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business unit one > lo1 > Flashcards

lo1 Flashcards

1
Q

primary activity

A

extract raw materials

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2
Q

tertiary

A

services

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3
Q

secondary activity

A

uses raw materials from primary and manufactures the product

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4
Q

examples of primary activity

A
  • mining
  • farming
  • fishing
    -extraction
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5
Q

examples of secondary activity

A
  • factories
  • mills
  • construction
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6
Q

examples of tertiary activity

A
  • retailers
  • personal services
  • business services
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7
Q

what are the three sectors?

A

private
public
third

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8
Q

private sector

A

owned by an individual

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9
Q

public sector

A

owned by goverment

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10
Q

third sector

A

charity

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11
Q

examples of a private sector

A
  • tesco plc
  • manchaester united plc
  • coca-cola enterprise ltd
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12
Q

examples of a public sector

A
  • NHS
  • ofsted
  • the british army
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13
Q

examples of third sector

A
  • the british red cross society
  • cancer research
  • living well CIC
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14
Q

what are the forms of legal business ownership

A

-sole trader
-partnership
- private limited company
- public limited company
- state-govermenmt-owned organisation
- charity
- CIC

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15
Q

sole trader

A
  • one owner
  • unlimited liability
  • operates in the private sector
  • full control of the business
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16
Q

sole trader advantages and disadvantages

A

+be own boss
+ keep all profit
+ financial affairs are private
x unlimited liability
x skill shortage
x long hours

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17
Q

partnership

A
  • two or more owners
  • unlimited liability
  • owners have joint control of the business
    -operates in the private sector
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18
Q

partnership advantages and disadvantages

A

+ financial affairs are private
+ workload shared
+ multiple skills
x split profit
x may disagree
x unlimited liability

19
Q

private limited comapny

A
  • owned by one or more shareholders
  • shares can be brought privately
  • incorporated
  • limited liability
  • directors control the business
  • operates in the private sector
20
Q

ltd advantages and disadvantages

A

+ can control who buys shares
+ separate legal identity
+ can raise funds by selling shares
x financial accounts not kept private
x dividends need to be paid to shareholders
x complex legal / administrative requirements

21
Q

public limited company

A
  • owned by two or more shareholders
  • shares are brought and sold on the stock exchange
  • incorporated
  • limited company
  • directors control the company on behalf of the shareholders
  • operates in the private sector
22
Q

plc advantages and disadvantages

A

+ limited liability
+ can raise large amounts of capital
+ business continues if shareholders dies
x loss of control
x higher set up costs
x more expectations to meet

23
Q

state-/government-owned organisation

A
  • owned by the state and controlled by the gov
  • public sector
  • aims and objectives are set by government
  • limited liability
24
Q

state/gov advantages and disadvantages

A

+ limited liability
+ no shareholders to please
+ not driven by the need to make a profit
x slow decision-making
x slow to change
x inflexible procedures

25
Q

registered charity

A
  • makes revenue not profit
  • aim is to benefit a specific cause rather than make a profit
  • charitable status test
  • ran by trustees not owners
  • limited liability
  • third sector
26
Q

charity advantages and disadvantages

A

+ limited liability
+ wide range of funds available
+ direct control of business aims
x complex legal requirements
x relies on volunteers
x financial accounts not private

27
Q

community interest company

A
  • set up by private individuals
  • benefit society rather than making a profit
  • incorporated
  • third sector
  • limited liability
28
Q

CIC advantages and disadvantages

A

+ any profit made will be reinvested in the business
+ limited liability
+ wide range of funds available
x must pay tax on income
x financial accounts not private
x complex legal / administrative requirements

29
Q

what are the factors that inform business ownership

A
  • legal status
  • liability
  • funding
  • funding
  • control / decision-making
  • legal / administrative requirements
30
Q

legal status

A
  • is the business a separate legal identity
  • being separate means the business can sue, and be sued, in its own right
31
Q

liability

A
  • unlimited liability - personal possessions of the owners if the business goes into financial difficulty
  • incorporated businesses have limited liability
32
Q

funding

A
  • public sector organisation may be financed by taxation
  • third sector organisation may receive grants and donations
  • private sector organisation is more likely to secure funds by borrowing or by taking additional owners
33
Q

legal/administrative requirements

A
  • sole trader has very little paper work to set them up or to continue trading
  • plc has a great deal of paperwork
34
Q

business aims and objectives

A
  • survival
  • financial aims
  • growth
  • reputation
    -being enterprising
35
Q

survival

A
  • has to build up sales and a customer base
  • earn enough revenue to cover costs (break-even)
  • the business needs to survive
36
Q

financial aims

A

-break-even
-increase revenue
-reduce costs

37
Q

financial aims (break-even)

A
  • cover costs
  • allow the business to survive without
  • making a profit
38
Q

financial aims (increase revenue)

A
  • increase money brought back from sales
  • selling more at the same price
  • reducing price so more is sold
39
Q

financial aims (reduce costs)

A
  • lower exenses involved in running the business
  • reducing electricity bill
  • finding cheaper supplier
  • paying lower rent
40
Q

financial aims (making a profit)

A

-increasing revenue or reducing costs
- when costs are covered additionally revenue will be profit

41
Q

growth

A
  • physically - opening a second branch, extending factory, employing more staff
  • increase market share
  • extend the range of products
42
Q

reputation

A
  • quality / value for money, being ethical and having a social conscience
  • linked to personal ideals of the business owners
  • the right reputation will help a business to survive and make a profit
43
Q

being enterprising

A
  • taking risks

business unit one (16 decks)

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