Everything Flashcards
What are the two ways you can run a business?
Sole trader and partnership
What are three stakeholders of a business?
Shareholder, customers, the market
What is a stakeholder? Name some examples
A person with an interest or concern in the business. Examples are Employees, Consumers, Investors, Suppliers, Owner
What is the economic problem?
How to satisfy unlimited wants and needs with limited resources. All consumers have unlimited wants but only limited means on which to satisfy them resulting in consumers making choices.
What is unlimited liability?
If the business fails, the owner is liable for all the debts and personal assets may have to be sold.
What is scarcity?
Insufficient resources to satisfy our wants
What is an opportunity cost?
The option that is given up when a choice is made
What is a good?
A tangible item (things we can see and touch)
What is a service?
An intangible act of help
What are resources?
Things that can be used to produce or obtain goods and services to satisfy needs and wants.
What are four limited means used by consumers to satisfy their wants
- Time
- Money
- Family
- Skills
Name three characteristics of an entrepreneur
Innovative, Risk-taker, Hard worker, Determination, Enthusiastic, Leadership skills, Creativity, Networking skills
What is the private sector?
Private sector is organizations and business owned/run by individuals.
What is the public sector?
Public sector is organizations owned/run by the government (ex state schools, libraries, fire dept, IRD). These organisations operate to provide a service to the people of NZ not to make profit.
What is a state owned enterprise(SOE)?
Public organisations that operate to provide a profit to the government. Ex NZ Post Limited, KiwiRail Holdings Limited, TransPower NZ Limited
Where does the Govt get its money from?
Taxes (Income tax, GST, Company tax), Fines (police tickets, speeding tickets, court costs), Providing goods and services (from SOEs), Admission prices (eg to the pools, zoo, art gallery), Excise duty (extra ‘tax’ on cigarettes, alcohol, petrol)
Where does the Govt spend its money?
Social welfare, Education, Health, The justice system, Roading and Infastructure, Research and development
What is a sole trader?
An enterprise run by one person. Anyone can open up a business and start trading
Advantages of being a sole trader
- Own boss
- Keep all the profits
- Decides when to work
- Makes all the decisions
- Easy to set up
Disadvantages of being a sole trader
- No one to discuss decisions
- Hard to obtain finance
- Hard to have time off
- Unlimited liability
What is a partnership?
Two or more people going into business together (2-20 people) where all involved provide finance.
Advantages of partnership
- Share the set-up costs
- Share expertise
- Risks and responsibilities are shared
- Easy to set up
Disadvantages of partnership
- The partners don’t have limited liability
- If one of the partners die then their stake has to be sold or dissolved
- Disagreements
- Other partner could suffer losses if one partner is dishonest
What are limited companies?
Companies jointly owned by the people who’ve invested in the business
What is the difference between a public (limited) company (PLC) and a private (limited) company (Ltd)?
- Same as public and private company
A public limited company sells shares on the stock exchange and anyone can buy them (people who buy are called shareholders) while private limited companies can’t share stocks on the stock market and don’t publicly trade shares while also being limited to 50 shareholders. Private limited companies also can be any ownership that changed their business structure.
Advantages of limited companies
- The company exists separately from the owners and will continue to exist if one of the owners die
- A public listed company can raise money by selling shares
- All shareholders have limited liability (only responsible to pay debts of the company to the extent of value of their shares)
Disadvantages of limited companies
- It takes time, money and legal matters to set up a company
- The shares in a private limited company can’t be sold or transferred without agreement from the other shareholders
- A public limited company can run the risk of takeover if competitors buy too many shares
- The financial reports must be filed in the company’s office and are available for viewing
What is a co-operative?
Groups of people who agree to work together and pool their resources. All members have one vote and help in running the business. The workloads, decisions and profit is shared.
What is franchising?
A business based on the use of brand names, logos and plans of an exisiting successful business
What are the five Māori business concepts?
Pūtake (Reason for being), Tūranga (The position/anchor of the business), Tikanga (Values, rules, priorities, ethics and ways of doing business), Kaitiakitanga (Guardianship of resources), Rangatiratanga (Authority, leadership and rights)
What is an entrepreneur?
A person who sees potential in a business idea, takes the risks and has the initiative to develop the business and attempt to make profit.
What does an entrepreneur do?
They take advantage of business opportunities and take the risk of a business. Their reward for the risk is large profits (if they’re successful)
Why is entrepreneurship important?
It’s important for economic growth, productivity, innovation and employment.
Reasons for becoming an entrepreneur
More control over working life, Passionate about an idea or business, Opportunity for greater financial success, Want to escape an uninteresting job.
Reasons entrepreneurs fail
- Business started for wrong reasons (solely for profit)
- Lack of planning
- Poor management
- Insufficient capital
- Poor location
- Over expansion
- Poor marketing
What are the three categories of resources?
- Natural resources
- Capital resources
- Human resources
What are natural resources and what categories is it divided into?
Raw materials that can be harvested or extracted. It can be separated into 2 categories. Renewable resources (They can be regenerated or regrown eg wheat) and Non-renewable resources (They take longer to be generated eg oil)
What is a capital resource?
Man-made goods which are then used to produce other good and services eg fishing boats, nets
What are human resources and what categories can they be divided into?
Workers, managers and owners involved in production of a good or service. It is separated into labor which is the paid staff and enterprise which is the owner and risk taker.
What are resources for producers?
Raw materials, labour, machinery, buildings etc
What is the term that describes the group of people you are promoting the product to?
Target market
What is a positive incentive?
A financial reward for people making a choice. Ex: earn money, get an allowance, win a prize
What is a negative incentive?
A penalty for people financially for making a choice. Ex: Paying a parking ticket, paying a late fee at the library