Business in the real world Flashcards
1
Q
Define goods
A
- Physical items
2
Q
Define services
A
- Actions performed by other people to aid the customer
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
4
Q
List the sectors of business
A
- Primary (Raw Materials)
- Secondary (Manufacturing)
-Tertiary (Services)
5
Q
Define enterprise
A
- A business or organization
- The personal qualities that mean you can see and take advantage of business opportunities
6
Q
Define entrepreneur
A
- Someone who identifies new business opportunities and takes advantage of them
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
8
Q
Qualities of an entrepreneur
A
- Hardworking
- Organized
- Innovative
- Willingness to take risks
9
Q
Four factors of production
A
- Land
- Labor
- Capital
- Enterprise
10
Q
Define opportunity cost
A
- The benefit given up in order to do something else - the cost of the choice made
11
Q
Sole trader advantages (3)
A
- Easy to set up
- Be your own boss
- You alone decide what happens to any profit
12
Q
Sole trader disadvantages (4)
A
- Long hours
- Unlimited liability
- Unincorporated
- Difficult to raise capital
13
Q
Partnerships advantages (3)
A
- More owners, more ideas
- Share the work load
- More capital to invest
14
Q
Partnerships disadvantages (3)
A
- Partners are legally responsible for what each other do
- Unlimited liability
- Profit shared
15
Q
Private limited company (Ltd) advantages (3)
A
- Limited liability
- Incorporated
- Easier to get a loan or mortgage
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
Define a business plan
- An outline of what a business will do and how it aims to do it
26
What does a business plan include (7)
- 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
What affects a business location (5)
- Proximity of Raw Materials
- Proximity to Labor
- Proximity to market
- Proximity to competition
- Costs
28
List the economies of scale
- Purchasing economies of scale
- Technical economies of scale
29
Define purchasing economies of scale
- When a large firm buys its supplies in bulk so gets them at a cheaper unit price
30
Define technical economies of scale
- A firm can afford to buy and operate more machinery than larger firms
31
Define diseconomies of scale
- Areas where growth can lead to increases in average unit costs
32
Diseconomies of scale
- 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
Define internal/organic growth
- When a business grows by expanding its own activities
34
Features of internal/organic growth
- Relatively inexpensive
- Less risky
- Slow
35
Methods of internal/organic growth (4)
- Opening new stores
- Ecommerce
- Outsourcing
- Franchising
36
Define external/inorganic growth
- Expanding by working with other businesses
37
Features of external/inorganic expansion (3)
- Fast
- Risky
- Expensive
38
Methods of external/inorganic expansion (2)
- Takeovers
- Mergers
