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Business > component 1 - Business opportunities > Flashcards

component 1 - Business opportunities Flashcards

1
Q

what are the 3 business sectors?

A

-private
-public
-voluntary

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2
Q

what type of businesses are in the private sector?

A

businesses who’s main goal is to make a profit and are owned by private investors

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3
Q

what type of businesses are in the public sector?

A

businesses who’s goal is to help British citizens and are owned by the government. They are funded by taxes.

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4
Q

what type of businesses are in the voluntary sector?

A

businesses that aren’t concerned about profit and that’s main goal is to help raise money eg charities

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5
Q

what are the 4 sizes of businesses?

A

-micro businesses
-small businesses
-medium businesses
-large businesses

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6
Q

what is a micro business?

A

a business with less than 10 employees and turnover under £2million

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7
Q

what is a small business?

A

a business with less than 50 employees and turnover under £10million

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8
Q

what is a medium business?

A

a business with less than 250 employees and turnover under £50million

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9
Q

what is a large business?

A

a business with more than 250 employees and turnover more than £50million

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10
Q

what are the 4 factors of production?

A

-capital
-enterprise
-labour
-land

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11
Q

what is the mnemonic for the factors of production?

A

CELL

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12
Q

what is capital?

A

the finance invested in the firm by the owner/shareholder

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13
Q

what is enterprise?

A

bringing together the factors of production in order to produce a good or service

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14
Q

what is land?

A

where the business is based or where it can get extractable resources

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15
Q

what is labour?

A

the people who work in the business

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16
Q

what are the 3 production sectors?

A

-primary
-secondary
-tertiary

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17
Q

what is the focus of the primary sector?

A

extracting raw materials

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18
Q

what is the focus of the secondary sector?

A

manufacturing processes

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19
Q

what is the focus of the tertiary sector?

A

private companies that provide a service

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20
Q

what does interdependent mean?

A

all sectors rely on eachother

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21
Q

what is an aim?

A

a long term goal

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22
Q

give 2 pros of an aim

A

-helps give a business direction and work towards a goal
-helps a business see their progress

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23
Q

give 3 examples of aims

A

-profit
-growth
-market share

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24
Q

what is innovation?

A

coming up with new ideas

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25
Q

what are objectives?

A

shorter term, more specific goals

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26
Q

what is the mnemonic for objectives?

A

SMART
-specific
-measurable
-achievable
-realistic
-time based

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27
Q

what is the mnemonic for examples of objectives?

A

PIGSS
-profit
-image
-growth
-social
-survival

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28
Q

state the equation for profit

A

profit = total sales - total costs

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29
Q

give 3 uses of profit

A

-expansion of business
-measurement of success
-investor pressure

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30
Q

state 3 ways growth can be measured

A

-value of sales
-volume of sales
-market share

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31
Q

give 2 ways a business can grow

A

internally or externally

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32
Q

give 2 examples of how a business can grow organically

A

-by opening new stores
-by launching new products

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33
Q

give 2 examples of how a business can grow externally

A

-merger
-takeover

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34
Q

what is the focus of the tertiary sector?

A

when the business has enough capital to cover costs in order to exist

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35
Q

what is cashflow?

A

the inflow and outflow of cash in a business

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36
Q

what does it mean by a business behaving socially?

A

what does it mean by a business behaving socially?

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37
Q

give 2 ways in which a business could behave socially

A

-creating employment
-supporting local community

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38
Q

what does it mean by a business behaving ethically?

A

when they behave in a way which is morally correct

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39
Q

give 2 ways in which a business can behave ethically

A

-by treating stakeholders in a fair manner
-by reducing negative impacts on the environment

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40
Q

give 2 reasons why businesses set objectives

A

-to monitor/measure performance
-to motivate employees

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41
Q

give 2 aims of a business in the private sector

A

-profit
-expansion

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42
Q

give 2 aims of a business in the public sector

A

-help people
-improve quality of public services

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43
Q

give 2 aims of a business in the voluntary sector

A

-offer services to the community
-to open more branches

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44
Q

what is a stakeholder?

A

someone with an interest in a business

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44
Q

give 2 examples of internal stakeholders

A

-owners
-employees

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45
Q

give 5 examples of external stakeholders

A

-customers
-the government
-local community
-suppliers
-competition

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46
Q

give 3 examples of conflict in a business

A

-owner vs employee
-owner vs customer
-owner vs supplier

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47
Q

give 3 reasons someone might start their own business

A

-to make a profit
-to fulfil and interest
-to be their own boss

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48
Q

what is an entrepreneur?

A

An individual who has an idea that they develop by setting up a new business and helping it grow

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49
Q

give 3 qualities of an entrepreneur

A

-risk taking
-determined
-creative

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50
Q

what is an opportunity cost?

A

The next best thing that could’ve been chosen but wasn’t. Eg the cost of losing out on an opportunity

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51
Q

give 3 ways in which business opportunities can be identified

A

-spotting trends
-notice something missing
-copying ideas from elsewhere

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52
Q

what is a business plan?

A

a report describing the strategies involving the functions in a business

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53
Q

give 5 things in which a business plan contains

A

-the idea
-finance (costs)
-market research
-aims and objectives
-competition

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54
Q

give 3 pros of a business plan

A

-helps clarify objectives and identifies how to meet them
-helps with organisation
-helps analyse risk

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55
Q

give 3 cons of a business plan

A

-factors may change
-time consuming
-may lack experience

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56
Q

give 2 sources of help for writing a business plan

A

-enterprise agencies
-accountants

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57
Q

what is a market?

A

a place where buyers and sellers come together

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58
Q

give 2 types of markets

A

-local
-global

59
Q

give 2 types of marketing

A

-mass
-niche

60
Q

what is mass marketing?

A

creating a product or service that appears to all types of consumer

61
Q

what is niche marketing?

A

targeting smaller/specific segments

62
Q

give 2 pros to a business operating in a local market

A

-good relationship and understanding with customers
-reputation spreads quickly

63
Q

give a con of a business operating in a local market

A

-small market size so less potential sales

64
Q

-give 3 cons to a business operating in a global market

A

-slower communication
-more competition
-slow spread reputation

65
Q

give a pro|to a business operating in a global market

A

-large market size meaning more potential customers

66
Q

what is market segmentation?

A

grouping customers into categories based on characteristics eg age and gender

67
Q

give 3 methods of market segmentation with examples

A

-demographic eg age, gender, income
-geographic eg urban, rural
-psychographic eg personality and emotion

68
Q

give 2 pros of market segmentation

A

-helps with advertising as can be more specific so is more specific
-most and least profitable customers can be identified

69
Q

give a con of market segmentation

A

-business may become too narrow minded so sales may be limited

70
Q

give 2 pros of niche marketing

A

-more specific
-allows business to charge premium prices

71
Q

give 2 pros of mass marketing

A

-large audience
-more potential customers

72
Q

what is market share?

A

the percentage or proportion of the total sales of a product in comparison to it’s market

73
Q

what is market growth?

A

the percentage change in sales over a period of time

74
Q

what are the 3 cs?

A

-customers
-competition
-costs

75
Q

give 2 ways a market is measured

A

-in volume/quantity of products sold
-value of the goods sold

76
Q

give 3 factors that could influence market growth

A

-economic growth
-fashion/trends
-changes in taste

77
Q

give the formula for market share

A

sales of one product/total sales in market x 100

78
Q

what is extrapolation?

A

the use of trends established by previous data to make predictions about future values

79
Q

give 2 pros of extrapollation

A

-cheap and simple
-not much data is required

80
Q

give 3 cons of extrapolation

A

-may be unreliable
-assumes past trends will continue
-ignores qualitative factors eg changes in taste

81
Q

give 3 reasons why businesses compete

A

-market share
-profit
-to be market leader

82
Q

give 4 types of competition

A

-monopoly
-oligopoly
-monopolistic
-perfect

83
Q

what is monopoly competition?

A

-when a market is dominated by a firm with a market share over 25%. They are known as the pricemakers

84
Q

give 3 features of monopoly competition

A

-larger firms have control over the market
-high capital costs to set up for new businesses
-customers already have loyalty

85
Q

what is oligopoly competition?

A

when a market is dominated by a small number of large firms

86
Q

give 3 features of oligopoly competition

A

-brand loyalty
-strong brand identities
-barriers to entry

87
Q

what is monopolistic competition?

A

when a large number of firms compete in a market, however each have a differentiation

88
Q

give 2 features of monopolistic competition

A

-easy for new firms to enter the market
-product differentiation

89
Q

what is perfect competition?

A

when there are a large number of similar sellers who are too small to influence the price of the product

90
Q

give 2 features of perfect competition

A

-all sellers produce very similar products
-freedom of entry for new businesses

91
Q

give 3 pros of SMEs

A

-create jobs
-pay tax to the government
-create competition

92
Q

give 3 cons of SMEs

A

-small scale and more likely to fail in hard times
-smaller budgets so hard to compete
-harder to raise finance eg less branding

93
Q

give 2 pros of PLCs

A

-can raise finance by selling shares on stock exchange
-reputation as well established

94
Q

give 2 cons of PLCs

A

-risk of takeover
-financial information available to anyone

95
Q

give 4 internal factors that influence a business

A

-finance
-marketing
-operations
-human resources

96
Q

give 4 external factors that influence a business

A

-political factors
-customers
-suppliers
-competition

97
Q

give 3 ways of how a business can improve competitiveness

A

-improved marketing
-reducing costs
-improved quality

98
Q

give 2 reasons why competition benefits the government

A

-provides jobs = less unemployment
-more disposable income = more tax

99
Q

what is demand?

A

the amount of a product of service that consumers are willing or able to buy at any given price

100
Q

give 5 factors that influence demand

A

-tastes and fashion
-seasonal factors
-price
-incomes and wealth
-marketing

101
Q

what is market equilibrium?

A

the point at which consumers are willing to purchase at a given price and suppliers are willing to sell at the given price (where consumers and suppliers both agree)

102
Q

why may market equilibriums shift/change?

A

due to patterns of demand and supply

103
Q

what does price elasticity of demand mean?

A

how sensitive demand is to a change in price

104
Q

what does it mean if demand is elastic?

A

demand is sensitive to a change in certain factors eg price or income

105
Q

what does it mean if demand is inelastic?

A

demand isn’t sensitive to a change in price

106
Q

give 3 things that influence pricing decisions

A

-costs of production
-competition
-customer demand

107
Q

what is the equation for price elasticity of demand? how can you tell if it is elastic or inelastic?

A

%change in quantity demanded/%change in price

if answer is 1+ = elastic
if answer is 1- = inelastic

108
Q

give 3 types of product with examples

A

-luxury (iphone 15)
-normal (walkers crisps)
-inferior (Aldi crisps)

109
Q

what is market research?

A

finding out information about the wants and needs of customers in order to identify and satisfy demand

110
Q

give the 3 steps for market research

A

-identify
-anticipate
-satisfy

111
Q

what is primary research?

A

collecting information first hand

112
Q

give 3 methods of primary research

A

-focus groups
-questionnaires
-interviews

113
Q

give 2 pros of primary research

A

-up to date
-relevant to business

114
Q

give 2 cons of primary research

A

-may be expensive
-time consuming

115
Q

what is secondary research

A

-collecting already existing information

116
Q

give 3 methods of secondary research

A

-census
-magazines
-newspapers

117
Q

give 2 pros of secondary research

A

-readily available
-cheap

118
Q

give 2 cons of secondary research

A

-may not be relevant to the business
-may not be up to date

119
Q

give 2 types of data

A

-qualitative and quantitative

120
Q

what is qualitative data

A

the collection of information based on subjective factors eg opinions and reasons

121
Q

what is quantitative data?

A

the collection of information based on numerical values (usually gathered by closed questions)

122
Q

give 3 pros of being a sole trader

A

-full control
-keep all profits
-quick decision making with less conflict

123
Q

give 3 cons of being a sole trader

A

-unlimited liability
-limited skillsets
-more responsibility and work load

124
Q

give 3 pros of being an LTD

A

-limited liability
-shared workload
-varied skillsets

125
Q

give 3 cons of being an LTD

A

-profits shared
-more potential conflict
-slower decision making

126
Q

give 2 pros of break even analysis

A

-helps planning and target setting
-cheap to construct and can be carried out quickly

127
Q

give 2 cons of break even analysis

A

-factors may change so may be misleading
-assumes all output is sold

128
Q

what are the 4 business ownership types?

A

-LTD
-PLC
-sole trader
-partnership

129
Q

give 3 pros of a partnership

A

-shared workload
-varied skillset
-more sources of finance

130
Q

give 3 cons of a partnership

A

-unlimited liability
-potential conflict
-profits split

131
Q

give 3 business oportunities

A

-increase in customer demand
-gap in the market
-new developing market occurs

132
Q

give 3 sources of guidance available to entrepreneurs

A

-already established businesses
-banks (loans)
-accountants (advise)

133
Q

give 3 reasons why consumers need protection from exploitation by businesses

A

-to ensure consumer satisfaction of purchase
-to ensure goods sold don’t contain harmful side affects
-to protect from misleading advertisement

134
Q

what are subsides?

A

Financial assistance provided by the government to support economic activities (businesses) that it wishes to encourage.

135
Q

give 4 factors that impact the supply of a product

A

-cost of production
-technology
-number of existing firms
-subsides

136
Q

state 3 business opportunities for entrepreneurs

A

-can be own boss
-make a profit
-fulfil and interest

137
Q

what are inferior goods?

A

goods that will increase in demand when incomes fall (elastic)

138
Q

give an example of an inferior good

A

supermarket own branded food

139
Q

what is a normal good?

A

a good that is least affected by income. these are usually a need (usually inelastic)

140
Q

give 2 examples of normal goods

A

bread and milk

141
Q

what is a luxury good?

A

a good that will increase in demand as income increases (these are elastic)

142
Q

give an example of a luxury good

A

designer clothing

143
Q

give 2 advantages of margin of safety

A

-helps the business to understand the level of cushioning they have
-helps alert the business about financial threats and indicates them to change selling price

144
Q

give 2 disadvantages to margin of safety

A

-doesn’t guarantee returns, only an indication to the business so doesn’t prevent loss
-business may choose to ignore their margin of safety, making it ineffective

145
Q

what is quantitative data?

A

data involving numerical values and can be measured

146
Q
A

Business (4 decks)

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