Chapter 1- Business Start Up Flashcards
What is a business
It is any organisation which is involved in the providing of goods and services to meet our everyday needs
What are four factors of production
Land- the natural resources, the land we build on as well as, mines, fishing and forestry, payment= rent
Labour- the physical and mental contributions given by an employee, payment= salary
Capital- not wanted as its self but what it can go on to make eg. computers 💻
Entrepreneurship- people who are willing to take the risk and bring all factors together to create a successful business
What is an entrepreneur
What are 3 characteristics of an entrepreneur
Is someone who is willing to take risks to achieve a successful business Risk taking Independent Hard working Ability to learn from failures
Why does the government encourage entrepreneurship (4)
Employment
Stimulates economic development
Can bring money to Northern Ireland
People who set up are usually highly motivated
What are three types of product
Primary- the extraction of raw materials form the earth
Secondary- the manufacturing and construction of a finished product
Tertiary- provides a service
What is the chain of production
Refers to all the production stages a product goes through before it is sold to a customer
What is interdependence
When economies, businesses, workers and consumers all become dependent on each other for their welfare
What is the…
Private sector
Public sector
Voluntary sector
Owned by the government
Owned by private individuals aiming to make a profit
Owned by private individuals not aiming to make a profit
What are types of private sector businesses
Plc Ltd Sole trader Franchise Partnership Social enterprise
Give facts about sole traders How many owners Liability Capital provided Profits Risks Legal requirements
1 Unlimited Owner Owner High None
Give facts about partnerships How many owners Liability Capital provided Profits Risks Legal requirements
2-20 Unlimited, sleeping partner (limited) Partners Partners High None
Give facts about plc How many owners Liability Capital provided Profits Risks Legal requirements
Unlimited amount of shareholder/ board of directors
Limited
Shareholders
Shareholders
Low
Certificate of trade, memorandum and articles association
Give facts about ltd How many owners Liability Capital provided Profits Risks Legal requirements
Unlimited amount of shareholders Limited Shareholder Shareholder Low Registered under the memorandum and article of association act
Give facts about franchise How many owners Liability Capital provided Profits Risks Legal requirements
The franchisee owns the premises while the franchisor owns the name Depends on set up Franchisee Franchisor gets % royalties Low Depends on set up
What is an unincorporated business
No legal difference between the owner and the business
Sole trader, partnership
What is a incorporated business
There is a difference between the business and the owner
Plc, ltd
What are four advantages of unincorporated businesses
Easy to set up
Provide a personal service
Specialist
Keep all profits
What are three disadvantages of unincorporated business
Lack of continuity
Unlimited liability
Lack of capital
What are three advantages of incorporate businesses
More capital from sale of shares
Limited liability
Specialisation
What are three disadvantages of an incorporated business
Threat of takeover
Harder to set up
Divorce between ownership and control
What is a franchise
What is a positive of it
Give examples
What sector is it in
Where a business (franchiser) allows another business (franchisee) to trade under their name
Growth
McDonalds, Pizza 🍕 Hut,
Private sector
What is the advantages (2) and disadvantages (1) of a franchisee
Support from franchisor
Established name
Lack of control
What are the advantages and disadvantages of a franchisor
Get % royalties from franchisee
Quick way to grow
Risk of reputation if bad franchisee
What is a social enterprise
Give two examples
Aims to give back to the community, profits are reinvested or given to local community
Jamie Oliver’s Fifteen restaurent, divine chocolate 🍫
What are some business aims (5)
Profit maximisation Growth Corporate image Concern for environment Survival
What are two public sector aims
Public service
Covering costs, breaking even
Why are aims helpful
Gives staff and managers a common purpose and direction
Useful in the context of forward planning
Will help firm make decisions
What is a stakeholder
An individual or group of individuals that are impacted if a business is successful or not
What are four internal stakeholders and what are they interested in
Owners/ shareholder- profit
Employees- salary, job security, working conditions
Managers- salary, perks, job benefits Directors- profit, personal income
What are four external stakeholders
Customers- value for money Suppliers- regular orders Pressure groups- ethical behaviour Local community- employment Trade unions- employees treated fairly, gong pay levels, good working conditions
