Influences On Business Flashcards
Not for profit organisations
Businesses specifically set up to benefit other people.
Enterprise
A business or the quality of utilizing business opportunities
Entrepreneur
Someome who takes on the risks of enterprise activity
Four factors of production
Land (teritory, materials, renewable resources)
Labour (work done by people who contribute to the production process)
Capital (equiptment, factories and schools that help produce goods or services)
Enterprise (refers to the entrepreneurs that take the risks.
Opportunity cost
The benefit that is given up in order to do something else.
Sole trader
Businesses with just one owner
Unlimited liability
You are personally responsible for all the debts of a company.
Limited company
A business that has limited liability. The owners only risk losing money invested into the business
Social enterprise
People who make money by selling products, but their aims are to use those profits to benefit society
Advantages ofa sole trader
. Easy to set up
. Independence
. Limited paperwork to set up
. All decisions go through you
Disadvantages of a sole trader
. Could be hard to raise capital
. Limited ideas
. Unlimited liability
. Loans are less likely to be provided for sole traders
. May work long hours
Advantages of Partnerships
. Multiple different people in specialized fields, more ideas
. Easier to raise finances
. More likely to recieve loans than sole traders
Disadvantages of partnerships
. Lots of paperwork including the deed of partnerhsip
. May have conflicted ideas
. Profits are shared
. You become liable to other peoples mistakes
Private limited company advantages (ltd)
. You cant lose more than you invest
. Easy to get loans
. Owner keeps control over shareholders
Private limited company disadvantages
. More difficult and expensive to set up due to paperwork
. Must publish accounts each year (does not have to be public)
Public limited company (PLC) advantages
. Much more capital can be raised than any other business
. Limited liability
. Helps company expand and diversify
Public limited company (PLC) disadvantages
. Hard to please all shareholders on how the business is run
. Easy for someone to buy enough shares to takeover business
. Could be hard finding shareholders when a company is new
. Acounts must be published publically
. More profits are shared
Consumer law
refers to any piece of government legislation designed to protect consumers from poor-quality products and poor business practices.
What are the product laws in the uk
The goods must be:
. Described accurately
. Fit for purpose
. Satisfactory quality (not be damaged or faulty when sold as new)
What are the Consumer laws regarding services
. The service provider must use reasonable care and skill in delivering the service
. Any written or verbal information provided by the supplier is binding
. The service must be provided in a reasonable time, unless agreed otherwise
. The service must be provided for a reasonable price, if the price is not agreed beforehand
What is employment law
The term ‘employment law’ refers to any piece of government legislation designed to protect employees from exploitation
What does the equality act state
Employers are required to treat people fairly and not to discriminate in any way.
What is the employment rights act
The act that states what working for a company will entail (e.g, the job title and place of work,
the date the employment started, the hours of work and the salary or wage)
What age group is the national minimum wage directed to
16-22
What age group is the national living wage dorected to
People aged 23 or over
What does the equality act state
That people doing the same job cannot be paid different than others
How many weeks minimum is an employee allowed to take off per year
5.6 weeks
Advantages of following legal obligations
. Employees are more confident of their safety working at a company- improved motivation
. The business will gain a better reputation
. Avoid fines or restrictions
Disadvantages of following legal obligations
. employers could find themselves in court which means they may have to pay expensive legal fees
. employers may have to pay fines and compensation if they break employment laws
. Suppliers and stakeholders would want to limit involvement with the business
. Bad reputation
Which ways can the economy affect businesses
. Unemployment
. Inflation
. Changes of consumers imcome
. Changes in interest
. Changes in exchange rate
. Government taxation
What does the interest rate represent
The interest rate represents the cost of borrowing money or the amount a saver receives in interest.
How will am increase in interest affect savers and borrowers
. Savers would be more likely to save since they get a higher reward for saving
. Borrowers will be less likely to borrow since they have to pay back more
How will a decrease in interest affect savers and borrowers
. People will be less likely to save because they will get less money back
. People will be more likely to borrow since they will have to pay back less added on interest
Income tax
is charged on income , such as wages that have been earned.
Corporation tax
is a charge on a company’s profits
Value-added tax (VAT)
a charge on sales of goods and services based on the value of the item sold.
SPICED
Strong pound - imports cheaper, exports dearer
WPIDEC
Weak pound - imports dearer, exports cheaper
