business unit 1 Flashcards
what is a business owned in the private sector
owned by individuals - exist to make a profit by producing good or service or may also exist for the benefit of others
what is a business owned in the public sector
business owned and run by the government - which exist to provide services to the population : schools and hospitals
definition of opportunity cost
cost of the next best opportunity forgone
types of business ownership and their liability (5)
sole trader- unlimited liability
partnership-unlimited liability
private limited company-limited liability
public limited company-limited liability
not for profit- limited liability
what is a stakeholder
a person or organisation with a concern (an investment)or interest(affected by) a business
list 5 external stakeholder groups of a business
shareholders
customers
local community
government
banks
list 4 internal stakeholder groups of a business
workers
managers
owners
directors
why might different stakeholder groups of a business be in conflict
their interests may contradict each others
why is business location important
it can determine how successful a business is . how close a business is to raw materials of customers can have a significant impact on the costs of getting your product into the market.
what is a business plan
a written document that describes a business , its objectives, its strategies, the market it is in and its financial forecasts
why have a business plan ?
it can aid a business secure external funding and measure its success
what may a business plan have
what is the business?
who are the people behind it?
what is the product(S)?
who are the target market?
costs / profitability?
4 types of business expansion
fowards vertical -towards customer
horizontal- same industry
backwards vertical- away from the customer
lateral- different industry
what is a takeover
also called an aquisition- when one company buys out another : could be by buying the majority of shares or by buying the company outright
merger
two companies join together both original set of owners keep some ownership
forwards vertical explained
when a business integrated with a business closer to the customer in the production process e.g. a manufacturer buying a retailer
backwards vertical explained
when a business integrates with a business further away from the customer in the production process e.g. retailer buying a manufacturer
horizontal explained
when a business integrates with a business that operates in the same market at the same stage of production e.g. tata who bought Jaguar Land Rover
lateral
when a business integrates with a business who operates in a different market possibly at a different stage of production .
outsourcing
when a business pays another company to do some of the work for you
franchising
selling the right to use your brand - the franchisor allows other companies franchisees to use your name , logo , products in exchange for annual fee or share of the revenue .
economies of scale
benefits of getting larger
diseconomies of scale
drawbacks of getting larger
