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Business > Business in the real world > Flashcards

Business in the real world Flashcards

1
Q

Define goods

A
  • Physical items
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2
Q

Define services

A
  • Actions performed by other people to aid the customer
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3
Q

Reasons to start a business (3)

A
  • When someone starts making a good or providing a service they believe people will pay for
  • To distribute goods from supplier to a customer
  • To benefit others
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4
Q

List the sectors of business

A
  • Primary (Raw Materials)
  • Secondary (Manufacturing)
    -Tertiary (Services)
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5
Q

Define enterprise

A
  • A business or organization
  • The personal qualities that mean you can see and take advantage of business opportunities
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6
Q

Define entrepreneur

A
  • Someone who identifies new business opportunities and takes advantage of them
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7
Q

Why might someone become an entrepreneur (5)

A
  • Financial reasons - earning more money than they did before
  • Identifying a gap in the market
  • The independence of being your own boss - Flexible working hours
  • To follow an interest
  • Dissatisfied with their current job
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8
Q

Qualities of an entrepreneur

A
  • Hardworking
  • Organized
  • Innovative
  • Willingness to take risks
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9
Q

Four factors of production

A
  • Land
  • Labor
  • Capital
  • Enterprise
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10
Q

Define opportunity cost

A
  • The benefit given up in order to do something else - the cost of the choice made
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11
Q

Sole trader advantages (3)

A
  • Easy to set up
  • Be your own boss
  • You alone decide what happens to any profit
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12
Q

Sole trader disadvantages (4)

A
  • Long hours
  • Unlimited liability
  • Unincorporated
  • Difficult to raise capital
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13
Q

Partnerships advantages (3)

A
  • More owners, more ideas
  • Share the work load
  • More capital to invest
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14
Q

Partnerships disadvantages (3)

A
  • Partners are legally responsible for what each other do
  • Unlimited liability
  • Profit shared
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15
Q

Private limited company (Ltd) advantages (3)

A
  • Limited liability
  • Incorporated
  • Easier to get a loan or mortgage
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16
Q

Private limited company (Ltd) disadvantages (2)

A
  • More expensive to set up than partnerships
  • Legally obliged to publish their accounts (although not required to be made public)
17
Q

Public limited company (Plc) advantages (3)

A
  • Easier to raise capital
  • Limited liability
  • Incorporated
18
Q

Public limited company (Plc) disadvantages (3)

A
  • Difficult for the shareholders to agree on decisions
  • Easy for someone to buy enough shares to take over the company
  • Accounts have to be made public
19
Q

Business aims (5)

A
  • Survival
  • Growth
  • Maximise profit
  • Increase shareholder value
  • Increase market share
20
Q

What factors affect a business’ objectives (4)

A
  • Size of the business
  • The level of competition the business faces
  • The type of business
  • The life stage the business is in
21
Q

Factors that affect the dynamic environment of business

A
  • New Legislation
  • Changes in the economy
  • Changes in technology
  • Environmental expectations
22
Q

Stakeholders (6)

A
  • Owners
  • Employees
  • Suppliers
  • Local Community
  • Government
  • Customers
23
Q

Types of costs

A
  • Fixed costs - do not vary with output e.g. rent
  • Variable costs - increase as the firm increases output and expands e.g. running machinery
24
Q

What is average unit costs

A
  • How much each product costs to make
  • Average unit costs fall as the firm grows due to economies of scale
25
Q

Define a business plan

A
  • An outline of what a business will do and how it aims to do it
26
Q

What does a business plan include

A
  • Personal details of the owner and other important personnel
  • Mission statement describing the broad aims of the business
  • Objectives
  • Product description - unique selling point, market and competitors
  • Product details - how it is made
  • Staffing requirements
  • Finance
27
Q

What affects a business location (5)

A
  • Proximity of Raw Materials
  • Proximity to Labor
  • Proximity to market
  • Proximity to competition
  • Costs
28
Q

List the economies of scale

A
  • Purchasing economies of scale
  • Technical economies of scale
29
Q

Define purchasing economies of scale

A
  • When a large firm buys its supplies in bulk so gets them at a cheaper unit price
30
Q

Define technical economies of scale

A
  • A firm can afford to buy and operate more machinery than larger firms
31
Q

Define diseconomies of scale

A
  • Areas where growth can lead to increases in average unit costs
32
Q

Diseconomies of scale

A
  • The bigger the firm, the harder and more expensive it is to manage properly
  • More people so harder to communicate
  • The production process may become more complex and more difficult to coordinate
33
Q

Define internal/organic growth

A
  • When a business grows by expanding its own activities
34
Q

Features of internal/organic growth

A
  • Relatively inexpensive
  • Less risky
  • Slow
35
Q

Methods of internal/organic growth (4)

A
  • Opening new stores
  • Ecommerce
  • Outsourcing
  • Franchising
36
Q

Define external/inorganic growth

A
  • Expanding by working with other businesses
37
Q

Features of external/inorganic expansion

A
  • Fast
  • Risky
  • Expensive
38
Q

Methods of external/inorganic expansion

A
  • Takeovers
  • Mergers

Business (4 decks)

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