business studies (edexcel igcse) Flashcards
1.1 what are ‘business objectives’?
a specific outcome that a company works to achieve
what are ‘financial objectives’?
specific goals related to the financial performance of a business
list all the main financial objectives:
survival, profit, sales, market share, financial security
what are ‘non-financial objectives’?
goals that are not related to making money
list all the main non-financial objectives:
social objectives, personal satisfaction, challenge, independence and control
what is meant by the term ‘market share’
proportion of total sales in a market
what is an impact of market conditions on business objectives?
- increased competition may result in change of objective depending on the level of competition in market
what is an impact of technology on business objectives ?
- improvements in ecommerce software may help increase sales
what is an impact of legislation on business objectives?
- new laws may increase business costs and force business to focus on increasing sales
1.2 what is a sole trader?
business with a single owner who makes all the decisions and gets to keep all of the profit
what are some advantages of setting up as a sole trader?
-easy and inexpensive to set up
-the owner has complete control over the business and can make all decisions
-all profit belongs to the owner
what are some disadvantages of setting up as a sole trader?
-limited skillset of the owner/entrepreneur may limit business growth
-long hours, hard work and lots of responsibility for the owner
-no business continuity. The business often dies with the owner
what are partnerships?
involves two or more people joining together to own a business
what are some advantages of setting up as a partnership?
-Easy and inexpensive to set up and run as there are few legal formalities
-Shared responsibilities and decision-making
-More skills and knowledge means partners can specialise in their area of expertise
what are some disadvantages of setting up as a partnership?
-There is potential for disputes between partners
-Profits are often shared equally regardless of a partner’s contribution
define shareholder
a person or organization that owns shares in a company
what is a private limited company?
a business that is owned by one or more shareholders who have each invested a sum of money into the business
list some advantages of private limited companies:
-Shareholders benefit from limited liability for debts incurred by the company
-Access to greater finance from investors and lenders who consider limited companies to be less risky
-Ownership can be easily transferred by selling shares
-Business continuity as the business does not die with its original owner
list some disadvantages of private limited companies:
-More expensive and time-consuming to set up as legal advice is often required
-More complex operational rules than sole traders or partnerships
-Annual financial reporting and auditing are required
-Shareholders may have little control over the company as the founder usually imposes their own agenda
what are public limited companies?
large businesses that sell shares publicly on the stock exchange
stock exchange- a place where shares in companies are bought and sold
list some advantages of public limited companies:
- significant amounts of capital can be raised
- Company shares can be bought and sold easily on a public stock exchange
-PLCs have high visibility with customers, suppliers, and potential investors which can help grow its customer base
list some disadvantages of public limited companies:
- Setting up a public limited company can be expensive
- PLCs must comply with complex legal and financial regulations
What are public corporations?
Corporations owned and controlled by the government
What is a stakeholder?
Person, group or organisation that has a direct or indirect interest in the outcomes of a particular development or decision
What are some characteristics of a small business?
> employ fewer than 50 ppl
provide goods and services at a local or regional level
What are some characteristics of a large business?
> employ 250 or more workers
very well known
What are some advantages and disadvantages of owning a franchise?
ADVANTAGES
> a recognised brand name which is promoted by the franchisor
> product training is provided to ensure consistency of the brand
DISADVANTAGES
> a fixed sum must be paid at the start of the franchise for the right to use the business name and resources
> franchisees have little input and lack freedom to introduce products or change prices
What is a social enterprise?
A business that has the primary purpose of creating social or environmental impacts
What are some advantages and disadvantages of social enterprises?
ADVANTAGES
> good reputation which encourages customer loyalty
> deserving causes receive financial support
DISADVANTAGES
> may face media scrutiny
> profits available for reinvestment are limited as they are shared with members or good causes
What are multinational companies?
Business that is registered in one country but has manufacturing operations in different countries
