Introduction To Business Flashcards
Explain what’s meant by entrepreneur and enterprise
Entrepreneur - a person that takes the risk of starting their own business
Enterprise - actions of a risk taker starting their business
Explain what’s meant by factors of production
Land - natural resources
Labour - workers in the business
Capital - machinery and tools
Enterprise - individuals prepared to take risks
Evaluate the importance of entrepreneurship on an economy
More entrepreneurs in an economy mean the government receive more taxes because theirs more businesses to tax
Explain the characteristics of entrepreneurs
Determination, hard working,using their initiative, resilience, confident, good decision making
Distinguish between primary, secondary and tertiary organisations
Primary - using natural resources
Secondary - converting raw materials
Tertiary - provision of services
Distinguish between private, public and third sector organisations
Private - businesses are owned by individuals and are ran for profit
Public - business run on behalf of the public/government and aren’t ran for profit
Third - value driven, not motivated by profit but a desire to achieve social goals
Distinguish between local, national and international/global markets
Local - targets an audience based in the same town or region as your business
National - domestic marketplace for goods and services operating within the border
International - any market outside a company’s home country
Distinguish between a national and multinational business
National - a company that operates in a particular country and provides goods or services
Multinational - a company that does business in a select few countries around the world and operates facilities
Explain the legal structure of businesses (different ways of setting up a business)
Sole trader - an individual owning the business on their own
Partnership - a business owned by two or more people
Limited liability partnership - a business owned by two or more people in which some or all partners have limited liability
Private limited company - any type of business entity in private ownership
Public limited company - a business managed by directors and owned by shareholders
Explain what’s meant by limited and unlimited liability
Limited - where people’s assets are safe in the event the business fails
Unlimited - an owners assists can be taken to cover the money owned
Evaluate factors affecting the choice of legal structure of a business
Ease of setup
Legal requirements
Personal liability and risk
Scalability of your business tax, income and profits
Explain what’s meant by a franchise
Where a well known business name lets a smaller business use their brand name to set up
Distinguish between franchisers and franchisees
Franchisers - the well known brand name
Franchisees - the company using that brand name to let them start up
Evaluate factors affecting the use of franchises to a business
Allows expansion without spending money
Under they’re control
Applicants can be selected with suitability
Possibility of conflict
Control issues
The costs involved
Explain what’s meant by co-operatives
Owned and run by members and the profits are shared between members than being distributed to shareholders
Evaluate the impact and importance of co-operatives
Legally straight forward to establish
Limited liability for members
Higher quality of service
Customers are loyal and supportive
Limited capital
Weak management
Slower decision making
Employees may want more money
Evaluate the impact and importance of franchising for the franchisee
Lower risk
Support, advice and training
National marketing
Easier to obtain finance
Shared profits
Less control and independence
Need permission to sell
May be for a fixed period
Distinguish between small medium and large businesses
Small - less than 10 employees
Medium - less than 50 employees
Large - les than 250 employees
Explain how and why the business size is measured
How - on the amount of employees, the companies turnover, the amount on their balance sheet
Why - they want to compare the size of the business with close competitions to find out it they’re growing quickly or not
Evaluate the factors affecting the size of a business
Market size
Nature of the product
Ability to access resources for expansion
Explain why businesses want to grow
Benefit from economies of scale
Entrepreneurs want a greater challenge
Owners want higher returns on investment
Growth into new markets can spread risks
A bigger business is a better place to fight risks
Explain what’s meant by a joint venture
Two or more businesses pooling their resources and expertise to achieve a particular goal
Explain whats meant by a strategic alliance
An arrangement between two companies that decide to share resources
Evaluate the concept of a joint venture
You gain from each others expertise and resources
Reduces the risk of a growth strategy
Synergy - combined effect greater than the sum of their separate effects
Risk of a clash in organisational structures
Objectives of the partner may change
Could be an imbalance in levels of expertise, investments or assets bought
Potential redundancy and lack of motivation
Organisational aims
The long term plan of the business - survival, growth, market share and profit
Corporate objectives
Objectives for the business as a whole, covers a wide range of areas
Strategic objectives
How a business plans to achieve its long term goals and aims
Tactical objectives
The immediate short term desired result of a given activity, task or mission
Operational objectives
Short term goals set as a means of achieving a larger longer term goal
Explain the importance of setting SMART objectives
It keeps the project moving forward. Helps with accountability and timing and lets you know what you’re accomplishing
Explain whats meant by the hierarchy of objectives
A tool to help analyse and communicate project objectives
Explain how objectives can be communicated
Email - sending an email with key details on what needs to be said
Speaking - say what needs to be said
Evaluate the consequence of mis-communicating objectives
It could lead to employees doing the wrong thing which could waste time or money for the company
Evaluate ways in which objectives can be better communicated
Instead of have it go through lots of different people bring them in for a meeting so that everyone gets the same message and they know it is correct, however this takes valuable time
Explain why objectives of a business may need t change
They’ve completed previous objectives
Market conditions may change
The businesses competitors
The proportion of small and large businesses in the market
Explain whats meant by the term ‘stakeholder’
Individuals or groups who have a vested interest in the business
Identify internal and external stakeholders of a business
Internal - employees, managers, board of directors, owners, shareholders
External - suppliers, government, customers, trade unions
Explain reasons for conflict between stakeholders
Each stakeholder would have different types of objectives, therefore they would want theirs to be priority
Explain why a business needs to manage conflicting objectives of its stakeholders
Stakeholder groups cold leave which negatively impacts the business
It could de-motivate the workforce
Analyse the objectives of different stakeholders in a business
Shareholders/owners - ensure the business is successful and are interested in the amount of profit they make
Managers/employees - job security and working conditions
Customers - high product quality for the money they pay for the good/service
Evaluate the influence different stakeholders have on a business
Customers - if they don’t buy as much it could negatively affect performance
Managers/employees - if they’re motivated they’ll produce products more efficiently, so they’d receive more sales which benefits the business
Shareholders/owners - if they put money into the business, they can buy the most efficient machinery
