Introduction to Business- Enterprise Flashcards
what is meant by entrepreneur and enterprise?
An entrepreneur is someone who organises a business venture, takes a risk and is responsible for the risks involved.
what are the four factors of production?
Land, Labour, Enterprise and Capital
What is meant by “land”? (factors of production)
natural resources available for production
what is meant by “labour”? (factors of production)
the human input into the production process
what is meant by “enterprise”? (factors of production)
individuals who organise all other factors of production
what is meant by “capital”? (factors of production)
goods used in the supply of other productions of goods and services
risks of entrepreneurship?
- loss of money
- heavy workload
- mental health issues
- time lost
- no wages until business works
- missing out on career opportunities
rewards of entrepreneurship?
- profit
- control of company
- flexibility
- own boss
- decide on wages
- work from anywhere
- pride and satisfaction
characteristics of an entrepreneur?
- risk taking
- organised
- motivated
- ambitious
- independent
- creative
- hard working
- leadership skills
define adding value?
additions or improvements to something which makes it worth much more (larger markup)
how can value be added?
- high quality
- craftsmanship
- prestige design
- unique and different
- convenience
- branding
why is adding value important?
- allows entrepreneur to make a profit
- this gives the entrepreneur the incentive to be creative
- it allows the business to charge a higher price
- makes you different and better than the competition
three types of business activity?
- primary
- secondary
- tertiary
what does primary business activity involve?
- natural resources and raw materials
what does secondary business activity involve?
manufacturing raw materials into products
what does tertiary business activity involve?
providing a service OR selling and distributing the finished product
what are constraints of a business?
- employee skills
- finance available
- legislations
- competition
- the economy
define stakeholders?
groups or individuals who have an interest in a business
types of stakeholders?
- banks
- directors
- suppliers
- customers
- shareholders
- government
- communities
- employees
- the business
what are primary stakeholders?
stakeholders that directly deal with the business
what are secondary stakeholders?
stakeholders who have an indirect relationship with the business
stakeholder objectives- shareholders
- returns on investments
- high dividend payments
stakeholder objectives- customers
- pay fair prices for products
- receive good quality goods/ services
stakeholder objectives- employees
- earn fair wages and salaries
- have a suitable schedule of hours
- a good working environment
stakeholder objectives- government
- receive taxes
- boost economical activity
- create jobs
stakeholder objectives- suppliers
- supply as much as possible
- good communication and treatment from businesses
-receive payments on time
stakeholder objectives- banks
- give out loans with high interest rates
stakeholder objectives- local community
- ethical businesses
- supporting and giving to community
- new job opportunities
define the private sector?
the part of the national economy that is not under direct state control
examples of private sector companies?
- digital media companies
- accountancy firms
- hospitality and catering businesses
- retail and e-commerce
- manufacturing and construction firms
- health and beauty services
- technology and software developers
define public sector?
the part of the economy composed of both public services and public enterprises (government owned)
examples of public sector companies?
- healthcare
- law enforcement
- environmental protection
- justice system
- broadcasting
- transport
- public finance
what are third sector organisations?
charities and community groups, social enterprises and co-operatives
which businesses in the private sector are incorporated?
- private limited company
- public limited company
- franchises
which businesses in the private sector are unincorporated?
- sole traders
- partnerships
what is a sole trader?
an individual owning a business on their own
advantages of being a sole trade?
- own boss
- choose wages
- complete control
- flexibility on hours
- easy to set up
disadvantages of being a sole trade?
- unlimited liability
- no continuity
- difficulty getting loans
- workload may be heavy
- stress and mental health damage
what is a partnership?
where a business is started and owned by two or more people
advantages of being a partnership?
- shared workload
- more finance sourced
- more skills inputed
disadvantages of being a partnership?
- unlimited liability (unless LLP)
- shared control
- shared profit
- requires Deed of Partnership
- no continuity
what is a limited liability partnership?
combined features of a partnership with those of a limited company
what is a private limited company (Ltd.)?
- owned by share holders
- separate legal entity
- shares sold to close friends and family
- controlled by board of directors
what is a public limited company (PLC)?
a company where any member of the public can buy a share on the stock market
advantages of being a limited company?
- limited liability
- easier to raise finance
disadvantages of being a limited company?
- greater admin cost
- public disclosure of company information
what is a franchise?
a business with well-known brand name lets a person or group of people set up using that brand.
why would someone want to be a franchisee?
you want to be in the business industry but do not want to take the risk of starting your own business
advantages of being a franchisee?
- little to no experience in the industry is needed (all training provided)
- existing customer base and brand awareness
-lower risk than starting own business - support from franchisor
disadvantages of being a franchisee?
- limited creative opportunities
- investment and start- up costs can be expensive
- contracts aren’t always permanent
- financial information shared with franchisor
- still have to do a lot on your own (find land, research market etc.)
what is a multinational corporation (MNC)?
a business which operates in many countries
advantages of MNCs?
- provide job opportunities
- can boost the economy
- production costs can be reduced
- good quality products
- growth is high
- new inventions
- decrease product prices
disadvantages of MNCs?
- sweat-shop labour
- local companies may be driven to failure
- increase pollution
- build legal monopolies
- import skilled labourers, reduces fair chance on locals
what is a co operative
- owned by members
- ran by it’s members
- profits are shared among members (not a charity or not for profit organisation)
advantages of a co operative
- legally straightforward
- cheap to set up
- all involved are working towards the same goal
- limited liability for members
disadvantages of co operatives
- capital may be small
- lenders may be reluctant to lend
- weak management is possible
- large amounts of decision makers
