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Introduction to Business > Enterprise & Business Functions > Flashcards

Enterprise & Business Functions Flashcards

1
Q

defintion of ‘enterprise’

A

'’Business’’
OR
Actions of a risk taker who starts up their own business = entrepreneur

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2
Q

Entrepreneur definition

A

Someone who’s wanted to run/own their own business and is prepared to take risks

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3
Q

Entrepreneur characteristics and abilities

A
  • Self confidence in what they’re doing and themselves
  • Energy and enthusiasm for the business (even the boring parts)
  • Being comfortable & able to face risk (financially, family)
  • Motivation and communication
  • Being able to work under pressure
  • Creativity
  • Persistence
  • Drive
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4
Q

Why governments like and encourage entrepreneurs

A
  • business reaches objectives/ is profitable = happy shareholders
  • More employed = secure jobs
  • consistent suppliers and orders = business growth = MORE TAXES PAID
  • Exports improves UK’s trade balance
  • Government receiving TAX REVENUE
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5
Q

What are the factors of production

A

Capital
Enterprise
Land
Labour

CELL

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6
Q

What’s the C in CELL for

A

Buildings, tools and machinery (NOT MONEY)

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7
Q

What’s the 2 L’s in CELL for

A
  • Land - natural resources, fields, minerals, what can be grown/done on top of the land
  • Labour - all of the Human Resources available I.e workers
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8
Q

What’s the E in CELL for

A

-Enterprise

The one who owns, manages, operates and organises the CLL to make the profit

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9
Q

What’s adding value

A

Selling a product at a price that’s higher than what it costs to produce it

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10
Q

Business functions

  • large business = ran by lots of specialists
  • new entrepreneurs = juggle a lot or all of it
A
  • Finance + accounting
  • HR
  • Operations
  • Production
  • Marketing
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11
Q

What’s the chain of production

A

The stages that a product passes through until it reaches the end (consumer)

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12
Q

Chain of production importance?

A

That value is added at each step of the chain and becomes of more worth

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13
Q

Primary sector as business output

A
  • Extracting the raw materials

- Farming, fishing, forestry, mining, oil/gas extraction

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14
Q

Secondary sector as business output

A

-Manufacturing and construction
Raw materials ➡️ semi finished and finished products

  • Building houses, roads, factories
  • Producing a car engine to contribute to the final assembly of the car
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15
Q

Tertiary sector as business output

A
  • Businesses concerned with services

- Retailing, banking, transport

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16
Q

Which business sector is the largest and why?

A
  • Tertiary sector
  • Highest GDP output of 80%
  • Our advanced de-industrialised economy
17
Q

Why have manufacturing lost its value within the UK?

A

-imports + exports, manufacturing and production can take place anywhere

18
Q

The private sector is?

A

Businesses that are owned and run by private individuals usually for a profit

19
Q

The public sector is?

A

Businesses owned and run by central and local government

BBC and the NHS

20
Q

Deindustrialisation definition

A

The decline in the secondary sector of the economy

21
Q

What’s the third sector?

A
  • Not the public or private sector
  • Includes charities, community groups, faith groups, social enterprises and cooperatives
  • They’re motivated by the ambition to achieves social goals rather than to maximise profit

(Improve housing, reduce poverty, help the environment)

22
Q

Does the third sector receive a profit?

A

Profit can be made BUT

any that is made is reinvested into the business in order to improve the service that they provide

23
Q

What legal forms can third sector businesses take?

A

associations of people with shared objectives / values

Some operate as a company BUT not for personal profit aimed reasons (charities, cooperatives)

24
Q

What’s a sole trader?

A
  • The simplest form of business organisation
  • Owns the business
  • Makes all the decisions affecting the business
  • Can employ lots of people and not be the only person who works there
  • Will have overall control
  • The business and the owner are together and NOT separate = UN-INCORPORATED
25
Q

Sole trader advantages

A
  • Easy start up with few legal requirements
  • Can be started with little capital
  • Keeps all the profit after tax
  • Can make their own decisions without consulting with others
  • No shares in the business from others - no takeovers!
  • Can be kept private (bar providing income tax information) & no accounts need to be published
26
Q

Sole trader disadvantages

A

-Fully responsible for their own debts
= therefore responsible or forced to sell assets and possessions to cover the costs of the debt

-Unlimited liability ^^^

-Must preform all aspects of the business
= (marketing, finance etc.)
= cannot cover all these things perfectly
= some aspects will suffer more than others

  • Difficult to raise capital to expand (small businesses seen as risky) so lack of opportunities to grow

-First years of business particularly stressful and hard to control
=long working hours to build up a business rep

-No continuity (sole trader dies means business is not passed on)

27
Q

What’s a partnership?

A
  • Two or more people running a business together
  • Not a legal entity in its own right (like a sole trader)
  • 2-20 max partners
  • DEED OF PARTNERSHIP - legal document
28
Q

What’s the DEED OF PARTNERSHIP have in and clarify?

A
  • the responsibilities for each partner
  • Finance arrangements (joint or separate accounts?)
  • How much income each partner can take from the business
  • How much money each partner is expected to contribute
  • How decisions are going to be made
  • Arrangements for taking on new partners
  • Absence, sickness and holiday arrangements
29
Q

Partnership advantages

A
  • Easy to establish
  • Partners are able to specialise in what they do best
  • Shared work
  • Different people of different skill sets can be employed
  • Income tax being paid so business can be kept private (like a sole trader)
30
Q

Partnership disadvantages

A

-Liable for any debts = unlimited liability

Contribute money to the business but don’t run it = limited liability
= ‘sleeping partners’

  • A partnership must have at least one partner with unlimited liability
  • Disagreements in decision making and a slower process
  • Difficult to expand despite the maximum number of partners of 20 being involved = can still lack capital
  • Shared profits and losses

Introduction to Business (4 decks)

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