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Business - Chapter 1 > Chapter 1 - Unit 1-8 > Flashcards

Chapter 1 - Unit 1-8 Flashcards

0
Q

What is in a market environment?

A 
Intermediaries
Unions
Regulators
Competitors
Suppliers
Customers
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1
Q

What is in a micro environment?

A 
Goals
Culture
Structure
Management
Resources
Functions of a business
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2
Q

What is in a macro environment?

A 
Institutional
Economic
Technological
Political
Physical/Natural
Global
Social, cultural and demographic
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3
Q

What is a micro environment?

A

Also referred to as internal environment.
It is the immediate environment in which a business functions.
It has the most direct positive and negative influences on a business.

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4
Q

What does a business’s success depend on?

A

It’s strategy and plans.

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5
Q

What is part of the strategy and plan to achieve success?

A

The vision, mission statement, goals and objectives.

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6
Q

What is a vision?

A

A dream that you want to achieve.

Example: To be the biggest and most preferred salon in Soweto.

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7
Q

What is a mission statement?

A

It gives a clear direction on how you intend to achieve your vision.
Example: To use excellent quality products and resources and always to provide excellent customer service.

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8
Q

What is a goal?

A

Are you long-term plans of what you want to achieve.

Example:Have a client base of 500 clients in five years’ time.

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9
Q

What are objectives?

A

Short-term aims that you want to meet in order to achieve your long-term goals.
Examples: To employ another beautician by the end of the month.

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10
Q

What is a organisational culture of a business?

A

It is the way a company goes about doing business. It is the way that management interacts with its staff and how the staff interact with each other.

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11
Q

How much of a role does ethics and morals play in a business?

A

It plays a large role in determining the culture of a business.

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12
Q

What kind if style does a company have?

A

It depends on the company, some will have a informal style and others will have a structured and formal style.

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13
Q

Give an example of a company with an informal style?

A

Google.
There employees can work whenever they want to (as long as they do their work).
The staff can do their own research or project during office hours.

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14
Q

What are organizational resources? Name all of them.

A

They are all the resources that are available to a business.
Human resource (people)
Physical resource (raw material, machinery and infrastructure)
Financial resource (capital)
Other resources such as time

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15
Q

Why are some business goals unrealistic?

A

They set goals but they don’t have the organisational resources to achieve these goals.

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16
Q

What is the main function of a finance department?

A

Ensure business makes a profit.

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17
Q

How does the finance department ensure the business makes a profit?

A

They source the funding, make a budget, find the best investments and audit and control the spending of the finances.

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18
Q

What are the four main reasons as to why a business needs finance?

A

Start-up
Cash flow
Replacement
Expansion

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19
Q

Why does the business need money for expansion?

A

To grow a successful business.

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20
Q

Why does a company need finance for start-up?

A

To start a business? Normally borrowed money.

21
Q

Why does a business need finance for replacement?

A

To replace any broken equipment, machinery or computers.

22
Q

Why does a company need cash flow?

A

It needs money to cover the. Running costs of a business while waiting for outstanding payments.

23
Q

What are the tree main start-up financing?

A

Equity
Grants
Debt

24
Q

What is equity?

A

Money already available.
Might be personal savings.
Might come from investor who is happy to get paid only if the business makes a profit.
Advantage is that there is no interest on initial amount invested.

25
Q

What is debt financing?

A

There are different types such as bank loans, bank overdrafts, leasing and bonding.
Interest is charged on the initial amount of financing and is there is usually a certain time by when the business has to pay the money back.
Debt financiers do not like to take risks and the business fails, the financiers will take what is owed to them first.

26
Q

What is a grant?

A

Given by the government to encourage certain types of business projects in certain areas.
Does not have to be repaid but has a strict criteria that has to followed.

27
Q

What is a bank loan?

A

It is money borrowed from a bank, it will have a interest rate attached.
Usually used for long term financing.

28
Q

How long does an entrepreneur have to pay back the loan plus interest?

A

Money is paid back in installments over a certain period of time as well as percentage of money outstanding.
Fixed assets often have to be used as surety to the value of the loan.
If loan is not paid back or the entrepreneur defaults, the bank can attach the asset as payment.

29
Q

What is an overdraft?

A

Most popular short term finance option.

Owner applies for a overdraft on a bank account, which will have to be payed back over a set period of time.

30
Q

What is a asset-based loan?

A

Option usually offered to businesses that are already successful and want to expand further.
Money is lent to purchase a specific asset and that asset belongs to the lender until it is fully paid off.
If the asset is not paid off then the lender will take the asset as payment.
Asset could also be trademark or intellectual property.

31
Q

What are grants?

A

Provided by governments for small small developing businesses.
Grants are usually set aside for businesses in essential industries or where there is high unemployment rate.
Government normal wants to see that the business will benefit the community and environment in someway.
Most grants don’t have to be paid back.
Mos

32
Q

Receivable finances.

A

Businesses often have a short cash-flow.
This happens when they have delivered the product or service and are waiting for the payment.
A business is able to get a loan for the amount of its outstanding invoices that are due.

33
Q

What is angel funding?

A

Are often wealthy entrepreneurs themselves and are willing to offer financing for a share in the business.
Option is often required at the start and is a big risk for investors.

34
Q

What is venture capital?

A

It is finding given by individuals or organizations to start up or expand a business.
Financing is given for a share on the business.
Some venture capitalists also require a position in management or on the board.
Can be given at an early stage or late stage.

35
Q

What is budgeting?

A

A planning tool to estimate the amount of money flowing into the business (expected income) and the amount of money flowing out of the business (expected expenditure).
Once budget has been drawn up, it is essential to compare it to actual income and expenditure.
This comparison will help the business to keep track of the finances and ensure better profitability.
Each business department is expected to draw up its own budget.
Each business department is expected to draw

36
Q

What are the two types of budget?

A

Capital budget

Cash budget

37
Q

What is capital budget?

A

Estimate the fixed capital.
Usually drawn up every three to five years.
Plans purchasing, upgrading and changing of fixed assets, such as building a machinery.

38
Q

What is cash budget?

A

Estimates working capital.
Usually drawn up at the end of each financial year for the start of the new one.
Assesses whether the business will have enough money to purchase what it needs to operate.
Also includes sale forecast which predicts the sales for they next year.

39
Q

Once a business is making a profit, it is important that the money gets invested well. Why?

A

So the business has ongoing funds.

40
Q

Where could businesses invest?

A

In government bonds, financial institutions or public components.

41
Q

What are the two types of investments?

A

Short-term investment

Long-term investment

42
Q

What is short-term investment?

A

Enables business to access that money in a short period of time.
The return on the investment (amount of money they make on it) is not as good as long-term investment.
Examples: bank savings account or money market accounts.

43
Q

What are long-term investments?

A

Businesses get a better return on investment in the long term, but they have no access to their money in the short term.
Some long term investments carry more restrictive conditions than others.
Examples:fixed deposit accounts, unit trusts or public company shares.

44
Q

What is capital and name all four types of capital.

A 
Capital is a term describing the assets that can be used to operate a business.
Fixed capital
Borrowed capital
Working capital
Owned capital.
45
Q

What is fixed capital?

A

Consist of those elements that a business uses over the long term.
These elements stay in a business permanently and are essential for the business to operate smoothly.
Examples: Land, buildings, machinery, equipment, some stock and resources

46
Q

What is working capital?

A

Also called operating capital.
Covers short term needs and can vary according to productivity and output.
Are often monthly expenses,
Examples: wages, salaries, stationary, electricity and water, telephone, raw materials and packaging

47
Q

What is owned capital?

A

Money provided by the owner/s of the business, and come from savings or the sales of an asset.
Also could come from investor who want a share in the business in exchange for funding.
Examples: Personal savings or venture capital.

48
Q

What is borrowed capital?

A

Is money that is borrowed from a financial or investment institution or person.
Money has to be repaired with interest.
Institution has no ownership in the business.
Examples: bank loan and overdraft

49
Q

What is the purchasing department in charge of?

A

Ordering, sourcing, buying and finalizing all goods and services that are needed for operating the business.

50
Q

What is the procedure that the purchasing department must follow when ordering or buying goods and services?

A

Process starts with generating a purchasing requisition and getting quotes.

Business - Chapter 1 (3 decks)

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