Business unit 1: Business in the real world Flashcards
What is a business?
An organisation that aims to make a profit.
Differentiate between goods
and services.
A good is a physical product, a service is intangible.
Differentiate between wants
and needs.
Needs are essential to survival, wants are desired products.
What are the sectors of
production?
Primary (raw materials), secondary (manufacturing) and tertiary (services).
What are the factors of
production?
Capital (man made tools), enterprise (management), land, labour
What is an entrepreneur?
Someone who takes the risk of starting their own business.
Define the term opportunity
cost.
The next best alternative foregone (i.e. what someone has to give up).
Give a business example of
an opportunity cost.
Can spend £100,000 on staff training or a marketing campaign.
What are the external factors
that affect business?
TELE + C – technology, ethics, legislation, the economy, competition.
Entrepreneurial motives
Earn a living / increase income, follow an interest, be own boss, flexible working
Entrepreneurial
characteristics
Innovative, hardworking, risk taking, organised
What does a business’s legal
structure determine?
Who keeps the profit, who makes the decisions, what type of tax is paid.
What are the pros of being a sole trader?
Independent decision making, keep all profit, easy to set up
What are the cons of being a sole trader?
Unlimited liability, less start – up capital, less access to skills
What are the pros of being in a partnership?
