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business studies a level > Business objectives - 1 > Flashcards

Business objectives - 1 Flashcards

1
Q

What is a business objective?

A

A clearly defined target for a business to achieve over a certain period of time. Objectives should be SMART

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2
Q

SMART

A

Specific, Measurable, Agreed, Realistic, Time specific

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3
Q

Specific

A

Clearly defined or identified

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4
Q

Measurable

A

Quantifiable target (10% increase)

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5
Q

Agreed

A

Targets have to be discussed and mutually agreed - people are more likely to be committed to them

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6
Q

Realistic

A

People will loose motivation to achieve objectives if they are unrealistic

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7
Q

Time specific

A

By what time should the objective be met

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8
Q

What is a mission statement?

A

A statement of the organization’s purpose - the reason the business exists

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9
Q

Why is profit important to a business?

A

-To attract shareholders

-Its a source of finance

-Motivation

-For Survival

-As a Measure of Success

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10
Q

What is fixed costs?

A

Costs that do not change as output changes (e.g. rent will not change with levels of production)

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11
Q

What is variable costs?

A

Costs that change as output changes (e.g. raw materials, wages)

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12
Q

What is semi-variable costs?

A

Costs that have fixed and variable elements (e.g. transport - fixed charge for renting vehicles but costs such as driver’s wages and fuel will change

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13
Q

What is total costs?

A

fixed costs + variable costs

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14
Q

What is revenue?

A

Money obtained from goods or services

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15
Q

Revenue formula

A

quantity sold x average selling price

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16
Q

What is a sole trader?

A

Business owned and operated by one person

17
Q

What are the advantages of operating as a sole trader?

A
  • Easy to set up
  • Make their own decisions
  • Profits are not shared between others
17
Q

What are the disadvantages of being a sole trader?

A
  • Pressure of all the responsibility
  • Difficult to raise finance and expand
  • Unlimited liability (responsible for all actions of the business and could loose person assets such as houses and savings)
18
Q

What is a company?

A

A business organization which sells a product or service in exchange for revenue and profit and is owned by shareholders and has limited liability

19
Q

What is a private limited company (LTD)

A

Any company can set up as a PLT, owners are shareholders although shareholders need approval from the business before they purchase a share

20
Q

Advantages of a PLT

A
  • Limited liability
  • Individuals are their own boss
  • Business is protected from outside influence
21
Q

Disadvantages of a LTD

A
  • Lots of paperwork
  • People can view businesses financial information
  • Time consuming
22
Q

What is a Public limited company? (PLC)

A

Owned by shareholders who are members of the general public - shares can be bought by anyone on the stock market

23
Q

Advantages of a PLC

A
  • Ability to raise additional finance
  • Shareholders have limited liability
  • Economies of scale (suppliers are more likely to negotiate prices with bigger businesses)
24
Q

Disadvantages of a PLC

A
  • Expensive
  • Complex accounting
  • Bigger risk of hostile takeovers
25
Q

What is a public sector business?

A

A business owned by the government, which will make the decisions about what to produce, how it should be produced and what price should be charged for it.

26
Q

What is a private sector business?

A

A business not owned by the government, which will make the decisions about what to produce, how it should be produced and what price should be charged for it without the government’s input.

27
Q

What is a not-for-profit business?

A

A business with helping a society as their main objective and not profit

28
Q

Who buys shares?

A
  • Banks
  • Pension funds
  • Insurance companies
  • Individuals
29
Q

Why do people buy shares?

A

For money, if there is an increase in share price, they will receive a share of the profits in the form of dividends

30
Q

What do shareholders do to a business?

A

They can influence a businesses decisions, each share is worth one vote so people may buy multiple shares of a business for more votes over the businesses decision.

31
Q

What influences share prices?

A
  • Company’s Performance
  • The business environment in which it trades.
32
Q

What is market capitalisation?

A

Determines how much a company is worth based on the stock market

33
Q

What is demand?

A

Amount of goods or services that consumers or organisations want and can afford

business studies a level (4 decks)

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