Business Objectives

Question 1

what happens when a business diversifies

Answer 1

it increases its range of goods or services it produces

Question 2

why must a business set objectives (4)

Answer 2

• Employees need something to work towards
• owners need a motivation to keep going and a goal to reach
• objectives can help owners decide where to take a business and what steps to reach that goal
• objectives can help measure the performance of a business, it could be argued that if a business has reached a goal, it has performed well

Question 3

what is the pneumonic to remember financial objectives

Answer 3

FISPS
Financial security
increased market share
sales
profit
survival

Question 4

what is the pneumoic to remember non-financial objectives

Answer 4

CISP
Challange
Independance and control
social objectives
Personal Satisfaction

Question 5

why might business objectives change

Answer 5

market conditions
technology
legislation
internal reasons ie ownership transfer
performance

Question 6

what are entrepreneurs

Answer 6

someone who takes risks in setting up a business

Question 7

what are the roles of an entrepreneur

Answer 7

to innovate ideas by finding gaps in the market or improving other practised ideas
responsible for organising production, labour and equipment

Question 8

what are incorporated businesses

Answer 8

business that have a seperate legal indentity from their owners, they can sue, be sued, liquidated or taken over

Question 9

what are Unincorporated businesses

Answer 9

bussinesses that have no legal distinction from their owners, everything good or bad is carried out in the name of the owner

Question 10

what is a sole trader

Answer 10

simplest form of a business organisation, has only one only but can employ any amount, is simple to set up because theres no legal requirements

Question 11

what are some examples of sole traders in each sector

Answer 11

fisherman or farmers, builders or small manufacturers, taxi driving or haridressing

Question 12

what are the advantages of the sole trader

Answer 12

keeps all the profit
owner is indepedant, full control
lots of flexibility
simple to set up
can offer personal service since the its small

Question 13

disadvantages of a sole proprietor

Answer 13

unlimited liability
independance may to big responsiblity
to small to exploit economies of scale
very hard work
owner dies with business, no continuity

Question 14

what is unlimited liability

Answer 14

when a business owner is personally responsible for all profit and losses in a business such as debts or loans

Question 15

what is a partnership

Answer 15

a business owned between 2 and 20 people

Question 16

what is a deed of partnership

Answer 16

a binding legal document which states the rights of business partners

Question 17

what should a deed of partnership include

Answer 17

HHHTR
how much capital each partner will contribute
how profits and losses will be shared
how much control each partner has
the procedure for ending a partnership
rules for taking on new partners

Question 18

advantages of a partnership

Answer 18

easy to set up and run, no legal formalities
partners can specialise in their area of expertise
more capital can be raised with more owners
shared workload

Question 19

disadvantages of partnership

Answer 19

parternships tend to be small
one partners descision is legally binding on all partners
partners share the profit
partners may dispute and fall out
partners have unlimited liability

Question 20

what are the requirements of a limited partnership

Answer 20

it is possible to have a limited partnership where some partners have limited liability where they contribute capital but take no part in the management of the business
for this to work one partner must have unlimited liability

Question 21

what law in the uk legislates limited partnerships

Answer 21

in 2000 the uk law changed so that limited liability partnerships could be formers where all partners have limited liability, for this the business has to comply with a number of legal requirements

Question 22

what are audits

Answer 22

offcial examination of a companies finacial records to check they are correct

Question 23

what is a franchise

Answer 23

where a business allows another operator to trade under their name

Question 24

what is a franchisee

Answer 24

an person who wants to trade under a busines name because they do not have their own idea

Question 25

what is a franchisor

Answer 25

someone who owns a franchise

Question 26

what does a franchisor offer to a franchisee

Answer 26

a license to trade under the recognised brand name of the franchisor a start up package, material, equipment etc training on how to run the business and operate the systems used by the business marketing suppoort a geographical area so the business does not face competition by other franchisees in a franchise group

Question 27

what does the franchisee have to pay in return to a franchisor

Answer 27

a one off start up fee an ongoing fee usually based on sales contribution to marketing costs franchisee may take a share of the profit

Question 28

advantages to the franchisee

Answer 28

a tried and test idea is used so less risk back up support is given set up costs are predictable

Question 29

disadvantages to the franchisee (4)

Answer 29

profit shared less control, strict operating rules apply strict contracts have to be signed can be an expensive way of starting a business

Question 30

advantages to the franchisor (3)

Answer 30

fast and cheap method of growth franchisee take some liability franchisee are more motivated than employees

Question 31

disadvantages to a franchisor (4)

Answer 31

profit shared franchisees may damage reputation franchisees may buy merchandise somewher else cost of support may be high

Question 32

what is merchandise

Answer 32

goods that are being sold

Question 33

what are social enterprises

Answer 33

business that have a social objective, usually non profit

Question 34

what are the goals of social enterprises

Answer 34

have a clear environmental mission income through donations or trade revinvest most of their profits are accountable or transparent to the public

Question 35

what are the 3 forms of a social enterprise

Answer 35

consumer or retail cooperatives worker cooperatives charities

Question 36

what do consumer cooperatives do

Answer 36

owned or controlled by the members, which elect directors. profit is given to members

Question 37

what do worker cooperatives do

Answer 37

where workers share ownership, like milk or wine growing where employee share profit and management

Question 38

what do charities do

Answer 38

raise goods or services for or to raise awarenes for needy disadvantaged people such as senior citizens or poverty stricken third world counties