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Business > Introduction To Business > Flashcards

Introduction To Business Flashcards

1
Q

Define Enterprise

A

A business or company.

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2
Q

Define Entrepreneur

A

A person who takes the initiative and makes things happen.

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3
Q

What are the qualities of an Entrepreneur?

A
  • leadership skills
  • energy and enthusiasm
  • comfortable with risk
  • confidence
  • persistence
  • ability to work under pressure
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4
Q

Define Adding Value

A

Changing products to be worth more in the eyes of the customer.

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5
Q

How do you increase value?

A
  • extra product features
  • convenience
  • rebranding
  • aesthetically pleasing
  • excellent service
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6
Q

Benefits of Adding Value

A
  • charge a higher price
  • USP
  • focuses closely on target market
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7
Q

Define Private Sector

A

Privately owned businesses.

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8
Q

Define Public Sector

A

Government run businesses.

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9
Q

Define Third Sector

A

Social enterprises.

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10
Q

Define Multinational

A

A company that operates in several countries of several nationalities.

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11
Q

Define Soletrader

A

Someone who runs a business by themselves.

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12
Q

Advantages of being a Soletrader

A
  • keep all their profits
  • only pay income tax
  • total control of the business
  • no conflicts of interest
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13
Q

Disadvantages of being a Soletrader

A
  • limited capital to start
  • raising capital is an issue
  • unlimited liability
  • can’t carry the business on
  • can only do a limited amount of work
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14
Q

Define Private Limited Company

A

A privately owned business that is incorporated .

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15
Q

Advantages of being a LTD

A
  • stocks can only be brought by family and friends
  • easier to raise finance (e.g. loans)
  • business has continuity
  • don’t have to make financial accounts public
  • greater range of skills
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16
Q

Disadvantages of being a LTD

A
  • owners don’t have full control
  • pay corporation tax
  • bigger administration costs
  • higher set up costs
  • owners don’t keep all profits (dividends)
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17
Q

Define Public Limited Company

A

Where a business tries to raise finance by selling shares on the stock market.

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18
Q

Advantages of being a PLC

A
  • limited liability

- continuity

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19
Q

Disadvantages of PLC

A
  • turnover must be very high
  • cost and time to create is very high
  • highly complicated to set up
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20
Q

Define Franchise

A

Where you buy the right to sell someone else’s products.

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21
Q

Advantages of Franchising

A
  • wide spread recognition
  • built in customer base
  • on going support with advertising and managing
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22
Q

Disadvantages of Franchising

A
  • must operate under strict restrictions
  • must pay royalties and a percentage of profit
  • damaged brand name could affect their sales
  • terms of the franchise are set by the franchiser
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23
Q

Define Social Enterprise

A

A business with social aims such as job creations and provisions of local services.

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24
Q

Advantages of Social Enterprises

A
  • no VAT paid on most goods
  • grant funding available
  • exempt from corporation tax
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25
Q

Disadvantages of Social Enterprises

A
  • cannot be used to generate profit for owners
  • assets of business can never be used for private use
  • trustees cannot be paid unless authorised by the charity
  • cannot sell shares to raise finance
  • all decisions are made by trustees of the enterprise
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26
Q

Define Aim

A

Where the business sees itself in the long term.

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27
Q

Define Objectives

A

Short term measurable goals.

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28
Q

Define PIGS (in relation to objectives)

A

Profit
Increase market share
Growth
Sales/survive

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29
Q

Define SMART (in terms of objectives)

A 
Specific
Measurable
Achievable
Realistic
Timed
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30
Q

Define Cooperative

A

Where a business is owned and run by the workers.

31
Q

Advantages of Cooperatives

A
  • more motivating (get paid and paid dividends)
  • workers get cheaper prices
  • shared ownership
32
Q

Disadvantages of Cooperatives

A
  • profits are shared but some shouldn’t get as much
  • difficult to attract investors
  • lack of capital
  • often unfair
  • inefficient managers
33
Q

Define Incorporation

A

A process that separates the owner from the business, giving the owner limited liability.

34
Q

Define Certificate of Incorporation

A

A legal document issued by government giving the business a licence to form a corporation.

35
Q

Define Memorandum of Association

A

A legal document which sets out the business’ purpose, what it was created to do.

36
Q

Define Articles of Association

A

A legal document stating the company’s files for what their directors can do and the voting rights of their shareholders.

37
Q

Define Mission Statement

A

Overriding goal of the business and the reason for its existence.

38
Q

What is the Hierarchy of Objectives?

A 
Aim
Mission
Corporate objectives
Functional objectives 
Business unit/individual targets
39
Q

Define Strategic Objective

A

How a business plans to achieve its aims and goals, often a long term approach.

40
Q

Define Tactical Objectives

A

The daily short term objectives needed to ensure that the strategic objectives are achieved.

41
Q

How can you measure the size of a business?

A
  • number of employees
  • number of assets
  • turnover and profit levels
  • stock market value
  • capital employed
42
Q

Positive Impacts of Large Businesses on Customers

A
  • reliability
  • convenience
  • choice
  • reputation
  • customer service
  • pricing
  • quality
43
Q

Negative Impacts Of Large Businesses On Customers

A
  • higher prices
  • lack of choice
  • customer service
  • inefficient
44
Q

Factors Affecting Business Size

A
  • market size
  • nature of the product they are selling
  • personal preference
  • resources
  • finance
45
Q

Define International

A

Where a business is based in one country but imports and exports abroad.

46
Q

Define Organic Growth

A

Expansion within the business by increasing sales.

47
Q

Advantages of Organic Growth

A
  • less risk than external growth
  • can be financed internally
  • builds on business’ strengths
  • allows steady rate of growth
48
Q

Disadvantages of Organic Growth

A
  • may be determined by growth of whole market
  • hard to build market share if business is already leading
  • growth may be slow
49
Q

Define Mergers

A

Where 2 businesses join to form one new business.

50
Q

Advantages of Mergers

A
  • larger market share/market power
  • access more customers
  • use other companies assets
  • removes competition
  • more established brand
51
Q

Disadvantages of Mergers

A
  • customers may disagree
  • causes redundancies
  • low morale
  • inherit negative aspects of the company
  • can be time consuming
52
Q

Define Acquisition

A

Control of another business is acquired by buying a majority (over 50%)Of their shares.

53
Q

Advantages of Acquisitions

A
  • increase market share
  • acquire new skills
  • access economies of scale
  • intangible benefits (e.g. reputation, brand name)
  • overcomes barriers to entry of a new market
  • eliminates competition
54
Q

Disadvantages of Acquisitions

A
  • eliminates competition
  • costs money and time
  • inherit negative aspects of company
  • could lose customers if they preferred previous company
  • suffer from diseconomies of Scale
  • upset customers and suppliers
  • redundancies
55
Q

Define Joint Venture

A

Where two businesses, usually in different countries, work together for a mutual benefit.

56
Q

Advantages of Joint Ventures

A
  • benefit from infrastructure of other business
  • publicity for both businesses
  • benefit from EOS
57
Q

Disadvantages of Joint Venture

A
  • clash of business cultures
  • objectives of the partners may change, could cause conflict
  • imbalance of expertise and skills
58
Q

Define Strategic Alliance

A

An agreement between business to work towards common objectives.

59
Q

Why do Small Businesses Survive?

A
  • customer service can be better
  • quality may be better
  • personalised service
  • convenience
60
Q

Define STEEPLE

A 
Social
Technological
Economic
Environmental
Legal
Ethical
61
Q

Define Adding Value

A

Where a business charges a higher price for a good than they paid in costs.

62
Q

Advantages of Adding Values

A
  • can charge higher prices
  • maybe higher profits
  • enhance image of product
  • target the market more easily
  • make product more distinctive and develop a USP.
63
Q

Disadvantages of Adding Value

A
  • not guaranteed that cost of Adding Value can be covered by an increased price
  • may restrict sales (too expensive?)
  • competition might make it harder to increase prices
64
Q

Define Value Analysis

A

Looking at the 3 aspects (function, cost and aesthetics) and deciding where you can increase the value of the product; prioritising one aspect.

65
Q

Ways to Add Value

A
  • build a brand
  • deliver excellent service
  • add product features and benefits
  • offer convenience
66
Q

Define Research

A

Finding information about what customers want, as well as how to make production more efficient.

67
Q

Define Development

A

Taking research ideas and improving/adapting them.

68
Q

Define Innovation

A

Where a product becomes economic reality.

69
Q

Define a Research and Development

A

A process that enables the creation of new and improved products to meet custom needs.

70
Q

Factors influencing Research and Development

A
  • level of competition
  • nature of product
  • external environment
  • state of economy
  • trends
71
Q

Define Market Orientated

A

Where a company finds out what the market wants and developed the product in relation to this.

72
Q

Define Product Orientated

A

Where a business develops an product and tries to sell it.

73
Q

Define Innovation

A

Putting a new idea or approach into action; the commercially successful exploitation of ideas.

Business (7 decks)

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