Chapter 1 - Business In The Real World Flashcards
Why do businesses exist
To provide a good or a service
What is enterprise
Identifying a business opportunity and taking advantage of it
What are the sectors of the economy and what is each one’s purpose
Primary sector - Raw materials
Secondary sector - Production
Tertiary sector - Retail
What are the factors of production
Land, labour, capital and enterprise
What is a ‘Limited company’
A business with shareholders and limited liability
What are the business ownership structures
Sole trader, partnership, Private limited company (Ltd.) and Public limited company (PLC)
Name an advantage and disadvantage for:
- Sole trader
- Partnership
- Private limited company
- Public limited company
Sole Trader:
+ all the profit to yourself
- unlimited liability
Partnership:
+ more capital
- unlimited liability
Ltd.
+ limited liability
- Publicly published accounts
PLC:
+ More capital
- Easy for a ‘takeover’
What is a non-profit organisation
It is an organisation that has no attempt to make a profit for the owner’s financial benefit
What is a franchise
A franchise is when a business sells products with another business’ trademark
What are positives and negatives of a franchise
Positive: Recognisable brand
Negative: Fee to use trademarks
Name 3 possible business aims/objectives
Answers include:
Survival, max profit, growth, increase share value, increase market share, more sales, financial security, ethics, customer satisfaction, personal reasons
Why do aims/objectives change
Change between survival and growth, change in workforce size, enter and exit markets, varying product range or size
What is a stakeholder
A stakeholder is someone who is affected by the business in any way
What is the difference between internal and external stakeholders
Internal work within the business whereas external are related outside of staff or shareholders
What is revenue
Revenue is the total amount of income made by a business
