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a levels > BUSINESS UNIT 1 > Flashcards

BUSINESS UNIT 1 Flashcards

1
Q

Business resources

A

capital - money tools machinery equipment
land - production of good and services includes natural resources renewable and non renewable
labour - the workforce includes manuel skilled and management
enterprise - skills needs to take a risk when setting up, developing and organise a business

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2
Q

entrpenueleral characteristics

A

vision
risk taker
clear objectives
innovative
judgement
determination
self motivation
perserverance
communitvation skills

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3
Q

motives for being an entrpeneur

A

control over hours and working life
create a job
money
spotted a gap in the market
take advantage of an opportuinity
building experience
made redundant
unable to find employment

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4
Q

risks of becoming an entrpeneur

A

financial
lack of secuirty - no PTO, sick days, irregular hours
business failure - 1/2 fail in 5 years
health issues - due to stress/ long hours

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5
Q

rewards of becoming an entrepenur

A

profit
success
contribution to society
independence
capital growth
dividends payment

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6
Q

risks of a start up

A

high rate of failure
difficult to test without trading
easy to be over optimistic
aggressive competitors
underestimate persistace and effort

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7
Q

main reasons for start ups failing

A

customer deamnd - poor market research, unrealistic, competitors eg price cuts
poor execution - wrong employees, poor management, growth too quick/slow, failure to manage cashflow
external shocks - economic change, legal/social/tech change

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8
Q

example of startup failing

A

silver jet airlines - 25th jan 2007 - 30th may 2008

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9
Q

def of calculated risk

A

riak that has been given thoughtful consideration. potential losses/costs/benefits have been weighed and considered

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10
Q

why do the government encourage enterprise

A

creates employment - less benefits
stimulates economic dev
increase country reputation
increased comp
compete internationally bringing in more money

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11
Q

def of central business activity

A

to provide customers with goods and services that meet their needs and wants by providing similar goods/services for the marketplace. must compete with its competitors to make profits and survive to do this a business must add value and be competitive

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12
Q

def of service

A

intangable which cannot be touched or stored. paying for a skill

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13
Q

def of added value

A

a business makes a product/service more desirable to consumers. differences between selling price and cost of production

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14
Q

value added equation

A

value added = sales revenue - the cost of bought in good and services

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15
Q

ways to increase added value

A

introduce new/improved products
reduce cost of bought in items

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16
Q

how is a product made more desirable

A

quality
originality
customer service
additional features
builiding a brand
convenience
delivery options

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17
Q

def of competitive advantage

A

advantage a firm has over its competitors which allows it to attract and retain more customers and generate greater sales/profits

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18
Q

def of cost advantage

A

ability of a firm to produce an good/service at a lower cost if a firm has CA itll be able to sell its output at a lower price than competitor allowing it to gain a larger market share

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19
Q

methods of cost advantage

A

economies of scale - increased size lowers cost
economies of experience - accumulated experience built over time, producing goods more efficentley, specialists
superior tech - using more up to date machinery/products allows them to produce more efficently and often cheaper eg audi

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20
Q

def of differientation advantage

A

firms ability to separate itself and its products from thst of its main competitors making it more attractive

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21
Q

methods of differientation

A

unqiue selling point USP - originality eg free gifts, improves quality, limite editions, aftercare, loyalty cards, one off product
create a brand - unique design of symbols, words or a combination to create an image that identifies the product from its competitors

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22
Q

advantages of having a USP - differientation

A

charge higher price
increase market share
increase demand
lowers advertising costs
stands out against comp
- examples - nike (celebs in ads), amazon (convenience), dyson (bagless)

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23
Q

advantages of create a brand - differientation

A

charge premium prices
customer loyalty
save money on advertising

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24
Q

advantages of having cost advantage

A

gained through EOS increasing profit margin per unit
popular with consumers on low income
popular when economy goes into recession
smaller/less comp meaning can be eliminated easier
gain wider share of market
works for price sensitive products

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25
Q

disadvantages of having cost advantage

A

tends to reduce overheads through automisation so products are standardised
to remain comp prices may need reduced meaning lower profit margin
increased comp
may compromised quality

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26
Q

advantages of differientation

A

charge premium prices
useful in new markets where the consumers are unaware of other brands
suits those with strong brand image
difficult for a comp to do

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27
Q

disadvantage of differientation

A

extra costs may overweigh prices charged
contintious ad money needed
continious r&d money needed
can result in higher selling prices putting consumers off

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28
Q

def of sustainable comp ad

A

when a firm sustains a comp ad over a prolonged peroid of time over its rivals which cannot be copied or eroded

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29
Q

def of a body corporate

A

a company with a legal existence separate to its owners eg soletrader/partnership is NOT one

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30
Q

def of a legal entity

A

a body corporate

31
Q

def of continuity of existence

A

if an owner or shareholder died then the shares are spread out amongst the company and business continues eg a soletrader/partnership do NOT have this

32
Q

ad of sole trader

A

easy set up with little formalities
keep all profits
accounts private - comp ad
personal sat
freedom
grow at own pace
freedom from gov regulations

33
Q

dis of sole trader

A

limited finance
limited ops for EOS
unlimited liability
not a body corp
no continuitity of existence
occupied full time
no fresh ideas

34
Q

def of partnership

A

between 2-20 people with similar ideas or skills

35
Q

def of general partnership act 1890

A

take on equal responsibility, with limited liability

36
Q

def of sleeping partner

A

invest and take profits without taking a part in running the business

37
Q

def of deed of partnership

A

states responsiblities, clarifies losses/profits spilit as well as assets, includes - trading name, function, capital invests, profit ratio, control, rules on admitting new partners, rules on ending

38
Q

ad of partnership

A

own boss
easy set up
accounts kept private - comp ad
increased specialisation
increase finance availability
shared responsibility
people to help pay debts

39
Q

dis of partnership

A

unlimited liability
actions of one affect all
disputes
not a legal entity
no continuetity of existence
finance difficulties

40
Q

characteristics of limited companies

A

body corporate
limited liability
own legal identity
must be registared in UK company house by delivering the documents with fees in which they will then receive the certificate of incorporation
public - plc after its name, min of 50k share capital
private - limited after its name, max 50k share capital

41
Q

def of memorandum of association

A

gives the
name,
public/private
basic structure
objectives
authorised share capital
profit divides

42
Q

def of the articles of association

A

refers to the internal management of the company
gives rights of shareholders
role of directors
issuing dividends
holding of meetings

43
Q

def of the companies act 2006

A

changes that had to be made to articles of association, the memorandum of association, form 10 and form 12 had to be changed by 2008

44
Q

def of form 10 and 12

A

10 - records details of the directors
12 - directors declare their compliance with all legal requirements

45
Q

ad of company status

A

shareholders have limited liability
no limit on shareholders - opportuinity to raise capital
easier to borrow money
continuitity of existence
body corp
more status than other business meaning others are more prepared to deal making trade credit easier to get

46
Q

dis of company status

A

costly
timely
accounts open to public
strict legal requirements on the running
original owners have less influence
always under pressure to return profit
vunerable to take overs (public)

47
Q

ad of plc

A

raise more capital
extra capital is critical for r&d
easier to borrow money
improve corp image

48
Q

dis of plc

A

costly
time consuming
accounts public - loss of comp ad
have to concentrate of keeping shareholders happy
long term research may suffer due to paying yearly dividends
subject to take overs
loss of control

49
Q

ad of ltd

A

easier to raise capital than partnership/soletrader
no limit on number of shareholders
shareholders have limited liability - risktaking
no outsiders can purchase shares - no takeovers
body corp
continueity of existence

50
Q

dis of ltd

A

accounts open to public - loss of comp ad
limitations on capital
shared profits

51
Q

def of franchsing

A

an entrepeneur develops a business who will then sell the rights to a franchisee and allow them to sell under that name in an area

52
Q

def of product and trade name

A

less common - franchsior provides trademarks and logos, ad campaigns and products but not a complete business system. franchisee pays upfront fee but no adittional royalties eg soda

53
Q

def of business format

A

most common - franchisor offers a complete system of doing business and use of trademarks/logos in return they pay an upfront fee and ongoing royalties eg subway

54
Q

ad of franchisee

A

prebuilt customer base
prebuilt reputation
training arrangements - cheaper
pre sorted area and equipment
provided assistance
easier to loan money
ads done large scale - money saving
franchisor sells stock - EOS
r&d done for you
higher sucess rate

55
Q

dis of franchisee

A

loss of control
no control over reputation
franchsior mistakes affect you
have to pay royalties reducing profits

56
Q

ad of franchsior

A

expand without risking own capital
less work

57
Q

dis of franchsior

A

reputation ruined easy
diseconomies of scale

58
Q

def of social enterprise

A

works to deliver goods/services to make a profit/breakeven they are driven by social/enviromental purposes. set up to fufill social needs eg unemployment any profit made is reinvested to the purpose

59
Q

qualities to be a social enterprise

A

primaraliy social objectives/aims and ethical values
profits reinvested into business or community
directly involved in producing goods/services
self sustaining
doesn’t rely on donations

60
Q

examples of social enterprises

A

divine choclate
jamie olivers 15 restaurants
the big issue
bryson house

61
Q

ad of social enterprise

A

profits to change
donations for change
revenue for change

62
Q

dis of social enterprise

A

depends on funds
big risk

63
Q

def of stakeholders

A

groups affected by or have an interest in the operations/objectives of the business

64
Q

examples of internal, connected and external stakeholders

A

internal - directors, managers, employees
connected - shareholders, customers, suppliers, consultants, competitors, advisors
external - government, locals, media, pressure groups

65
Q

examples of how business can use social media

A

podcasts
media compaigns
celeb giveaways

66
Q

task of the owners, staff, customers use of social media

A

owners - maintain positive profile
staff - build customer network, monitor brand preformance, max website visits, generate sales, respond to customers, establish the business
customers - provide feedback

67
Q

task of creditors, pressure groups and locals of social media

A

creditors - communicate reguarding price changes, discounts, special offers, however they may not request payment
pressure groups - publise business activity
locals - promote corporate soical responsibility, free publicity

68
Q

ad of using social media

A

boost links to website
cheaper
increase brand awareness
improve customer service
can be found through more links generating more sales

69
Q

dis of social media

A

commit to the resources managing - expensive
ineffective use
user resistance
failing to respond to negative feedback

70
Q

def of quality management

A

the ability of a product to meet consumer expectations reguarding its use aswell as the actual build quality of the product itself
OR
a measure of the excellence or extent to which something is fit for its purpose and includes aspects such as reliability, safety, durability, usability, after sales service and customer care

71
Q

why is quality management important

A

performance
charge premium prices
adds value
cost effectiveness - low level defects, less returns
reliability - good reviews
retaining customers - encourages repeat buying
improves brand image
attracts good staff

72
Q

implications of quality management

A

costs - refunds, reductions, returns
damaged rep - complaints, dissatisfied, product recall,
loss of sales - market share, loyalty
legal issues - fines, sued, dangerous products
decreased prod - employee demot, increased costs, health and safety issues

73
Q

def of quality

A

a levels (2 decks)

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