal cost but a metaphorical cost.)

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6
Q

What are 5 good reasons to start a business?

A

To produce goods
To supply a service
To distribute products
To fulfill a business opportunity
Providing a good or service to benefit others – social enterprise

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7
Q

What is a social enterprise?

A

A business which has the objective of trading to help people or the planet, rather than making a profit

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8
Q

What is the primary sector?

A

The primary sector extracts raw materials from the planet ( mining diamonds )

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9
Q

What is the secondary sector?

A

In the secondary sector goods are manufactured from raw materials into finished goods ( metal made into cars )

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10
Q

What is the tertiary sector?

A

The tertiary sector also includes shops, retail, banking and insurance

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11
Q

What is the definition of enterprise?

A

A company or business

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12
Q

What is an entrepreneur?

A

A person who starts a business and takes on financial risk in the hope of making a profit

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13
Q

Why would some people want to become an entrepreneur?

A

To be your own boss
Flexible hours
To pursue an interest
Dissatisfaction with current job
To identify a gap in the market
To earn more money

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14
Q

What are inflation rates?

A

The rate of increase in prices for goods and services

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15
Q

What are interest rates?

A

This is set by the Bank of England. When this rises the cost of borrowing increases

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16
Q

How would inflation rates affect a business?

A

If these go up in the UK then raw materials required to make goods may increase

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17
Q

How would interest rates affect a business?

A

A rise interest rates will impact a business because if they have loans or overdrafts these will now cost them more

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18
Q

What are unemployment rates?

A

The rate of unemployment in the UK is those people without a job who have been actively seeking work in the past 4 weeks and are available to start work in the next 2 weeks

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19
Q

How would unemployment rates affect a business?

A

More unemployed means that a business will have more applicants per job that they advertise

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20
Q

What are exchange rates?

A

the cost of one currency expressed in terms of another e.g. $ to £

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21
Q

How would exchange rates affect a business?

A

If the pound is strong (increases) then a business thatimports will find that the goods become cheaper, however if they export the goods will become dearer

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22
Q

What is a sole trader?

A

A sole trader is a business which has only one owner
Have unlimited liability

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23
Q

What are some examples of sole traders?

A

Corner shops
Plumber
Electrician
Cleaner

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24
Q

What are the advantages of being a sole trader?

A

They are their own boss
Easy to set up
Need less capital

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25
Q

What are the disadvantages of being a sole trader?

A

Unlimited liability
Difficult to raise money
No one to take over if ill

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26
Q

What does unlimited liability mean?

A

This means that the business and the owner are ONE legal entity
If the business gets into debt, the owner gets into debt

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27
Q

What is a partnership?

A

2 or more people that run a business and are all joint owners of the business

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28
Q

What are some examples of partnerships?

A

Doctors
Dentists
Accountants
Solicitors

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29
Q

What are some advantages of partnerships?

A

Easy to set up
Small capital needed
All information about the business can be kept private

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30
Q

What are some disadvantages of partnerships?

A

Unlimited liability
Can disagree on many things
Trust can be an issue

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31
Q

What does limited liability mean?

A

When an owner can only lose the money they invest into the business
If the business is in debt, the owners will only lose the money they put into the business

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32
Q

What is a private limited company ( ltd ) ?

A

Shares cannot be bought by the public, the share issue is limited (hence the ltd) to friends and family who can buy shares in the business
Have limited liability

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33
Q

What are some examples of ltds?

A

Eddie stobart
Raleigh uk

34
Q

What are the advantages of ltds?

A

Protection of limited liability for investors, they cannot lose their own assets on the value of the investment
Easy to raise capital – issue more shares to friends and family
Banks more willing to lend money to a ltd company than a sole trader

35
Q

What are the disadvantages of ltds?

A

Business has to issue more information about itself which can be expensive to produce
Business has to prepare Annual Accounts and have these printed and sent to all shareholders
Also has to make annual accounts available for general public and competitors to see.

36
Q

What is a public limited company ( plc ) ?

A

A company that sells products to anyone on the stock exchange
Have limited liability

37
Q

What are some examples of plcs?

A

Tesco
Barclays
Waitrose

38
Q

Advantages of plcs

A

Protection of limited liability for owners and investors
Easy to raise capital – issue more shares
Banks more willing to lend money to a large well-established company – less risk

39
Q

Disadvantages of plcs

A

Expensive to produce accounts every year
Has to publish annual accounts which means the public and competitors can see all their financial information
Expensive process to become a plc

40
Q

What is a not for profit organisation?

A

A not-for-profit organisation is one that has the objective of something other than making a profit (but it still might make a profit)
Made for a social cause
Have limited liability

41
Q

What are some aims a business may have?

A

Survival
Profit maximisation
Growth
Market share

42
Q

What are some objectives a business may have?

A

Customer satisfaction
Getting to the break even point ( survival )
Reaching a certain amount of shops in the country or globally

43
Q

What is the break even point?

A

Not making profit but not losing money

44
Q

What is shareholder value?

A

Where shareholders, in a business, earn a return from their investment which is greater than their required rate of return

45
Q

What are aims?

A

Aims are the strategic goals of a business; for example, to grow

46
Q

What are objectives?

A

Objectives are more specific steps; for example, to increase sales by 5% over the next year

47
Q

What is the role of objectives in a business?

A

Motivate workers
Keep an eye on profit
Helps the owner focus on growth

48
Q

Why doesn’t every business have the same objectives?

A

Business size
Level of competition
Type of business ( sole trader, partnership )

49
Q

What would be objectives for a not for profit business?

A

Aim to tackle the effects of poverty
– Provide jobs and tackle unemployment
– Help children with a social need
– Tackle the issue of an aging population
– Help the homeless
– Education and training initiatives

50
Q

How could a business change their objectives?

A

They could start as a sole trader or partnership and then build their company as they make more profit

51
Q

What is a stakeholder?

A

A stakeholder is defined as anyone who has an interest in a business and is affected by the actions of the business

52
Q

Who are typically the main stakeholders of a business?

A

Owners, employees, local community, customers, suppliers

53
Q

What is the owner’s role in the business?

A

To start and run a business to make profit

54
Q

What is the employees role in the business?

A

To work in the business in return for wages / money

55
Q

What is the customers role in the business?

A

To buy goods or services from the business

56
Q

What is the local community’s role in the business?

A

For those who live near a business who may be affected by its operations and to give feedback for the business

57
Q

What is the supplier’s role in the business?

A

To provide the business with goods or services that they might need to sell

58
Q

What do the owners want from the business?

A

To get a good return on any money they have invested into the business

59
Q

What do the employees want from the business?

A

To have job satisfaction

60
Q

What do the customers want from the business?

A

To get a good choice of goods and services and to get value for money

61
Q

What do the local community want from the business?

A

They want the business to provide jobs and they want the business to operate in an ethical way

62
Q

What do the suppliers want from the business?

A

They want to charge high prices for goods and services to make profit

63
Q

How are stakeholders affected by business activity?

A

If the owners choose they want to grow the business then more employees are needed, there will be more customers, the local community will be larger and the suppliers may want more money

64
Q

How do employees affect business activity?

A

They can influence productivity on how hard they work

65
Q

How do suppliers affect business activity?

A

Can choose wether to raise prices for goods meaning the business will have to spend more money

66
Q

How does the government affect business activity?

A

Introduce new laws to benefit or affect the business

67
Q

How do customers affect business activity?

A

Decidimg wether to purchase the goods that the business sells

68
Q

How does the local community affect business activity?

A

Protesting against the goods being sold or anything to do with a business

69
Q

How can employees cause conflict in a business?

A

They want higher wages meaning the owners would have to spend more money to pay them more

70
Q

How can managers cause conflict in a business?

A

They want big bonuses but owners and shareholders don’t want to pay them

71
Q

How can customers cause conflict in a business?

A

They want low prices and higher quality products which can cause a business to spend money they dont want to spend

72
Q

How can local communities cause conflict in a business?

A

They want lower pollution levels but this will cost the owners and shareholders of a business more money

73
Q

How can suppliers cause conflict in a business?

A

They want to get good prices for the goods they sell and this can cost businesses more money

74
Q

What are some factors influencing the location decision of a business?

A

The cost of premises : can cost businesses a lot of money
Government grants : they dont need to be payed back so can influence the location
The type of goods a business sells
The location of where the customers are
Where a businesses competitors are

75
Q

How could unemployment rate impact a businesses location?

A

If the unemployment rate in a specific area in higher then they will get more job applications if they move there

76
Q

How may other businesses impact a businesses location?

A

If there are smaller businesses in a location, you could steal all of their customers to get more sales

77
Q

How might materials impact the location of a business?

A

If all of a businesses raw materials are in a specific place, then it would be a good idea to put stores near where they are

78
Q

Where would a retail business locate their shops?

A

Where other retail stores are

79
Q

Where would a service business locate?

A

Near where their customers are

80
Q

How would manufacturing affect the location of a business?

A

Put their business near roads to be closer to manufacturing stores

GCSE BUSINESS (6 decks)

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