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[archive] business > business mocks > Flashcards

business mocks Flashcards

1
Q

what is positive cash flow?

A

When there is more money coming into the business then out

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2
Q

What is negative cash flow?

A

when there is more business going out of the business then into it

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3
Q

When can businesses experience cash flow problems and why ?

A
  • at start up - large amounts of money need to be invested to get the business started
  • During rapid growth-the business is not able to keep up with cash outflows
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4
Q

Define the term ‘overdraft’

A

These let a firm take out more money out of its bank account than it has paid into it.

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5
Q

Give 2 advantages of using an overdraft

A
  • allows a business to make payments on time

- interest is only paid on what you use

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6
Q

Give two disadvantages of using an overdraft

A
  • higher interest rates( may need to pay back more later)

- the bank can demand full payment at any time

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7
Q

What is trade credit?

A

The arrangement of the delay or rescheduling of payments to a later date.

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8
Q

Give two advantages of using trade credit.

A
  • gives a small business time to earn the money needed

- no interest charges if terms are met - costs are lower

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9
Q

Give two disadvantages of using trade credit.

A
  • can accumulate interest rates if terms are not met

- can damage relationships with supplier if not paid back on time

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10
Q

What is venture capital?

A

Money raised through investors willing to take a risk on small businesses

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11
Q

What is share capital?

A

Share capital is money raised by shareholders through the sale of ordinary shares

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12
Q

Name 2 advantages of share capital.

A

Share capital is a source of permanent capital (refunds are not allowed).
- There are no dividends to be paid if the business has a poor year

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13
Q

Name 2 disadvantages of share capital

A
  • the business’ founders will slowly lose control

- business is vulnerable to takeover

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14
Q

What is retained profit?

A

A portion of the companies’ profit that is kept in the business after paying dividends

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15
Q

Give 3 advantages of retained profit

A
  • no repayment needed
  • easy access
  • does not incur interest charges
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16
Q

Give 2 disadvantages of retained profit

A
  • may upset shareholders that prefer receiving dividends

- not available for future use

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17
Q

what is crowdfunding?

A

when a large number of people contribute to funding a business idea.

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18
Q

Give 2 advantages and disadvantages of crowdfunding

A
  • It acts as a form of market research
  • Provides opportunities for individuals to start a business
    dis:
  • It is difficult to reach the funding target
  • The business must interest people and make them want to invest.
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19
Q

Give 3 advantages of market segmentation

A
  • can tailor and offer product ranges that will appeal to a specific demographic
  • makes it easier to produce products that meet customer needs
  • allows a business to increase market share
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20
Q

Give 2 disadvantages of using market segmentation

A
  • markets and customer needs are always changing

- does not guarantee customers

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21
Q

What is the National Minimum Wage Act? year+ pay

A

NMW 1998
The lowest hourly rate permitted by the government that an employer can pay to employees 22 and over
- £8.91

22
Q

Give 3 advantages of increasing NMW

A
  • higher disposable income
  • more motivated staff
  • better work environment
23
Q

Give 3 disadvantages to increasing NMW- including not paying it

A
  • increases firms fixed cost and total cost
  • if business is unable to they may have to make employees redundant
  • paying less than NMW can lead to fines and bad publicity
24
Q

What year was the consumer rights act established ?

A
  • 2015
25
Q

What year was the Trade Descriptions Act established and what does it do?

A
  • 1968

- ensures that a business accurately describes their goods and services.

26
Q

How does the consumer rights act protect its customers?

A

goods and services should be:

  • as described
  • of satisfactory quality
  • fit for its purpose
27
Q

What year was the Health and Safety Act established and what does it do ?

A
  • 1974

- makes sure the working environment was safe

28
Q

Give 3 impacts of following the health and safety legislation

A
  • more productive workforce
  • expensive to train staff
  • if not followed, firms can be prosecuted or fined and may have to pay compensation
29
Q

What year was the Equality Act established and what does it do?

A
  • 2010

- prevents discrimination based on gender, age, race etc

30
Q

Give 3 benefits of meeting legal obligations

A
  • staff are more efficient
  • staff more likely to stay working for the business reducing recruitment cost
  • the business gains a good reputation
31
Q

Give 3 impacts of not meeting legal obligations

A
  • pay compensation
  • stakeholders and suppliers may be reluctant to be associated with the business
  • business’ reputation is damaged
32
Q

How does levels of interest impact loans?

A
  • high level of interest: more expensive loan: difficult pay back
  • low level of interest: cheaper loan: easy pay back
33
Q

Give three impacts of low interest rates.

A
  • firms and consumers borrow more and save less
  • consumers have more money leading to an increase of demand - more profit
  • firms may increase output to compensate for higher consumer spending
34
Q

Give three impacts of high interest rates

A
  • Borrowing money becomes more expensive
  • consumers will save more ( TIB ) in order to take advantage of higher returns
  • reduced demand for products, less sales
35
Q

How do levels of interest impact those who save?

A

high interest rates: better returns - higher reward

low interest rate- lower returns

36
Q

Give two disadvantages and advantages on focus groups.

A

adv:
- inexpensive and quick
- see facial expression and body language
dis:
- potential bias due to group influence
- not representative of market ( small group)

37
Q

define ‘ ethics’

A

ethics are the moral principles of right and wrong

38
Q

Discuss the importance of cash to the survival of a small business.

A
  • pay supplier on times
  • if not loss of trust
  • not allowed to purchase via trade credit
  • prevents insolvency
  • pay debts
  • maintain relationships
39
Q

give three ways a business can act more ethically

A
  • providing good working conditions
  • pay a fair wage
  • honest advertisement
40
Q

give three advantages to acting ethically

A
  • can charge higher prices as consumers place high value on ethical products
  • shareholders may be likely to invest
  • good relationship with supplier if treated fairly
41
Q

Give three disadvantages to acting ethically

A
  • higher labour costs due to paying fair wages
  • ethically sourced materials are more costly and difficult to find
  • increased costs leads to less profit - higher price- deters customers
42
Q

Give two advantages to acting environmentally friendly

A
  • improve corporate image- attract customers - increase sales
  • competitive advantage
43
Q

Give two disadvantages to acting in an environmentally friendly way

A
  • greenwashing can harm business reputation

- expensive to transition to a eco-friendly business.

44
Q

Give two ways pressure groups can influence businesses

A
  • raise awareness on a business’ unethical actions

- cause businesses to act more ethically

45
Q

Give 3 ways firms can be more sustainable and adapt their marketing mix

A
  • use less packaging
  • use renewable energy resources
  • recycle more and less waste
46
Q

Give one advantage and disadvantage of having a good brand image.

A
  • products are easily recognised and liked by customers

- can be expensive but can increase revenue

47
Q

List 3 different types of advertising

A
  • television adverts
  • internet adverts
  • special offers
48
Q

Name 1 benefit and drawback to using television adverts as a form of advertising

A

benefit:
- can be seen by a wide audience
drawback
- very expensive

49
Q

Name 1 benefit and drawback to using internet adverts as a form of advertising

A

benefit:
- can be seen by a targeted audience
drawback:
- a lot of adverts online so people may choose to block them

50
Q

Give two types of sales promotion

A
  • special offers ( discounts)

- product trials

51
Q

Give one advantage and disadvantage to using sales promotion to advertise

A
  • it should encourage new customers to try a product, boosting sales
  • customers may get used to seeing products on promotion and be reluctant to purchase

[archive] business (13 decks)

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