💸 Business Paper 1 Flashcards
Business in the Real World, Influences on business, Production Processes
1
Q
1.1 What purpose do businesses serve?
A
To meet customer needs or customer demands
2
Q
1.1 What are the sectors of business?
A
Primary, Secondary, Tertiary
3
Q
1.1 What is a product?
A
A tangible, physical item that can be sold
4
Q
1.1 What is a Service?
A
Labour to earn money
5
Q
1.1 What is a consumer?
A
Someone who uses the Product/Service
6
Q
1.1 What is a customer?
A
Someone who purchases the Goods/Service
7
Q
1.1 What are Cons of starting a business?
A
Risk of failure, Financial loss, Lack of security
8
Q
1.1 What are Pros of starting a business?
A
Financial Reward, Be their own boss, Dissatisfaction with current occupation, Pursue an interest
9
Q
1.1 What are qualities of an Entrepreneur?
A
Hardworking, Organised, Innovative, Risk-taking
10
Q
1.1 What are the factors of production?
A
Land, Labour, Capital, Enterprise
11
Q
1.1 What is opportunity cost?
A
The cost of making a decision and loosing the possible reward
12
Q
1.1 What are the types of business ownership?
A
Sole Traders, Partnership, Limited Companies
13
Q
1.1 What are Sole Traders?
A
A sole trader is a single person who is the exclusive owner of a business
14
Q
1.1 What are Pros to being a Sole Traders?
A
They are easiest to set up, get to be their own boss, get to keep profit, get to make business decisions.
15
Q
1.1 What are Cons to being a Sole Trader?
A
No distinction between business and personal assets, can be difficult to raise money - (Unlimited Liability), sole responsibility, hard to retain employees
16
Q
1.1 What is a Partnership?
A
Partnerships are businesses that are owned by 2 or more partners.
17
Q
1.1 What are Pros of a Partnership?
A
More ideas and perspectives, easier to rase money, easier to retain employees
18
Q
1.1 What are Cons of a Partnership?
A
Shared lower profits, No distinction between business and personal assets, can be difficult to raise money (Unlimited Liability), arguments and disputes, all partners are liable for each other
19
Q
1.1 What are Limited Companies?
A
Limited companies are businesses that are owned by shareholders. (Private and Public)
20
Q
1.1 What are features of a Limited Company
A
Limited Company’s are incorporated (Separate from personal identities), Limited Liability, Owned by Shareholders
21
Q
1.1 What is a Private Limited Company?
A
Private limited companies (Ltds) are companies where ownership of shares is restricted.
22
Q
1.1 What are Pros to LTD’s?
A
Limited liability, ownership is restricted, easier to loan for LTD’s
23
Q
1.1 What are Cons to LTD’s?
A
Finance needs to incorporate a business, legally obligated to publish accounts every year
24
Q
1.1 What is a Public Limited Company?
A
Public limited companies sell shares on the stock exchange. This means that anybody over 18 can buy shares (often through brokers).
25
1.1 What are Pros of PLC's?
Allows for profit from stock exchange, much easier to raise capital, Shareholders have limited liability
26
1.1 What are Cons of PLC's?
Owners have little say on how business runs, anyone can buy enough stocks for a takeover, competitors can see how well company is doing
27
1.1 What is a Not-For-Profit Organisation?
Any profit made by not-for-profit organisations is reinvested (put back) in the business.
28
1.1 What are types of NFP Organisations?
Charity's, Social enterprise (Big issue)
29
1.1 What Aims & Objectives could a Business have?
Survive, Profit maximisation (Looksmaxing), Growth, Increase market share,
30
1.1 What's the importance of Business aims?
Helps measure growth, Can see areas of improvements.
31
1.1 What is the difference between an Aim and an Objective?
Objectives are more specific than Aims.
32
1.1 What does a business factor in when creating Objectives?
The Size of the business, The level of competition, Stage of life, Laws, Economy, Society and ethicality, Technology,
33
1.1 What's a Stakeholder?
A stakeholder is any individual, group or organisation that is affected by a business and its operations.
34
1.1 What's the difference between a Shareholder and a Stakeholder?
A Shareholder owns financial interest in the business, a Stakeholder has general interest in the business.
35
1.1 Who are examples of Stakeholders?
Customers, Local community's, employers
36
1.1 What are the factors effecting business Location?
Supplier location, Labour, Competition, Rent, Location of the market
37
1.1 What is the calculation for Revenue?
Revenue = number of sales X sales price
38
1.1 What is the calculation for Total Cost?
Total Cost = Fixed Cost + Variable Cost
39
1.1 What is the calculation for Profit?
Profit = Total Revenue - Total Cost
40
1.1 What is the calculation for Average Unit Cost?
Average unit cost = total cost / output
41
1.1 What is the calculation for Interest
Interest = interest rate * size of the loan
42
1.1 Why do business's make a plan?
Setting goals, Raising finance, Business organising
43
1.1 What are the main parts of a business?
Executive summary (Overview), Mission statement (Aim), Goods (Products & Services), Market analysis, Organisation and team management, Production details, Finance
44
1.1 What is economies of scale?
Economies of Scale describes businesses benefiting from a reduction in the average unit cost of their product or service because of increasing production (the number of units produced).
45
1.1 What is Diseconomies of scale?
Diseconomies of Scale describes businesses loosing from a increase in the average unit cost of their product or service because of decreasing production (the number of units produced).
46
1.1 What is internal expansion?
Internal expansion is when a business grows by expanding its own operations
47
1.1 What can a business do for internal expansion?
Launching new products, Increase production capacity, opening new stores
48
1.1 What is another term for internal expansion?
Organic growth
49
1.1 What is External Expansion?
External expansion is growth achieved by acquiring another business
50
1.1 What are advantages of External expansion?
Rapid expansion, Reduced competition, Diversify industry.
51
1.1 What are disadvantages of External expansion
Complicated, Demotivated employees, Tension and resignation/redundancies
52
1.1 What is franchising?
Franchising is where a company gives someone the right to sell its products and use its trademarks.
53
1.1 What are pros to Franchising?
Expansion with low costs, Increases brand awareness
54
1.1 What are cons of Franchising?
Franchiser doesn't have control, Can badly effect image
55
1.2 What are the main influences on Business?
Technology, Ethics, Economy, Globalisation, Legislation and Competition
56
1.2 What is E-Commerce?
Selling products via the internet?
57
1.2 What are pros of E-Commerce?
Bigger markets, Sell easier
58
1.2 What are cons of E-Commerce?
More competition
59
1.2 What are examples of E-Commerce?
Social media, Websites, Apps, Conference Calls
60
1.2 What are ethical considerations?
Labour in developing countries (China's low pay), Product development, Employee welfare, Fairtrade
61
1.2 What are pros to being Ethical?
Marketing, Employee motivation, Stakeholders enjoyment
62
1.2 What are some environmental issues?
Traffic congestion, Waste disposal, Air and noise pollution, finite materials use, lack of public transport use
63
1.2 What can business do to be sustainable?
Use renewable energy resources, contributing to climate change
64
1.2 What economy factors effect business?
Economic cycles, Booms, Recession
65
1.2 What effects the economy?
Unemployment, consumer spending
66
1.2 What happens to demand during a recession?
Customers will spend on needs because of the lack of disposable income
67
1.2 What happens to demand during a boom?
Customers can spend more on wants because they have disposable income
68
1.2 What effects does interest rate have on a businesses sales?
The lower the interest rate, the less rate of return on saving resulting in increased sales (Same for inverse)
69
1.2 What is globalisation?
Globalisation is the process where people, businesses, governments and markets around the world become more connected.
70
1.2 What are pros of globalisation?
Single market share, Access to more customers, reduced costs
71
1.2 What are cons of globalisation?
Increased competition, High UK wages, ethical issues, Fluctuating global economy
72
1.2 What does acronym SPICED mean?
Strong Pound makes Imports Cheaper and Exports Dearer
73
1.2 What does a Strong Pound mean?
Imports are cheaper and Exports are expensive
74
1.2 What does a Weak pound mean?
Imports are expensive and Exports are cheaper
75
1.2 What is the difference between National minimum wage and living wage?
Minimum wage is the lowest amount of money you can be played based of age and job. A living wage is an amount to keep employees happy.
76
1.2 What's the Equality Act (2010)?
Protects people from discrimination based of race, religion, sex, age, gender ect
77
1.2 What is the Health and Safety at Work Act (1974)?
Places a responsibility to make sure businesses ensure safety of their staff.
78
1.2 What does the Health and Safety law require?
Risk assessments and health and safety conditions to reduce workplace injuries.
79
1.2 What is the impact of Health and Safety Law?
Costs, risks of fines and penalty's if not up to date
80
1.2 What does Customer Law do?
To protect customers against unfair treatment by businesses
81
1.2 What does the Customer Laws prevent?
Misfit/Poor quality products, inaccurate trade descriptions
82
1.2 What can 'Market' refer to?
Place to trade products, Industry, Specific group of customers
83
1.2 What can businesses compete on?
Price, Location, Product range, Customer service
84
1.2 What is the impact of High competition?
Selling price and profit, Quality
85
1.2 What is Barriers to entry?
Things that stop another business from entering an industry
86
1.2 What environment factors effects a business?
Technological advancements, The economy, Legislation, Environmental expectations
87
1.2 How can a business reduce risk?
Business plan, Being market-driven, Research (On competitors and the economy), Technological changes
88
1.3 What are the 2 types of production?
Job Production, Flow production
89
1.3 What are features of Job Production?
Needs highly skilled labour, High quality/ Customised items, Specific niches
90
1.3 What are features of Flow Production?
Assembly line, Capital intense, Mass market production and low production cost
91
1.3 What are Lean Production methods?
Cell production, Kaizen
92
1.3 What is Just in time Production?
Just in time (JIT) is a method for managing stock that aims to keep stock levels very low at all times.
93
1.3 What does JIT stand for?
Just in time production
94
1.3 What are pros to Just in time production?
Reduce excess space and waste
95
1.3 What is cons to Just in time production?
Needs more frequent deliveries and may not meet demand otherwise
96
1.3 What is Just in Case Production?
Just in case production involves a business will keep a ‘buffer stock’ of materials for production and finished goods
97
1.3 What are Pros to Just in case production?
If there is a spike in demand or a problem in suppliers, the business could cope
98
1.3 What is cons of Just in Case production
Stock control, Waste
99
1.3 What does Kaizen mean?
Continuous improvement
100
1.3 What is a supply chain?
A supply chain is the sequence of processes involved in converting raw materials into a final product and then distributing it to customers.
101
1.3 What is a typical supply chain look like?
Raw Materials -> Manufacturer -> Distributor -> Retailer
102
1.3 What is procurement?
Procurement is the process of finding and buying the materials and equipment that a firm needs to provide its product or service
103
1.3 What does efficient procurement and Logistics do for a business?
Reduces supply chain break downs, Reduce waste
104
1.3 What is a Raw material Supplier?
A company that extracts and sources Raw materials (Timber yard, Mines)
105
1.3 What is a Manufacturer?
A factory that converts Raw materials into Processed Goods (Wool -> Clothing)
106
1.3 What is a Distributor?
A company that Distributes Goods from the Manufacturer to the Retailer. (Bookers)
107
1.3 What is a Retailer?
A company that sells Goods (Tesco)
108
1.3 What are features of a Effective Supply Chain management?
Long-term relations, JIT production, Supplies at best price and quality, low waste
109
1.3 What are factors to consider for choosing a supplier?
Cost, Quality, reliability, Ethical and environmental considerations (Fairtrade)
110
1.3 What determines quality?
Materials, Production process, Style of production, Durability, Speed(Service)
111
1.3 What is Pros to Good Quality?
Customer loyalty, Increased sales, Word of mouth
112
1.3 What are Cons to Good Quality?
Expensive
113
1.3 How can businesses measure quality?
Customer feedback, surveys
114
1.3 How can a business identify quality?
Inspecting production process, customer service and complaints,
115
1.3 What is Total Quality Management?
Total Quality Management (TQM) is a set of management principles that places quality at the heart of everything a business does
116
1.3 What are pros of good Total Quality Management?
Reputation, Higher price, Avoid recalls
117
1.3 What are the Costs of good Total Quality Management?
Inspection costs, training, provision of services
118
1.3 What is The Sales Process?
The sales process is the chain of events (from purchase to later customer service) where a business sells to a customer.
119
1.3 What are important aspects of The Sales Process?
Speed and efficiency of service, good customer engagement, product knowledge, post sales service
120
1.3 What is Pros to good Customer Service?
Customer loyalty, Increased spending
121
1.3 What are Cons of poor Customer Service?
Bad word of mouth, less customer loyalty
122
1.3 How can customer service use technology?
Websites and e-commerce, Social media
