Business Studies Topic 1 And 2 Flashcards
What is a need ?
A need refers to something essential in everyday life like water or shelter .
What is a want ?
A want refers to something that people desire or with for but is not essential in everyday life like donuts.
What is a business?
A business is an organistation which trades to make money these come in all shapes and sizes.
What are two examples of a business ?
A big supermarker like Asda.
An electrician.
What is a product ?
A product is anything that is capable of satisfying customer needs .
What does tangible ?
Tangible means that you can touch it .
What is an example of a tangible product ?
A car
What is a service ?
A service is an act that a business person carries out for you in exchange for money .
What is an example of a service ?
The dentist
What are the 4 things neded to produce goods and services ?
Land , Labour , capital and enterprise .
What is land ?
Land is somewhere to produce the goods like a farm .
What is labour ?
People who work in the business
What is capital ?
Money to get the business started.
What is an enterprise ?
An enterprise is the drive or motivation from the owners to start a business .
What is an opportunity cost ?
The cost of not selecting an alternative when making a decision .
What are the 5 reasons for starting a business ?
. To produce goods
. To supply a service
. To disribute products
. To fulfil a business opportunity .
. To provide a good a service to benefit others .
What is the primary sector ?
The primary sector extracts raw materials from the planet .
What is the secondary sector ?
Goods are manafactured from raw materials into finished goods.
What is the tertiary sector ?
The tertiary sector is the shops that sell the prdocuts or lorries that transport the shops.
What is an entrepeneur
An entrepeneur can be defined as: A person who starts a business and takes on financial risk in the hope of making a profit
What qualities does an entrepeneur need to have ?
They have to be hardworking , initiative , organised , risk taker.
What are some entrepeneur objectives ?
To be your own boss , flexible hours , to pursue an interest , to earn money , to identify a gap in the market.
What are the changes that have happened to a business to adapt ?
Changes in Technology
Changes in the economic situation
Changes in legislation
Changes in enviromental expectations
What is inflation ?
The rate of increase in prices for goods and services
What are interest rates ?
Interests are the cost of borrowing or the reward of saving
What are exchange rates ?
Exchange ratss are the cost of one currency expressed in terms of another.
What is a sole trader ?
A sole trader is a business which has only one owner .
Do sole traders have unlimited liability ?
Yes
What is one example of a sole trader ?
Plumber.
What are two advantages of being a sole trader ?
Easy to set up
They are their own boss
What are the disadvatnages of being a sole trader ?
Unlimited liability and its difficult to raise money
What is unlimited liability ?
Unlimited liability means that the owner or the owners are responsible for their debts of the business.
What is a partnership ?
A partnership is a decision made when normally two people work together as the owners of the business.
What is one example of a partnership ?
Doctors
What are two advantages of a partnership ?
Easy to set up and the capital needed is small
What are two disadvantages of a partnership ?
Partnerships have unlimited liability
Trust and reliability can be an issue
What is limited liability ?
Limited liability means that the business owner or owners are only responsible for the business debts . This means that the owners have protection of their personal funds to pay business debts .
What is a private limited company ( LTD )
A privated limited company is a business that has limited liability . The shares in this business cannot be bought by the public but only by the friends and families .
What are two advantages of an LTD ?
. Protection of limited liability for investors who then donāt lose their own funds or assets .
. Easy to raise capital
What are two disadvantages of an LTd ?
. Business has to issue more information about itsekf which can be expensive to produce .
. They have to make annual accounts to the public and for competitiors to see .
What is a public limited company ?
A public limited company is a business that can sell shares to anyone from the public. It also has limited liability
What are the advantages of a PLC ?
. Protection of limited liability
. Easy to raise capital
What are two disadvantages of a PLC ?
. Expensive to produce annual accounts every year
. Expensive process to become a plc
What is a share ?
A percentage or an amount of a company
What is a stock market ?
A market where business shares are traded
What is a not for profit organisation ?
An organisation that does not seek profit but other things instead like a social cause .
What is one example of a non for profit organisation ?
Cafod
What does surplus revenue mean ?
You make extra than you thought youād make .
What are the objectives of a business ?
Survival , Growth , Profit maximisation , customer satisfaction , social and ethical objectives .
What are aims in a business ?
Aims are the strategic goals of a business; for example to grow
What are objectives ?
Objectives are more soecific steps in a business
What are two roles of objectives in a business ?
- They help keep the owner and employees all working towards common goals
- They help the onwner keep an eye on profitability , costs and profit margins
What are three reasons business donāt all have the same objectives ?
Business size , level of conpetition faced and type of business .
What is a survival in a business that is just starting ?
In the first year of trading , a start up business may aim to just survive . This means that it will have to just focus on keeping the business running and not taking too many risks
What is growth in a business ?
As business begin totrade and develop over time , they might start to change the objectives to help the business grow .
What is market share ?
This is the percentage of sales held by a business in a market .
What are social enterprises ?
Social enterprises are business trading for social or enviormental purposes .
What is shareholder value ?
This is where shareholders in a business earn a return from the investement which is greater than their required rate of return .
What is a stakeholder ?
A stakeholder is defined as anyone who has an interest in a business and is affected by the actions of the business .
What is the role of the owner ?
To start and run a business to make a profit
What are the objectives of owners ?
To make profit and to survive
What is the role of employees ?
To work in a business in return for wages
What are the objectives of employees ?
To have a job satisfaction, to have job security so they can pay their bills, to get promoted .
What are the customers role in a business ?
To buy goods or services from the business
What are the customers objectives in a business ?
To get a good choice of goods or services and to get good value for their money .
What is the role of the local community in a business ?
They might just by the businesses operations in their local area .
What are the objectives of the local community ?
They want the business to provide jobs and they want the business to operate in an ethical way .
What is the role of suppliers in a business ?
To provide the business with goods or services that they might need .
What are the objectives of a supplier ?
They want to charge higher prices to make a profit and they want customer loyalty with repeat orders .
How can stakeholders affect by the business activity ?
- Employees can influence the success of an organisation by their productivity and efficiency l
- Suppliers can decide whether to raise prices for orders .
- Government can influence a firm by introducing new laws .
- Customers can influence a business by deciding to continue to purchase goods and services from the organisation .
What is one possible conflict between stakeholders that can involve employees ?
Employees want higher wages but owners and shareholders donāt want to pay higher wages, as this will raise costs and therefore impact profit.
What is one possible conflict that can involve managers ?
Managers want big bonuses but owners and shareholders donāt want to pay them as this will inpact costs and lower profits .
What is one possible conflict between stakeholders that can involve customers ?
Customers want low prices and high quality, but owners and shareholders want high profit and high prices .
What is one possible conflict between stakeholders that can involve local communities ?
Local communites want lower pollution levels, but owners and shareholders want high profits and reducing pollution will affect that .
What is one possible conflict between stakeholders that can involve suppliers ?
Suppliers want to get good prices for their goods and services, owners and shareholders want high profits and want to keep their costs low .
What is the cost of premises ?
The rent you pay to own a shop .
What is a government grant ?
A government grant is when the governent lends money to a business or people .
Why can being close to the manafactures of your goods be good ?
Because it will will reduce costs for the business .
Why is it important for a business to be close to the customer traffic ?
Its important because it is good for sales as more customers will be closer to your business .
Why is it good for the business to locate close to conpetitors ?
Its good for a business to do this because they will be located in area which is well known for their products .
Why is it important for a business to be close to its materials ?
The closer a business can be to the raw materials it needs for production, the lower the costs of production .
What is a retail business ?
A retail business is a shop on a street for example
What is a business plan ?
A document which sets out the future plans for a business .
What are the four purposes of a business plan ?
To help set up a new business
To help the business raise finance
To help the business to set objectives
To outline how functions of the business will be organised .
How will a business help an enterpeneur set up a new business ?
They will help them decide what resources they need to start their business .
What does SMART stand for ?
Specific , measurable , agreed , realistic and timed .
What are the main sections of a business plan ?
. Goals
. Pricing
. Knowing your market
. Customers
. Competitors
. Location
. Promotion
. Finance
What do goals in a business plan include ?
Information on short term goals and long term goals
What does pricing include in a business plan?
Pricing the product and costs
What does knowing your market include in a business plan ?
What market you wish your business to be in , e,g catering .
How are customers included in a business plan ?
Need to see which people are likely to buy your productd
How are competitors included in a business plan ?
Need to show how the business is different in terms of price and your products .
How does location fit into a business plan ?
You need to know where your location will be and what are the advantages of that location .
What is one benefit of a business plan ?
A business plan will help the business owner define their business idea .
What is one drawback of a business plan ?
Plans are only good if they are put into motion .
What are fixed costs ?
Fixed costs are costs that do not vary with level of business output ( this is how much the business sells ) .
What are variable costs ?
Variable costs are costs that do vary with the level of trade .
What are total costs ?
Total costs is calculated when all your fixed and variable costs are added together .
What is sales revenue ?
Money into your business through sales is called sales revenue .
What is the formula for sales revenue ?
Price of goods x quantity you have sold .
What are two types of profit ?
Gross profit
Net profit
What is the equation for gross profit ?
Sales revenue minus varibale cost
What is the equation for Net profit ?
Sales revenue minus fixed costs and variable costs .
What are two types of growth ?
Organic and inorganic growth .
What is organic growth ?
This means that the business has grown from within . This means that it didnāt need takeovers or mergers .
What are the four ways a business can organically grow ?
Franchising , outsourcing , opening new stores and expanding through e-commerce .
What is franchise ?
When a business wants to sell their idea to other peole instead of spending money opening a whole new one .
What is e-commerce ?
E-commerce is the use of a website or online shop to sell their products or their business ideas .
What is outsourcing ?
This is when the business finds out they canāt do a specifc role in the business so they find people who can .
What is one advantage of organic growth ?
A business that grows from within can retain their own company culture .
What is one disadvantage of organic growth ?
A very high risk strategy, opening lots of stores or taking on new staff is very risky .
What is inorganic growth ?
A business may decide to grow quicker and so it will decide to merge or takeover another business .
What does merger mean ?
When two business combine together .
What is a takeover ?
A takeover is when a business takes over another a business.
What is one advantage of merging ?
Economies of scale
What is one disadvantage of mergers ?
Possible communication problems .
What is one advantage of a business takeover ?
Buying a competitor eliminates the threat of that competitor .
What is one drawback of a takeover ?
This is a very expensive and risky way to grow a business .
What is economies of scale ?
When the costs fall as the business increases the output .
What is diseconomies of scale ?
As the level of output of a business increases, eventually the average costs increase, this is called diseconomies of scale .
What are two methids of e-commerce ?
Online auctions and advertising .
What is online advertising ?
Online advertising are ads for the business that target customers to buy their products online .
What is an online auction ?
This is a virtual market place where customers can bid for products or services .
What are two methods of digital communication ?
Mobile phone call and E-mail .
What is one advantage of using mobile phones ?
Ideal when an employee wants to speak to a customer or client at length
What is one disadvantage of mobile phone calls ?
Mobile phone calls are not always reliable , the reception must always be available if youāre talking to a customer .
What does ethics mean ?
In a business ethics can be defined as knowing right from wrong .
What are two ways a business call be more ethical ?
- Paying workers higher wages
- Improved working conditions
What are two examples of when a business sometimes is not ethical ?
Poor Working conditions and child labour .
What is one benefit of a business being ethical ?
They may be more popular with customers who might be interested in buying your products .
What is one disadvantage of ethics ?
They may not be able to maximise profits.
What is a trade off ?
A compromise between one thing and another . For example a compromise between making a profit and being ethical .
What are two enviormental considerations in a business ?
Recycling and air pollution
What is one benefit of a business trading with the enviroment in mind ?
It will meet the needs of customers who might want to become greener .
What is one drawback of a business trading with the enviroment in mind ?
Greener products may mean more expensive products in mind .
What are two ways a business can be more enviromentally friendly ?
- Using solar energy
- Producing goods with less packaging
What does sustainability mean ?
The process of which a business will try to maintain ecological balance .
What is sourcing ethically ?
When businesses seak to source products in a sustainable and responsible way .
What is an economic climate ?
The general condition of the economy, the way that the resources and the production and consumption of goods in the Uk are managed .
What are interest rates ?
Interest rates are the cost of borrowing money or the reward of saving money
What is unemployment ?
The number of people willing to work but out of work and seeking work .
What is disposable income ?
When a workee recieves their wages they will have to pay tax and national insurance . And what is left is their disposable income .
What is a discretionary income ?
After a disposable income a worker will have to pay for bills , electric , food and gas . After this the money left over is called their discretionary income
How does unemployment affect a business ?
It weakens consumer buying , people will have less money to spend if they are unemployed .
How else does a unemployement effect a business ?
Many unemployed people decide to become entrepeneurs which means that business lose out on people to employ .
What are the three types of goods ?
Inferior goods
Normal goods
Luxury goods
When are luxury products bought ?
When consumer incomes rise they choose to buy better products .
When are inferior products bought ?
They are bought when consumer incomes fall and they buy cheaper products .
What is globalisation in business ?
The process by which the world is becoming increasingly interconnected as a result of international growth .
What is a multinational MNC ?
A multinational is a business which trades in more than one country .
What are two benefits for uk business of globalisation ?
Wider markets and economies of scale
What does a wider market mean ?
Trading on a global level
What is labour migration ?
People from different countries coming to work here to carry out jobs like the NHS and manafacturing .
What is labour migration useful ?
Its useful because it allows businesses to extract talented employees worldwide .
What is specialisation ?
Specilisation is when some economies start to specialisd at what they are good at .
What is the multiplier effect ?
As MNCās move to the uk for manafacturing , they create jobs for uk workers .
What are two drawbacks to globalisation ?
Foreign competition and loss of uk staff
What is an export ?
This is a product that the countries sell to overseas markets .
What is one thing the uk export ?
Machinery
What is international trade ?
This is the exchange of goods and services between different countries .
What are two ways a country can compete internationally ?
Better designs for products and higher quality products for lower prices .
What is an import ?
An import is a product made overseas and brought to your own country
What is an exchange rate ?
The exchange rate is the the price of one currency in exchange for another .
What are two things that happen if the pound is strong against other currencies in terms of profit ?
- It becomes more expensive for countries to buy exported goods , this means that they will buy less and the UKās profit will go down .
- It becomes cheaper for the UK to import goods from abroad .
What is legislation ?
Legislation is the collective term for laws
What is the impact of legislation on business cost ?
A business will have to meet all of the consumer, employment and recruitment laws . The business will also have to pay additional costs so that they can keep the requirements .
What is the impact of legislation on business training needs ?
The business will need to make sure that their employees are fully trained .
What will happen if a business doesnāt meet the legislation laws ?
They may be faced with fines or prison .
What is the impact of legislation on business recruitment ?
The business cannot discriminate a personās race , sex , age or disability because of legislation in the UK when recruiting . They must offer equal pay to women and ethnic minorities .
What are the two principles of employement law ?
Recruitment and pay
What is the Equality Act 2010 ?
It makes sure that there is no discrimination in the workplace and wider society on age, race, gender and religion .
What is the health and safety at work act?
As an employer, or a self employed person, they are responsbile for health and safety in the business .
What are two beneifts for having a safe working enviroment ?
- Avoids a fine
- Avoids negative publicity
What is consumer law ?
Consumers have a right for a product to be as described , fit for purpose and has satisfactory quality .
What are three things that customers are entitled to when something goes wrong with an item that has been bought ?
Refund , repair and money back .
What is the trade descriptions act ?
Carries criminal penalties for a trader who falsely describes their goods or services .
What is a market ?
A voluntary meeting of buyers and sellers who trade or exchange goods or services .
What is a dynamic market ?
A dynamic market is a market where supply/or demand factors are constantly changing .
Why are many products changing ?
Due to technology and/or consumer taste .
What are three examples of a market ?
- Goods market
- Factor markets
- Labour markets
What is a Goods market ?
A Goods market are things ready to sell .
What is a Factor market ?
Raw materials
What is a labour market ?
People and jobs
Define competition .
This is the rivalry between business to gain sales from customers .
What are the positive impacts of competition on a business ?
Develop new products , new services that will give consumers more choice .
What is a competitive market ?
Where a large number of sellers are selling to large number of customers .
What are the negative impacts of competition on a business ? Name two .
- Have lower sales as there are lots of alternatives
- Have less profits unless the business reduces costs and possibly quality .
What are two ways a business can become more competitive ?
- Provide better quality goods than the competition
- Offer better value for a product .
What is the definition of risk in a business ?
The possibility a company will have lower than anticipated profits pr experience a loss rather than make a profit .
What does IP stand for ?
Intellectual property
What happens during a recession and economic problems ?
Customers tend to save rather than spend on non essential items .
What is cash flow in a business ?
The flow of money in and out of a business .
What are three reasons why a business can fail ?
- Too much competition
- Cash flow issues
- Cost of running a business
What are the 4pās in a business ?
Product , price , place and promotion
What can a business do to minimise risk ?
Follow the 4pās
Product
Price
Place
Promotion
What is the definition of uncertainty ?
When a businesses are unable to predict external shocks or future events .
