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Business > Business ownership, sectors, enterprise etc. (1.1 - 1.5) > Flashcards

Business ownership, sectors, enterprise etc. (1.1 - 1.5) Flashcards

1
Q

Characteristics of a needs business

A
  • Prices are low
  • Competitors are plentiful
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2
Q

Characteristics of a wants business

A
  • Trends are temporary
  • More competitors
  • Premium price points
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3
Q

Definition of Opportunity cost

A

The benefits you forego by not choosing the alternatives.

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4
Q

Definition of Added value

A

The increased worth that a business creates for a product.

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5
Q

Sectors of the industry

A

Primary (Extracting raw materials e.g farming, agriculture, mining, fishing etc.)

Secondary (Manufacturing a finished product out of the raw materials e.g factories, construction/building etc.)

Tertiary (Provision of goods or services to the customer.)

Quaternary (innovation, benefiting the future.)

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6
Q

Business classification

A

Private sector - (looking for profit) (funded by personal money) e.g Mcdonalds, Adidas, Private schools etc. (any global organisations are classified as private)

NGOs - a combination of both

Public sector - Government owned (funded by public money, taxpayers) (profit is not a priority) e.g, public hospitals, public schools, parks etc.

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7
Q

Definition of entrepreneur

A

Entrepreneur - Generate ideas and further ideas into a physical manifestation or service that creates profit.

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8
Q

Characteristics of a successful entrepreneur:

A
  • Innovative
  • Hard working
  • Determined
  • Motivated
  • Risk taker
  • Knowledge
  • Connections
  • Able to visualise
  • Confidence
  • Resilience
  • Self-assured
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9
Q

How to measure a company:

A
  • Number of employees
  • Revenue
  • Capital employed
  • Market capitalisation
  • Total industry sales
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10
Q

Formula for marker share %

A

total business / total industry sales x 100

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11
Q

Definition of capital employed

A

total value of long term finance invested in the business

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12
Q

Definition of market capitalisation

A

how much your company is worth based on sales.

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13
Q

Reasons for growth:

A
  • To achieve economies of scale and see the average cost of production decline.
  • To achieve a greater market share.
  • To satisfy the ego of the businessman.
  • To achieve security by becoming more diversified.
  • To survive in an increasingly competitive market.
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14
Q

Definition of internal growth (organic)

A

A situation where a business increases its size through investing in its existing product range, or by developing new products.

  • Tends to be funded by retained profits, loans etc.
  • Is considered a safe option
  • Is generally quite slow
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15
Q

Definition of external growth

A

Growth via mergers and takeovers.

  • Often involves raising large amounts of money
  • Allows quick growth
  • Is considered risky due to the problems of integrating 2 different companies
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16
Q

Characteristics of a merger:

A
  • Mutual decision of two companies to combine and become one entity
  • A decision made by “two” equals.
  • The goal of producing a company that is worth more than the sum of its parts.
  • Shareholders usually have their shares in the old company exchanged for an equal number of shares in the merged entity.
17
Q

Characteristic of a takeover and its alternative name:

A
  • Also known as an acquisition
  • The purchase of a smaller company by a much larger one.
  • The purchasing company essentially finances the purchase of the target company, buying it outright from its shareholders.
  • Can be ‘hostile’ or ‘friendly’
18
Q

Advantages and disadvantages of a sole trader:

A

Advantages:

  • 1 owner keeps all profits
  • Their own boss
  • Easy to set up
  • Privacy

Disadvantages:

  • if sick/ill nobody can run business
  • limited profit
  • unlimited liability
19
Q

Definition of unlimited liability

A

Business owner and business treated as one entity, if business goes bankrupt the loaders can from owner’s personal assets.

20
Q

Advantages and disadvantages of a partnership:

A

(2 - 20 owners)
Advantages

  • shared risk
  • shared expertise
  • each partner brings revenue for growth

Disadvantages

  • shared profits
  • decision making difficult
  • unlimited liability
21
Q

Advantages and disadvantages of a private limited company (LTD) :

A

(20+ owners)
Advantages

  • sells shares to private individuals
  • can achieve large investments and growth
  • protected from takeovers
  • limited liability

Disadvantages

  • set up costs with becoming a limited company
  • must publish financial reports
  • limited growth (200 people)
22
Q

Advantages and disadvantages of a public limited company (PLC)

A

Advantages

  • sell shares on stock market
  • limited liability
  • trust

Disadvantages

  • share profits
  • must publish financial reports
  • no privacy
  • risk of takeover
23
Q

Advantages and disadvantages of a franchise

A

Advantages

  • reputation
  • free marketing

Disadvantages

  • pay a franchise fee
  • % profits
  • no autonomy (no right to self ownership)
24
Q

S.M.A.R.T targets:

A

Specific, measurable, achievable, relevant, time- based

25
Q

Typical business aims:

A
  • Survival (small business)
  • Growth/expansion
  • Profits
  • Please shareholders
  • Increase market share
  • Providing a service/social benefit
26
Q

Definition of stakeholder

A

Individual or groups of individuals who can be affected by, and have interest in, business actions.

27
Q

Definition of coporate social responsibility (CSR)

A

Social responsibility as a corporation, ethical practices.

28
Q

Different types of stakeholders

A

Internal stakeholders

  • Managers
  • Employees
  • Shareholders

External stakeholders

  • Media
  • Customers
  • Suppliers
  • Investors
  • Community
  • Competitors
  • Government
  • Pressure group

Business (4 decks)

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