Introduction to business Flashcards
What is a Entrepreneur?
An entrepreneur is ‘a risk taker who sets up a business’ (they will own and run their own business)
What is a Enterprise?
It is another term for business. And the actions of a risk taker who starts up his or her own business.
What are the factors of production?
Land- is natural resources; not only in fields but what lies below them in terms of minerals, and also includes what it can be grown on.
Labour- is all of the human resources available (except the entrepreneur) whatever the age and skill of the worker.
Capital- refers to the buildings machinery and tools rather than money
Enterprise- is the entrepreneur who organises the other three factors.
What does factors of production mean?
The inputs that are used in the production of goods and services. They are land/ labour/ capital and enterprise.
what is the Impact and Importance of the availability of factor of production for the stakeholders of a business?
Customers- are more likely for the products to be sold close to them, have a wide range of products and the produced they do have being of a high quality.
Staff- have a larger range of work so they are more motivated
Government- if all are kept they should have more tax come in for stakeholders
Shareholders- if all od the factors are widely available then shareholders should expect a high dividend as the company’s gain a higher profit.
Why are entrepreneurs important to the economy?
3 points
- Entrepreneurial ventures generate new wealth. Existing businesses may remain confined to the scope of existing markets and may hit the glass ceiling in terms of income. New and improved offerings, products or technologies from entrepreneurs enable new markets to be developed and new wealth created.
- Additionally, the effect of increased employment and higher earnings contribute to improve national income in form of higher tax revenue and higher government spending. This revenue can be used by the government to invest in other, struggling sectors and human capital.
- Although it may make a few existing players redundant, the government can soften soften the blow by redirecting surplus wealth to retrain workers.
What is the role of the entrepreneur in making business decisions
- The entrepreneur organizes the factors of production to create goods and services.
- The most suitable location, qualified workers, and the right equipment and machinery will ensure efficient production.
- make decisions concerning the employment of the required resources for his business.
- He must also make decisions on systems and processes to be applied in the production process.
Impact and importance of entrepreneurial activity for the stakeholders of a business
For customers there is a wider range of product choices.
Staff have a range of products to focus on- less chance of them getting bored.
Government should get more tax which means that there is economic growth.
If the Product or process is successful then shareholders should get higher dividend
Entrepreneurial activity is important as it means that there are changes in what is on offer in the market and it stops there from being a lack of economic growth. It ensures that there is always new products being introduced to the market and ensures that more companies survive recessions.
Primary business sector
The primary sector of the economy is the sector of an economy making direct use of natural resources. This includes agriculture, forestry, fishing and mining.
Secondary business sector
Is the industrial sector of an economy that is dominated by the manufactured of finished products. The secondary business sector makes products which are more likely to be consumed by individuals
Tertiary business sector
The tertiary industry is the segment of the economy that provides services to its consumers. This includes a wide range of businesses such as financial institutions, schools and restaurants. It is known as the tertiary sector or service industry/sector.
Private sector
The private sector is the part of a country’s economic system that is run by individuals and companies, rather than the government. Most private sector organisations are run with the intention of making profit .
Public sector
The public sector is usually comprised of organisations that are owned and operated by the government and exist to provide services for its citizens.
Third sector
The part of the economy or society comprising non-governmental and non-profit making organisations or associations, including charities, voluntary and community groups, cooperatives etc.
Local market
Clients and customers who will buy a product in the region or area in which it is produced. E.g. Local farm shops.
National market
A market where customers are spread throughout the country or over a large area. They are common in the U.K.
International market.
Selling a good or service in more than one country.
Global market
The act of buying or selling goods or services in all the countries of the world.
What is the difference between national and multinational companies
National (company etc.) work in nation wide and multinational (company etc.) work world wide, it work in more than 1 foreign country.
Sole trader
A person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses.
Partnership definition
A legal form of business operation between two or more individuals who share managements and profits. There are two main types
1) general partnership: the partners manage the company and assume responsibility for the partnership’s debts and other obligations.
2) limited partnership: has both general and limited partners. The general partners own and operate the business and assume liability for the partnership,while the limited partners serve as investors only; they have no control over the company and are not subject to the same liabilities as the general partners.
Private limited company (LTD) i
LTD is a type of privately held small business entity, in which owners liability is limited to their shares. Limited liability- they are only liable for the money they put into the business
Public limited company.
A public limited company has limited liability and are able to offer its shares to the public on the stock market.
Factors affecting the choice of legal structure of a business.
- capital
- control/ management
- liability
- taxation
- purpose of the business
- cost of business structure
- potential and future investment
- transferability of ownership
Impact and importance of legal structure for stakeholders of a business
Staff- the legislation and there rights should be upheld meaning that they are experiencing better working conditions.
Customers- products likely to be of a high quality
What is a franchise
A franchise business is a business which the owners sell the rights to their business logo, name, and models for 3rd party operators. E.g.- McDonald’s.
What is a franchisor?
The franchiser owns the overarching company, trademarks and products, but gives the right to the franchisee to run the franchise location, in return for a agreed-upon fee.
What is the franchisee
Is the person or company that is granted a licence to do business under the franchisor’s trademark, trade name, and business model, by the franchisor.
Factors affecting the use of franchises to a business (reasons for a business to franchise)
Lower costs Simpler management Faster expansion Better market penetration Greater commitment Well spread marketing- often free Less recruitment International potential
Factors affecting the use of franchises to a business (reasons not to franchise)
Expensive Big commitment No opportunity for entrepreneurship High expectations for the franchisor Less choice in the decision making process- you are told how to dress/what to buy/ what prices at/ how to advertise etc.
Importance of franchising to stakeholders of a business.
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What is meant by co-operatives?
A farm, business, or other organisation which is owned and run jointly by its members, who share the profits or benefits.
Impact and importance of a co-operative structure to the stakeholders of a business.
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What is the function of the marketing department?
The marketing department plays a vital role in promoting the business and mission of an organisation. It serves as the face of your company, coordinating and producing all materials representing the business. It is the marketing departments job to reach out to prospects, customers, investors and/or the community, and create an overarching image that represents your company in a positive light- that is your brand.
What is the function of production department?
Production is the functional area responsible for turning inputs into finished outputs through a series of production processes. Making sure products are produced to a high standard and good work appropriately.
What is the function of operations management?
Operations management (OM) is the business function responsible for managing the process of creation of goods and services. It involves planning, organising, coordinating, -‘d controlling all resources needed to produce a company’s goods and service.
What is the function of the accounting and finance department?
The department records accounts payable and receivable, inventory, payroll, fixed assets and all other financial elements. The departments accountants review the records of each department to determine the company’s financial position and any changes required to run the organisation cost effectively.
What is the function of customer service?
Customer service is the act of taking care of customers needs by providing and delivering professional, helpful, high quality service and assistance before, during, and after the customers requirements are met.
What is the function of the sales department?
The sales department is to engage in a variety of activities with the objective to promote the customer purchase of a product or the client engagement of a service.
What is the function of support services?
Actively or function required for successful completion of a process, program, or project.
The impact and importance of the functions of business to the stakeholders of a business.
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Small enterprise
A business who employs a small number of workers and does not have a high volume of sales. Such enterprises are generally privately owned and operated doe proprietorships, corporations or partnerships.
Less than 50 employees, regardless of revenue, or, if the number of employees is unknown, then then revenue less than £5.6m will be taken as an indicator of a small business.
Medium enterprise
Between 50 and 249 employees, regardless of revenue, or, if the number of employees is unknown, then revenue of greater than or equal to £5.6m and less than 22.8m is will be taken as a indicator that it is a medium business.
Large enterprise
Greater or equal to 250 employees, regardless of revenue, or, if the number of employees is unknown, then the revenue of greater than or equal to 22.8 m will be taken as a indicator that it is a large business
How and why is the size of a business measured?
- The market share of the business
- The level of sales turnover
- The number of employees
- The value of the business
- The value of capital employed
- The number of factories/stores there is.
The size of a company is measured as the government may sometimes wish to give money to small businesses.
Factors affecting the size of a business?
- Entrepreneurial Skill
- Managerial Ability
- Availability of Finance 4. Availability of Labour 5. Nature of Business
- Extent of the Market.
Impact and importance of the size of a business to the stakeholders of a business
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What is meant by a joint venture?
A commercial enterprise undertaken jointly by two or more parties which otherwise retain their distinct identities.
What is meant by a strategic alliance?
A strategic alliance (also see strategic partnership) is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. … Strategic alliances occurs when two or more organizations join together to pursue mutual benefits.
The impact and importance of joint ventures to a business and its stakeholders.
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Impact and importance of a strategic alliance to a business and its stakeholders.
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