Introduction to Business Flashcards
entrepeneur
a risk taker who sets up a business
enterprise
The process by which new businesses are formed in order to offer products and services in a market
what are the factors of production
land
labour
capital
enterprise
what is land in factors of production
natural resources e.g minerals+fields
what is labour in factors of production
all human resources available
what is capital in factors of production
buildings
machinery+tools
not money
what is the enterprise in factors of production
entrepreneur who organises the three other factors
how is bread produced using production factors
land-grow wheat
labour-plant wheat
capital-combine harvester
enterprise-owner of farm/bakery making a profit
what will happen if there is a shortage of a particular factor of production
price will rise
have to make up for the shortages- increase costs
benefits of entrepreneurship to the economy
create jobs
encourage innovation
sectors
primary-raw materials
seconding-production+manufacturing
tertiary-service output
third sector
want to achieve social goals
e.g charities, co-operatives
sole trader
business owned and controlled by 1 person
employs multiple people
advantages of sole trader
keep all profits
control over decisions
disadvantages of a sole trade
unlimited liability
hard to raise capital for expansion
partnership
two or more people run a business
what is a deed of partnership
legal document governs running of the business and sets out matters e.g duties of each partner
advantages of a partnership
more capitals
more skills
disadvantage of partnership
share profits
slower decision making
limited liability partnership
legal partnership where all partners have limited liability
unlimited liability
personally responsible for all the debts
plc
type of limited company where shares are sold on the stock exchange
ltd
type of limited company where shares cannot be publicly trade
limited company
company which has limited liability
limited liability
not personally responsible for debt
franchise
business (franchisor) authorizes the use of their brand name to individuals setting up their own business
advantages of a franchise
franchiser can charge high prices for supplies
franchisee gets free training+less risk
royalty payment
payment from franchisee to franchisor on percentage of profits made by franchisee
what factors affect the decision to franchise a business
time
money
attitude toward risk
franchise are long term investments no immediate reward
co-operative
business own and run my its members
profits shared between members>shareholders
advantages of a co-operative
work toward a common goals,motivated
high quality service
disadvantages of co-operatives
slower decisions-more member involved
investors put off by limited returns
what factors affect the size of a business
market size
nature of product (standardized bigger EOS)
Personal preference (may not want to expand)
ability to access resources
what factors determine the size of business
employees
offices/shops/factories
stock market value
capital employed
advantages and disadvantages of a large business to employees
job security
large hr department
co-ordination difficult
feeling detached from those who make the decisions
advantages and disadvantages of a large business to suppliers
large orders
over dependence on large customers
advantages and disadvantages of a large business on shareholders
more market power,higher prices, dividends
managerial EOS
advantages and disadvantages of a large business on customers
EOS-lower prices
DOS-higher prices
organic growth
growth from within the business
joint venture
separate entity created by two or more parties involving shared ownership, returns+risks
how is a joint venture different from a merger
no change of ownership involved
why would a business want to undertake a joint venture
share cost burden
risk spreading
share strengths
gain access to other markets
strategic alliance
formal relationship between two or more companies in pursuit of a common goal
drawback of using joint ventures
clash in organizational cultures
objectives of each partner might change
inbalance of resources/expertise, one has more power than other
