business management unit 1 Flashcards
for criteria A
Business
An activity where goods or services are produced, sold, or exchanged to make money.
Enterprise
Another word for a business or company, often used to describe a large or important one.
Entrepreneur
A person who starts and runs a business, taking on financial risks to make a profit.
Public sector
Part of the economy is controlled by the government, like schools, hospitals, and police.
Private sector
Part of the economy is run by private individuals or companies, not the government.
Sole trader
A business owned and run by one person, who is responsible for all its debts.
Partnership
A business owned and run by two or more people who share profits, risks, and responsibilities.
Unincorporated
A business that hasn’t been legally registered as a separate entity from its owner(s), like sole traders or partnerships.
Unlimited liability
When the owners of a business are personally responsible for all the business’s debts, even if it means using their personal assets.
Incorporated
A business that’s been legally registered as its own entity, separate from its owners.
Limited liability
When the owners of a business are only responsible for the money they invested in the business, not their personal assets.
Privately held companies
Companies owned by a small number of people (like a family or a few investors), and their shares aren’t available to the public.
Publicly held companies
Companies that have sold shares to the public, meaning anyone can buy them on the stock market.
Economies of scale
Economies of scale refer to the cost advantages that a business can achieve as it increases its production level.
Market share
The percentage of an industry or market that a particular company controls, relative to its competitors.
Interest rates
The amount charged by lenders to borrowers for the use of money is typically expressed as a percentage.
High interest rates
High interest rates can increase borrowing costs, making it more expensive for companies to finance operations or expansions. (Bad as it increases costs)
Low interest rates
Low interest rates generally encourage borrowing and spending, which can stimulate business growth. (Opportunity)
High rates of market growth
A situation where the overall market is expanding rapidly, often indicated by increasing sales and new customers. Companies in high-growth markets can see increased demand for their products or services, leading to higher revenues. (Increasing competition as well, opportunity as it gets more popular)
Low rates of market growth
A situation where the market is stagnating or growing very slowly. Companies may face challenges in increasing sales, leading to a focus on efficiency and cost-cutting. Competitive pressures may rise as companies fight for a share of a limited market. (Threat)
Political instability
A situation where there is uncertainty or volatility in a country’s political environment. Political instability can lead to uncertainty in regulations, taxes, and market conditions, which can hinder investment and growth.
Industrial unrest
Discontent among workers that can lead to protests, strikes, or other forms of disruption in the workplace. Industrial unrest can disrupt production, leading to lost revenue and increased costs. Companies may need to invest in employee relations and working conditions to mitigate unrest.
Strike action
A work stoppage initiated by employees to protest against their employer, often demanding better wages or working conditions. Strikes can halt production, causing significant financial losses.
Advantages of sole trader
Complete control
Profit retention
Cheap and quick to set up
accounts kept private
strong motivation
