Intro To Business Flashcards
Business sectors:
What is meant by the primary sector?
Primary sector - Refers to harvesting raw materials e.g. fishing
Business sectors:
What is meant by the secondary sector?
Secondary sector - converting raw materials into finished good (manufacturing)
Business sectors:
What is meant by the tertiary sector?
Tertiary sector - providing services e.g. teaching
Business sectors:
What is meant by a private sector business?
Private sector - businesses are run to make profit and are owned by private individuals.
Business sectors:
What is meant by a public sector business?
Public sector - businesses are run on behalf of the public by the government.
Business sectors:
What is meant by a third sector organisation?
Third sector - refers to charities and NGO’s
Business sectors:
What is a local market
Local markets refer to when customers are close to the suppliers
Business sectors:
What is a national market?
A national market refers to where customers are spread throughout a country
Business sectors:
What is meant by an international market?
An international market refers to when customers are located in many different countries around the world.
Business sectors:
What is the difference between a national and a multinational business?
A national business has operations in one country which is sells to…
whereas a multinational business has operations in more than country.
Franchises and franchisees:
What is meant by a franchise?
Franchise - when a business with a well known brand name (franchiser) let’s a person or group of people (franchisee) set up using that brand.
Franchises and franchisees:
What are the advantages to the franchiser?
- firm doesn’t have to spend lots to grow.
- products necessary for franchise to operate are under the franchisers control.
- Applicants can be carefully selected for suitability.
Franchises and franchisees:
What are the disadvantages to the franchiser?
- there may be control issues.
- the cost of supporting the franchisees.
- the possibility of conflict with the franchisees.
Franchises and franchisees:
What are the advantages to the franchisee?
- lower risk as it’s an established business.
- access advice and training.
- large amounts of marketing.
- may be easier to obtain finance.
Franchises and franchisees:
What are the disadvantages to the franchisee?
- profits have to be shared
- there are fees involved e.g. franchise fee and royalty fees.
- Less control and independence
- supplies have to be bought from the franchiser.
Franchises and franchisees:
What are costs that the franchisee has to pay to the franchiser?
- franchisee fee (cost of becoming a franchise)
- a percentage of profits.
- training or marketing fees.
Franchises and franchisees:
What is meant by a cooperative?
Cooperative - a business that is owned and run by its members (employees and customers).
Franchises and franchisees:
What are the advantages of cooperatives?
- members have limited liability.
- a higher quality of service.
Franchises and franchisees:
What are some disadvantages of cooperatives?
- capital can be limited.
- slower decision making
External growth:
What is meant by a joint venture?
Joint venture - when 2 or more businesses pool their resources and expertise to achieve a particular goal e.g. developing new products or business expansion.
External growth:
What are the benefits of a joint venture?
- partners benefit from the others expertise and resources
- each partner has the option to acquire the joint venture in the future
- reduced risk
External growth:
What are the drawbacks of a joint venture?
- risk of clashes in organisation cultures e.g. management styles.
- the objectives of each partner may change leading to a conflict of objectives.
- there may be an imbalance in the expertise/investment or assets brought by the partners.
External growth:
What is meant by a strategic alliance?
Strategic alliance - an arrangement between 2 companies that have decided to share resources to undertake a specific, mutually beneficial project.
External growth:
What is the difference between a joint venture and a strategic alliance?
In a strategic alliance the 2 or more companies remain separate entities whereas in a joint venture a new entity is formed.
External growth:
What are the benefits of a strategic alliance?
- firms can share resources.
External growth:
What are the drawbacks to strategic alliances?
- may be legal disputes over who owns what e.g. branding or design.
- often no better off than if one firm went it alone.
