Key Words End Of Year Year 10 Flashcards
Limited liability
Means that a business owner or owners are onto responsible for business debts up to the value if the financial investment in the business.
Only applies to some business for example private limited companies
Unlimited liability
Means that business owner or owners are personally responsible for all the debts of the business no matter the value.
Private limited company adv
Owners have limited liability
Individuals are there own boss
Any new shareholders need to be invited which protects business from influence
Shares in business can be sold to raise money
Private limited companies (LTD)
A company with one or more owners who can sell its shares to only the people known by the existing shareholders.
Private limited company (dis-adv)
More paperwork to do as a business has to register with the companies house
These records are public
File annual financial reports
Stakeholders
Shareholders and owners
Managers
Employees
Customers
Suppliers
Local community
Pressure grouos
Government
Internal growth
Franchising
Outsourcing
E commerce
Opening new stores
Franshcising
A franchise is a business that gives right to another person or business to sell goods or services using its name,
they do this by providing them with a licence. To become part of a franchise a new business must pay a fee.
In return they get too benefit firm the business name products marketing and equipment
Opening new stores
Can be done nationally or internationally.
Business must have access to enough finance and find a suitable location
E commerce
Involves selling products online
Provides a business with a much larger market and the ability to make sales at any time.
It can be expensive to set up and manage
Outsourcing
When a business pays another firm to produce there products .
Allows the business to increase its capacity
But the business will lose control and have a ruined reputation if the product is not the same quality
Internal growth (adv)
Can maintain its own values
Lower risk
Higher production means the business can benefit firm economies of scale and lower average costs
Internal growth (dis adv)
Return in investment could take a long time
Slower growth
Growth may be limited and is dependant I’d reliability of sale forecast
External growth
Merging
Takeovers
Merger
Occurs when two businesses join to form a new larger one
Factors effecting location
Proximity to market
Availability of raw materials
Suitable supplies of labour
Competition
Costs
Proximity to the market
If a business is close to its market it’s location will be convenient for customers
Important for industries such as cinemas, food retailers and restaurants.
Availability of raw materials
Easy availability of raw materials can be important for businesses that manufacture products
Suitable supplies of labour
Locating where there are supplies of labour with the correct skills and the lowest wages.
Important for a banking
Competition
Sometimes business will locate near competitors as they know there are customers. However there are some businesses where they may locate away from rivals such as a gas station
Costs
Some business will try locate in the cheapest locations as possible.
Characteristics is enterperneurs
Willingness to take risks
Hardworking amd committed
Innovative
Organised
Primary sector
First stage of production eg agriculture forestry and mining
Secondary
Converts resources from the primary sector into products. For example constructing or car manufacturing
Tertiary sector
Buisness that supply services. For example a restaurant or health care
Takeover
When one business buys control of another one.
Advantages of growth
Economies of scale
Advertising and publicity - business can afford to spend more money on this
Attracting the best employees - a larger business can provide more opportunity’s for promotions.
Dis advantages of growth
Diseconomies of scale
Failure to meet customers needs - larger business have a larger market it can be hard to reach the different needs of these groups
Economies of scale
When the cost of producing each individual product falls, allowing it to be sold more cheaply or more profit made. This can be achieved by:
Bulk buying may receive discount lowering the price per unit.
Technical economies when a business buys machinery which enables a product to be produced more cheaply
Dis economies of scale
When unit costs being to rise, usually occurs if a business grows too much.
It can be difficult for employees within very large firms to communicate
It can be difficult to co ordinate a large business and employees might be not working to the same goals
Some employees may feel isolated and poorly managed
Legislation
A set of rules that governs the way society operates. It is another term for laws.
Consumer law
Goods supplied by a business must be of a satisfactory quality, fit for any specified purpose, and must match any description given
Health and safety law
outlines the responsibilities that both employers and employees have in keeping the working environment safe. This includes appropriate training, regular breaks and a suitable work place temperature
Employment laws
- minimum wage
- holidays
- parenthood
- ## contract of employment
Protected characteristic
Designed to prevent discrimination
- age
- disability
- gender
- marital status
- pregnancy
- religion
- sexual orientation
Effects of legislation ( cost )
Costs may increase due to minimum wage having to be met, payed paternity leave, holiday pay and training has to be payed for
Effects of legislation ( motivation )
A safe working environment will help protect workers from injuries and illness, training will give employees more skills and build self esteem.
A minimum rate of pay and payed holidays will also motivate an employee
Effects of legislation ( number of employees )
Because the cost of having employees is more expensive businesses may decide to recruit fewer employees and perhaps make more use of machinery
flat structure
A structure with few layers in the hierarchy.
Managers have a wide span of control
And the structure has a short chain of command.
Tall structure
A business with many layers of management.
They have a long chain of command
And narrow span of control.
Chain of command
The line of authority within an business in which communication passes.
Delayering
The removal of one or more levels of hierarchy in a business organizational structure.
Delegation
Passing authority down an organizational structure to more junior employees.
Internal recruitment
When it appoints someone already in the business who it already employs. This can be shown through noticeboards, by word, newsletters and intranets
External recruitment
When people are employed from outside the business. Common when a business is expanding .
Internal recruitment ( adv )
Adv -
can motivate employees and improve performance
Less risky and cheaper
Employees will already have knowledge on the business
Internal recruitment ( dis adv )
- limited choice in people to recruit
- may have to pay to train employees who do not have the skills required
External recruitment ( adv )
Can bring new ideas to an organization
Provide business with a wider choice for candidates
May not be necessary for training as they should have skills required
External recruitment ( dis adv )
More expensive
Employee will be less familiar with the business
Contracts of employment
A legal contract that sets out the conditions under which a person is employed.this includes :
Hours
Place of work
Duties
Payed holidays
Rates of pay
Non financial methods of motivation
- job enlargement
- job enrichment
- training
- management style
Financial Methods of motivation ( salary )
A fixed amount of money played by the employer on a regular basis. Monthly. Expressed as an annual sum.
Financial Methods of motivation ( wage )
Workers are paid either weekly or monthly or by the hour. Any extra hours are payed and are classified as over time and will be paid at a higher hourly rate.
Financial Methods of motivation ( commission )
Payment made to an employee based on the value of sales achieved over a specific time.
Employees may be payed only by commission or by a low salary with commission on top.
Financial Methods of motivation ( profit share )
Staff will receive there hourly rate or salary but an additional payment is made based on the performance of the business.
Non Financial Methods of motivation ( job enlargement )
Gives staff a greater variety of tasks to perform making the work more interesting. This may take place through job rotation
Non Financial Methods of motivation ( job enrichment )
Giving staff more responsibility and a wider range of more complex tasks. Employees will experience an increased sense of achievement.
Non Financial Methods of motivation ( Training )
Will motivate there staff to do there job well learn new techniques be trained for future positions and promotions. Employees will feel more valued by there business.
Non Financial Methods of motivation ( management style - autocratic )
an approach by leaders or managers to keep control of decision making and ensure that employees are closely supervised
Non Financial Methods of motivation ( management style - democratic )
managers and employees working together to make decisions.
Non Financial Methods of motivation ( management style - paternalistic )
management style where a leader considers their subordinates part of a large, extended family
Non Financial Methods of motivation ( management style - Lassiez faire )
employees are allowed to make decisions and solve problems on their own with little guidance from management
