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Business Studies > Business Studies > Flashcards

Business Studies Flashcards

1
Q

Business

A

An organisation which produces a product or supplies a service

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2
Q

3 reasons for starting a business

A

Money

To produce goods

Distribute products

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3
Q

Goods and services

A

Goods - physical products for sale

Service - things a business person does for you in exchange for money

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4
Q

Land

Labour

A

Land - Location of business

Labour - People to work in business

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5
Q

Capital

Enterprise

A

Capital - money to get a business started

Enterprise - motivation to get a business started

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6
Q

Factors of production

A

Land, labour, capital, enterprise

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7
Q

Opportunity cost

A

Where you have to choose an option and lose another option

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8
Q

Primary sector

A

Materials extracted from the earth

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9
Q

Secondary sector

A

Goods are manufactured from raw materials into finished goods

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10
Q

Tertiary sector

A

Involved with customers and market reach

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11
Q

Primary sector examples

A

Mining

Fishing

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12
Q

Secondary sector examples

A

Plastic

Metal

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13
Q

Tertiary sector examples

A

Lorries

Transport of goods

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14
Q

Characteristics of an entrepenuer

A

Risk taker

Hardworking

Smart

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15
Q

Objectuves of an entrepenuer

A

Be their own boss

Start a business

Independence

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16
Q

Changes that lead to a constantly changing business environment

A

Changes in technology

Economic situation

Legislation

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17
Q

Sole trader

A

A person who is the exclusive owner of a business and keeps all profits
to himself

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18
Q

Partnership

A

A legal agreement between two or more people that determines shared ownership of a business

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19
Q

Private limited company (Ltd)

A

A business owned by shareholders

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20
Q

Public limited company (Plc)

A

A company that has offered shares of stock to the general public

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21
Q

Not-for-profit organisation

A

Business set up to help society rather than make a profit

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22
Q

Benefit and drawback of sole trader

A

Easy to set up

Unlimited liability

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23
Q

Benefit of partnership

A

Capital needed is very small

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24
Q

Benefit of private limited company

A

Reduce risk of personal liability

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25
Q

Benefit of public limited company

A

Protection of limited liability for owners and
investors

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26
Q

Benefit of not-for-profit organisations

A

Limited liability

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27
Q

Limited liability

A

Business owners are only responsible for business debts

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28
Q

Unlimiyed liability

A

The business owner or owners are personally responsible for all of the debts of the business

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29
Q

Which legal structures benefit from limited liability

A

Private and public limited company

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30
Q

Purpose of setting objectives in the business

A

Objectives give the business a clearly defined target

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31
Q

Role or objectives in running a business

A

Gives the business an important target which they have to do

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32
Q

How and why business objectives differ between businesses

A

Businesses operate in different sectors

business operations vary in size and scale

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33
Q

Why business objectives may change as business evolves

A

As businesses get larger they have bigger objectives than when just starting a business

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34
Q

The use of objectives in judging success

A

After a business has set its objectives, it can review them to see how successful they have been

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35
Q

Stakeholder

A

Someone in the business who is affected by the decisions of a business

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36
Q

Identify 5 stakeholders of a business

A

Customers

Workers

Managers

Owner

Supplier

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37
Q

Manager

A

Responsible for the quality of the employees and good performance

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38
Q

Business plan

A

A document which sets out the future plans for a business

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39
Q

How a business may face conflict between stakeholders

A

Workers want higher wages but owners don’t want to spend more money

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40
Q

Factors that influence location of a business

A

Weather

Distance from rivals

Close to customers, potential workers

Accessibility

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41
Q

Why businesses create business plans

A

To help set up a new business

To help business raise finance

To help the business set objectives

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42
Q

Sections of a business plan

A

Goals
Pricing
Knowing your market
Customers
Competitors
Location
Promotion
Finance

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43
Q

Benefits of a business plan

A

Helps a business plan for the future

Help the business owner to define their business idea

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44
Q

Drawbacks of a business plan

A

Business may fail to move forward if too busy gathering and analysing information for business plan

Plans are only good if they are put into motion correctly

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45
Q

Fixed cost

A

Business costs, such as rent, that are constant whatever the amount of goods produced

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46
Q

Variable costs

A

A cost that varies with the level of output

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47
Q

Total costs

A

Minimum financial cost of producing some quantity of output

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48
Q

Examples of fixed costs

A

Rent

Insurance

Repayments

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49
Q

Examples of variable costs

A

Raw materials

Production supplies

Delivery costs

50
Q

Total cost =

A

Total fixed cost + total variable cost

51
Q

Revenue =

A

Sales x avergae price of sales

52
Q

Profit =

Loss =

A

Profit = selling price - cost price

Loss = cost price - selling price

53
Q

Organic (internal) growth

A

When a business decides to expand its own activities by launching new products or entering new markets

54
Q

External growth

A

Usually involves a merger or takeover

55
Q

Merger

A

When two businesses join to form a new larger business

56
Q

Takeover

A

When an existing business expands by buying more than half the shares of another business

57
Q

Benefit and drawback of growth

A

Benefit - reduced competition

Drawback - compromised quality

58
Q

Benefit and drawback of franchising

A

Benefit - easier to make money

Drawback - loss of some decision making control

59
Q

Benefit and drawback of opening new stores

A

Benefit - faster growth

Drawback - increasing production output may lead in quality decline

60
Q

Benefits and drawbacks of e-commerce

A

Benefits - lower operational costs

Drawback - cost of setup

61
Q

Benefit of outsourcing

A

Allows the business to increase its capacity

62
Q

Benefits of merger

A

economies of scale which reduce unit cost

63
Q

Benefit and drawback of takeover

A

Benefit - New business becomes more competetive increasing market share

Drawback - Very expensive and risky

64
Q

Economies of scale

A

The cost advantages that a business can exploit by expanding their scale of production

65
Q

Diseconomies of scale

A

Occurs when average unit costs begin to increase, often as a result of business growth

66
Q

Purchasing economies of scale

A

As a business gets bigger, it is able to buy in bulk

67
Q

Technical economies of scale

A

As a business gets bigger it can purchase more advanced machinery and equipment

68
Q

Causes of diseconomies of scale

A

Communication problems

Technical issues in production process

As firm expands into different locations or internationally decisions take longer to reach all employees

69
Q

Average unit costs =

A

Total cost ➗ total output quantity

70
Q

E-commerce

A

Any form of business activity conducted electronically

71
Q

E-commerce examples

A

Online purchases

Websites

Online shopping

72
Q

Examples of digital technology

A

Mobile phone

E-mail

Social media

73
Q

Ethics

A

Moral principles that govern business behaviour or the conducting of an activity

74
Q

Trade off

A

A compromise between one thing and another

75
Q

How there may be a possible trade off between ethics and profit

A

Ethical behaviour such as paying fair wages can be more expensive for the business

76
Q

Examples of ways businesses can behave ethically

A

Paying workers higher wages

Improved working conditions

Reducing pollution

77
Q

Benefit and drawback of business behaving ethically

A

Good image/reputation

Expensive

78
Q

4 environmental considerations

A

Recycling

Noise pollution

Air pollution

Waste disposal

79
Q

How businesses and consumers accept greater environmental responsibility in their decision making

A

Reducing the amount of packaging on products

80
Q

Benefit and drawback to business behaving in more environmental way

A

Benefit - Investing in greener energy can result in a cost saving eventually

Drawback - Greener products may involve more expensive production methods

81
Q

Global warming

A

The current rise in the average temperature of Earth’s air and oceans

82
Q

Scarce resources

A

Resources are only available in limited supply

83
Q

Possible trade off between sustainability and profit

A

Some sustainability values may well go directly against profit

84
Q

Interest rates

A

The cost of borrowing money

85
Q

Employment

A

An engagement of a person in the labour force

86
Q

Consumer spending

A

Total money spent on final goods and services by individuals and households for personal use and enjoyment in an economy

87
Q

How businesses might be affected by changes in the rate of interest

A

Higher interest payments, less disposable income and bigger overheads

88
Q

How and why business might be affected by changes in the level of employment

A

Higher unemployment means many households have less money could lead to less spending

89
Q

How demand for products and services may change as incomes fluctuate

A

As one’s income rises, they will begin to demand more goods

90
Q

Globalisation

A

The process by which businesses start operating on an international scale

91
Q

Exchnage rates

A

The price of one country’s currency expressed in terms of another country’s currency

92
Q

2 benefits of globalisation

A

Access to more customers

Gain economies of scale

93
Q

Drawbacks of globalisation

A

Competing against foreign markets and imports

More staff can be poached by UK overseas companies

94
Q

Impact of exchange rates on profit and sales of businesses that import and export

A

Strong exchange rates make imports cheaper but exports more expensive

95
Q

How UK businesses compete internationally

A

Importing

Exporting

96
Q

2 examples of employment law

A

Discrimination

Minimum wage

97
Q

1 example of health and safety law

A

Employees must be informed of the first aid arrangements

98
Q

1 example of consumer law

A

The products you buy have to comply with their description

99
Q

Impact of legislation on a business

A

The consequences of meeting or not meeting legal obligations

100
Q

Benefits of providing a safe working environment

A

Reduced costs

Reduced risk

Fewer accidents

101
Q

Market

A

The place where buyers and sellers meet

102
Q

Competition

A

The businesses that compete for a share of the market

103
Q

Risk

A

The possibility of something either good or bad happening

104
Q

Impact of competition on businesses

A

Encourages businesses to improve their products and services

105
Q

A situation where businesses face little or no competition

A

Where there are no similar substitutes for its product

106
Q

Why entrepenuers embark on running a business

A

Can make their own business desicions and do what they want with the business

107
Q

Activities entrepenuers can undertake to minimise risk

A

Carrying out market research to find out what customers want

108
Q

Inflation rate

A

Increase in price of goods and services

109
Q

National minimum wage

A

Under 18 = £6.40

Age 18 to 20 = £8.60

Age 21 or over = £11.44

110
Q

Why is it good to recruit internally

A

It’s a cost-effective way to fill open positions while also improving employee retention rates

A quick process

applicants will already be known to the business

111
Q

Flotation

A

Occurs when private limited company decides to become a public limited company

112
Q

Drawback of patnership

A

Unlimited liability

113
Q

Drawback of private limited company

A

Shared profits

114
Q

Drawback of public limited company

A

Shared profit

115
Q

Drawback of not-for-profit organisations

A

Less profit for owner

116
Q

Drawback of merger

A

Expensive

117
Q

Drawback of outsourcing

A

Takes long time to grow internally

118
Q

Procurement

A

Getting the right supplies from the right supplier

119
Q

Delayering

A

A process where a business removes layers of its management to make its structure more flat

120
Q

Delegation

A

A process where tasks are given to members of staff, who then give tasks to employees further down the chain of command

121
Q

Increase rate increase=

A

Business debt increase

Business Studies (6 decks)

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