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Business > GCSE Business section 1 > Flashcards

GCSE Business section 1 Flashcards

1
Q

Define a need

A

A good or service that is essential for living

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2
Q

Define a want

A

A good or service which people would like, but is not essential for living

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3
Q

Define scarcity

A

When the demand for a good or service is greater than the availability of the good or service

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4
Q

Define Opportunity cost

A

The loss of the next best alternative without making a decision

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5
Q

Define and give advantages/disadvantages of Specialisation

A

People and businesses concentrate on what they are best at
Advantage-
More efficient
Better quality
Reduces average costs

Disadvantage
More things can go wrong and the consequences are greater if one thing goes wrong, 1 mistake breaks all.

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6
Q

What are the 4 factors of production

A

Capital- Machines for production
Enterprise- Ideas to setup the business
Land- Natural resources
Labour- Number of people available to work

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7
Q

what is the basic economic problem

A

There are unlimited wants but limited resources. This leads to scarcity.

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8
Q

What is Business activity

A

The process of producing goods and services to satisfy consumer demmands.

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9
Q

Define Added Value

A

The difference between the selling price of a product and the cost of bought in materials and components.

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10
Q

How to add value

A

Reduce Costs
Increase selling price

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11
Q

Define the Primary sector

A

the economic sector that involves the extraction of raw materials e.g. farming, mining, fishing, forestry

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12
Q

Define the Secondary sector

A

The economic sector that contains the role of manufacturing the raw materials e.g. steel workers, jewlers, builders, Food production

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13
Q

Tertiary sector

A

The economic sector that involves the provision of servicesto companies e.g. Pharmacies, healthcare, entertainment, technology, scientists

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14
Q

Define the Public sector

A

The part of the economy controlled by the government e.g. healthcare, education

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15
Q

Define the Private sector

A

The part of the economy not controlled by the government.

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16
Q

Define a mixed economy

A

An economy containing both private and public businesses

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17
Q

Define an Entrepeneur

A

Someone who has and idea for a business who takes the financial risk of starting and managing a new business

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18
Q

Characteristics of an entrepeneur

A

Opportunity spotter- Someone who comes up with a new idea with a USP
Risk taker- Invest their own fincance in an attempt to make a profit
Decision maker- Increases efficiency while lowering costs
Creative thinker- Creates a USP which increases sales
Self Motivator- More productive, Lower costs
Strong Communicator- Makes faster decisions

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19
Q

Define a business plan

A

A business plan is a detailed written doccument outlining the purpose and aims of a business which is often used to persuade lenders or investors to fincance a business proposal

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20
Q

Different parts of a Business plan

A

The name
The opportunity- The product, market research
The market- Current size, potential for growth and competitors
The objectives of the business- what the business hopes to achieve
Financial forecasts- a cash flow forecasts and projected sales, revenue and profit for at least the first year.

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21
Q

Benefits of a good business plan

A

Leads to more investors
Provides important information such as objectives to help monitor progress
Shows investors that you have the ability to pay back loans

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22
Q

How can the government help Start up businesses

A

They can:
Provide advise
Provide loans/ grants
Lower tax rates
Provide training for the workers

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23
Q

Why do the government support Start-up businesses

A

Creates jobs
Increases out put of goods and services

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24
Q

How can you measure business size

A

Capital employed- Value of all long term finance invested in a business
Value of output- amount businesses earn from selling their products
Number of employees
Market share- % of sales made by one firm out of the entire industry sales

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25
Q

Limitations of Measuring business size

A

Number of employees- some businesses use less machinery to produce large amounts of output. Large number of part time staff
Value of output- Some businesses have a high output of low value items
Capital employed- Labour intensive businesses require less machinery, therefore may require less loans. But they might not be small businesses.

26
Q

Why do business owners want to expand the business.

A

Increases profit
Increases brand image
Increases Market Share
Economies of scale = increased output = decreased average costs

27
Q

Explain Horizontal integration

A

Horizontal integration brings together two firms of the same industry who are in the same sector of business activity, e.g. Both secondary

28
Q

Explain Vertical integration

A

Forward Vertical Integration- brings together two firms in the same industry but one is a customer and one is a customer of the other, E.g. manufacturer and retailer
Backward vertical integration- brings togetheer two firms inthe same industry, but one is a supplier to the other. E.g. Manufacturer and Cocoa producer

29
Q

Explain Conglomerate integration

A

Bringing together two businesses who are in completely different industries

30
Q

Problems of Business growth

A

Workers could get overworked if too much extra work
May be shortage of finance to pay for expansion
Quality of product or service could drop

31
Q

Why do some businesses choose to stay small

A

Small market size
Lack of capital
Does not want to take risk
Could lead to poor communication

32
Q

Explain the causes of Business failure

A

Fuel Prices- Spends more of the budget on fuel prices so less going into otheer parts of the business
Competition from rivals- Overcrowded market, they werent offering anything new. People prefer larger/ more trusted brands
Lack of Management- Slow decision making
Lack of brand image- Less people will choose to buy from their business

33
Q

Define and explain advantages and disadvantages of Sole trader business

A

A business owned and managed by one person
Advantages:
You are your own boss- Faster decision making
Keep all the profit- May improve standard of living
Quick to setup- Few legal requirements

Disadvantages:
Unlimited liability- If unable to repay debt, person assets are at risk
Work longer hours- Make more mistakes/ bad decisions
May not have all the neccessary skills- decrease in productivity
Less finance- Unable to expand

34
Q

Define and explain advantages and disadvantages of a partnership

A

A business owned and managed by 2 or more people
Advantages:
More finance- Expand
Increased number of skills- Increased efficiency
Decreased responsibility- reduced workload
Share decision making- better decisions

Disadvantages:
Share profit- Worse living standard
Unlimited liability- Personal assets are at risk
Disagreements- Slower decision making

35
Q

Define and explain advantages and disadvantages of a private limited company

A

A business owned by shareholders, with shares sold to friends and family
Advantages:
Limited liability- Personal assets arent at risk if they cannot repay debt
Raise more capital- Expand
Owners have more skills/ Experience- Increased productivity

Disadvantages:
Less finance raised than a public limited company- cannot expand as quickly
Legal formalities- Increased administrative costs
Pay dividens- Decreased retained profit

36
Q

Define and explain advantages and disadvantages of a Joint venture

A

Two or more businesses start a new project together, sharing capital, risks and profit.
Advantages:
Enter new markets- Increased customers- Increased revenue
Develop new products- Increased sales
Different expertise- Increased efficiency/ quality
Decreased costs- Decreased cash outflow

Disadvantages:
Disagreements- Slower decision making
Shared profit- Decreased retained profit
Different cultures- Decreased productivity

36
Q

Define and explain advantages and disadvantages of a public limited company

A

A business owned by shareholders with shares sold to the public
Advantages:
Large amount of share capital raised- Expand
Limited liability- Personal assets are not at risk

Disadvantages:
Expensive to float on the stock exchange- Increased cash outflow
Loss of control- Chage in business operations
Risk of takeover

36
Q

Define and explain advantages and disadvantages of a Franchisor

A

Sells the rights to their business so that other businesses can use their name #
Advantages:
Franchisee has to buy licencse from franchisor- Increased cash inflow
Faster and cheaper growth- Increased market share= Decreased cash outflows
Not responsible for day to day running- can focus on more important tasks
Increased brand awareness- Increased customers, Increased sales

Disadvantages:
Poor management of one outlet can damage brand image- decreased customers, decreased sales
Pay for training and adverts- increased cash outflow

36
Q

Define and explain advantages and disadvantages of a Franchisee

A

Buys the rights to operate a business, using the brand name
Advantages:
Gain recognised brand- increased customers = increased sales
Dont need to pay for adverts and training- Decreased costs
Disadvantages:
Pay franchisee fee- increased cash outflow
Royalty Payments- decreased retained profit

37
Q

Define Public Corperation

A

Businesses owned by the government

37
Q

Difference between Unincorperated and limited companies

A

In Unincorperated companies owners do not have a seperate legal identity from the business and in Limited companies the owners have a seperate legal identity than the business.

38
Q

Advantages of an entrepeneur

A

independence
able to choose how to use time and money
Ability to put own ideas into practice
May become famous and succesfull if the business grows
Maybe profitable if the business is successful

39
Q

Disadvantages of an entrepeneur

A

Risk- may fail
Capital- entrepeneurs have to put their own money into the business
lack of experience in starting a business

40
Q

What is internal growth

A

Occurs when a business expands its existing operations
E.g. restaurant owner opens another restaurant in another town

41
Q

What is external growth

A

Involving a takeover or merger with another business

42
Q

What is a takeover

A

When one business buys out the owners of another business

43
Q

What is a merger

A

When 2 businesses agree to join their businesses together

44
Q

Advantages of Horizontal integration

A

Reduces numbers of competitors in the industry
opportunities of industries of scale
combined businesses have a larger market share

45
Q

Advantages of forward verticle integration

A

Gives an assured outlet for the product
Retailer is prevented from selling competitors products

46
Q

Advantages of backwards verticle intergration

A

Gives an assured supply of componentions/ materials
Supplier could be prevented from supplying competitiors
Cost of materials/supplies can be controlled

47
Q

Advantages of Conglomerate integration

A

Spreads the risks
Transfer of ideas between the different sections of the business

48
Q

Define Business objectives

A

Aims or targets that a business works towards

49
Q

Benefits for business objectives

A

Motivates employees
Decisions are focused on whether they help achieve the objectives
Unite the business
Managers can compare how the business has performed to the objectives to measure success

50
Q

Different business objectives

A

Survival- When it has been recently setup or the economy is in recession the business wil be more focused on survival
Profit- Profits are needed to pay a return for owners and provide finance for future investments in the business
Return to shareholders- shareholders own limited companies and managers will often set the objective of increasing returns to shareholders

51
Q

Define profit

A

Total income of a business (revenue) minus the total costs

52
Q

Define market share

A

Company sales / total market sales x100
Market share is the percentage of total market sales held by one brand or business

53
Q

Define social enterprise

A

Has social objectives as well as making profit to put back into the business

54
Q

Main objectives of social enterprises

A

Social- to price jobs and support for disadvantaged groups
Enviromental- to protect the environment
Financial- to make a profit to invest back into the social enterprise

55
Q

What is a stakeholder

A

Any person or group with a direct interest in the performance and activities of a business

56
Q

Who are the internal stakeholders and their objectives

A

Owners- profit and growth of the business
Workers - Regular payment for the work, job satisfaction, job security
Managers- High salaries, job security, growth of the business

57
Q

Who are the external stakeholders and their objectives

A

Customers- Safe and reliable products, value for money, good quality products
Government- Succesful business will employ workers increase taxes and increase countries output
the whole community- Jobs for the population, doesnt damage environment.
banks- interest and repay capital rent

58
Q

Explain the objectives of public sector enterprise

A

Financial- Meet profit targets met by the government
Service- Provide a service to the public and meet quality targets set by the government
Social- protect or create emploment in certain areas

Business (4 decks)

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