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UNIT 1 BUSINESS EXAM JANUARY 2021 > LO1 > Flashcards

LO1 Flashcards

1
Q

Definition of business activity

A

tasks completed by a business to achieve it’s objectives, eg buying and selling and producing products and services

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2
Q

What is the Primary Activity, name some examples

A

Extraction and harvesting of raw materials, these include fishing, mining, agriculture, oil and gas extraction

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3
Q

What is the Secondary Activity, name some examples

A

Manufacturing of products, this can be sold to retail customers, or components sold to business customers

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4
Q

What is the Tertiary Activity, name some examples

A

Provision of services, such as hairdressers, schools, banks and supermarkets or services to business, such as transport. As a country becomes more industrialised, the demand for services increase

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5
Q

What is the Private Sector

A

The aim is to make a profit, range from small local businesses such as a electrician, to large multinational corporations, such as Walmart stores, inc. In the UK Next plc is one

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6
Q

What is the Public Sector

A

Organisations that do not aim to make a profit, such as health care services, education, libraries

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7
Q

What is the Third Sector

A

Organisations that do not aim to make a profit and are not government owned.
They rely on donations, fundraising and grants.
NSPCC and Oxfam are some charities

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8
Q

What is a sole trader

A

A Business owned by one person although the owner may decide to employ others to work alongside them

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9
Q

Advantages of Sole Trader

A

Can start the business with limited finance
Few legal requirements to consider when starting compared to other ownerships
Sole traders can choose there own working hours
Do not share profits with others

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10
Q

Disadvantages of a Sole Trader

A

Liable for any debts incurred by the business
Do not have co-owners to discuss new ideas and decisions with
Often take long hours and not much holiday
Lack of finance may restrict the business

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11
Q

What is a Partnership

A

A business with a minimum of 2 or more partners.

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12
Q

Advantages of a Partnership

A

Others to discuss decisions
More finance available
Few Legal requirements when starting the business
Different areas of expertise, which can benefit the business

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13
Q

Disadvantage’s of a Partnerships

A

Decisions making can take longer as more people are involved
Partners have unlimited liability
Chance of the partners do disagree could affect the way the service is provided

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14
Q

What is a private limited company?

A

A company the separates legal entity to its owners, the shares in the business are sold to raise finance

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15
Q

Advantages of private limited company

A

Owners and shareholders have limited liability
Owners can choose who to sell the shares too
Owners can keep control of the business as long as they limit the amount of shares sold

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16
Q

Disadvantages of a private limited company

A

Can be expensive and a lengthy process

Shares cannot be sold to the general public, this limits the finance that can be gained

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17
Q

What is a pubic limited company

A

a pubic limited company is a separate legal entity from its owners, the shares of the business are sold via the stock market

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18
Q

Advantages of a public limited company

A

Shareholders benefit from limited liability
As shares are sold on the stock market, large amounts of finance can be made
A public limited company has a high profile, easier to attract customers and reliable suppliers

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19
Q

Disadvantages of a public limited company

A

Competitors can view the accounts of the plc
Due to the size decisions can be a lengthy process
Greater risk of a takeover

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20
Q

What is the a Government Owned business

A

A legal entity owned by the government, eg the BBC

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21
Q

Advantages of Government Owned

A

Government can support business that are struggling to survive
Some business/industries are vital, support from the government ensures there survival

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22
Q

Disadvantages of Government Owned

A

The business can be used for political gain, eg if unemployment is high, jobs can be created
Businesses that are not answerable to shareholders regarding profits may not priorities cost control

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23
Q

What is a charity owned company

A

Includes involuntary and community groups, trade unions and charitable trust and charities

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24
Q

Advantages of Charity owned business

A

Quick and easy to set up and can make an immediate impact

Charities are widely recognised as existing for social good. This can assist with fundraising.

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25
Q

Disadvantages of Charity owned business

A

They often depend on volunteers, which can make it difficult to maintain support in running the group
Setting up formal charity is expensive

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26
Q

What is a CIC owned company

A

Limited companies that aim to benefit the community or trade with social purpose rather than earning high profits for shareholders

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27
Q

Advantages of a CIC

A

The company has its own legal identity

Reputation of the business may be enhanced

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28
Q

Disadvantages of a CIC

A

Tax must be paid on profits

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29
Q

What is a USP

A

Unique selling point a specific factor that makes a business stand out frp, its competitors, eg excellent customer service

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30
Q

What is a functional area

A

Diversion of business where employees have similar roles, skills and expertise, eg marketing function, human resource function

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31
Q

Roles of a Finance in functional Area

A

responsible for controlling the finance of the business
Marketing and receiving payments on behalf of the business
paying employees
Preparing annual financial accounts

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32
Q

Roles of Marketing in functional Area

A

Promoting the business and its products/services
using different forms of social media to create awareness
They are responsible for identifying customers needs and working with research and development to ensure the products and services meet the needs

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33
Q

Roles of a Sales in functional Area

A

Communicating with existing customers and potential new customers

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34
Q

Name all the functional Areas

A

Finance, Marketing, Sales, Human Resources, Operations Management, Customer Services, Business Support Services, Research and Development, Purchasing/Procurement

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35
Q

What is the benefit of functional areas

A

for a smooth business operation, certain functional areas need to be deployed

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36
Q

What is the role of Human Resources

A

Planning, recruitment, redundancies , remuneration and reward system

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37
Q

What is the role of Operations Management

A

converting inputs to outputs

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38
Q

What is the role of Customer Services

A

Liaising with customers, managing expectations and resolving queries

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39
Q

What is the role Business support service

A

Managing resources, maintaining equipment, providing IT support, providing administrate support

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40
Q

What is the role of Research and Development

A

Developing new products and services in response tro research findings

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41
Q

What is the role of Purchasing and Procurement team

A

sourcing and providing materials or services

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42
Q

What is a flat structure

A

A company structure containing few levels

43
Q

Name some advantages of a flat structure

A

Communications flow tends to be good due to the short chain of command. Information can be passed accurately, there is generally more interaction between top and bottom levels improving understanding
Due to the wide span of control, employees are empowered and motivated to make decisions

44
Q

Name some disadvantages of a flat structure

A

Wider span of control may means the employees at the bottom levels may not be monitored closely, could lead to mistakes, Fewer levels reduce the opportunities for Promotion, this could make the employees leave

45
Q

What is the flat structure best suited to

A

a small business with fewer jobs roles

46
Q

What is a Tall/Hierarchy structure

A

Many layers of management, fewer people at the top than at the bottom, the chain of command is clearly defined and instructions are passed down from the top to bottom

47
Q

Advantages of a Tall/Hierarchy structure

A

Everybody knows their exact job role and whom their accountable for. A narrow span of control enables supervision to be closer leading to fewer mistakes. offers more chance of promotion, this could lead to employees working harder

48
Q

What is the Tall/Hierarchy structure best suited too

A

Medium to large types of organisations/businesses with large number of employees and the armed forces

49
Q

Advantages and Disadvantages of Centralised Structure

A

Advantages

  • Useful in unforeseen circumstances or times of uncertainty
  • Strong leadership allows for quick responses to potential threats
  • Decisions made tend to benefit the whole business rather than a department

Disadvantages

  • People lower down the structure may feel demotivated as decisions are made without them
  • There may be a better understanding lower down the structure regarding customers and employee needs which are not taken into consideration when decisions are made
50
Q

Advantages and Disadvantages of Decentralised Structure

A

Advantages

  • Employees feel more empowered and motivated as they have more responsibility and are able to make certain decisions for themselves
  • People at the top can have more time to focus on important decisions

Disadvantages

  • Decisions made might not reflect those valued by the whole business, sending confusing messages to stakeholders
  • Conflict may arise people make decisions based on their needs
51
Q

What is the Matrix Structure

A

where employees are grouped by function and product

52
Q

What is a tall hierarchy structure

A

A pyramid shaped structure with many levels

53
Q

What is a centralised structure

A

A structure where decisions are making is kept at the top of the hierarchy

54
Q

What is the role of a Chief Executive

A

Most authority in the business, responsible for the success or failure of the business, answerable to all stakeholder and makes the most important decisions

55
Q

What is the role of a Director

A

Report to chief executive, in a medium to large business they may be several directors each in charge of a functional area, directors oversee activities undertaken within a function

56
Q

What is the role of a manager

A

Managers make sure that their department achieves the aims and objectives identified by the directors, to whom they report directly. Managers overall in charge of activities in their department ensuring that it is running smoothly

57
Q

What is the role of supervisors

A

Usually in charge of team members in a specific area of department, make day to day decisions to ensure that the area in charge runs smoothly

58
Q

What is the role of assistant or operatives

A

At the bottom of a structure and are responsible for carrying out instructions given by their supervisors

59
Q

fixed cost

A

cost which do not change

60
Q

variable cost

A

Costs which change with output

61
Q

semi variable cost

A

Costs composed of a mixture of fixed and variable

62
Q

Revenue

A

the income generated from sales

63
Q

Cash flow

A

the total amount of money being transferred in and out of the business

64
Q

Net Cash flow

A

the differences between a company’s cash inflows and cash outflows in a given period

65
Q

Profit

A

financial gain, when revenue is greater than total costs

66
Q

Break even

A

When revenue is equal to total costs

67
Q

Margin of safety

A

the amount of sales above the break even point

68
Q

Depreciation

A

the actual decrease of value of an a asset

69
Q

Opportunity costs

A

the loss of other alternatives when one alternative is chosen

70
Q

Break even formula

A

Fixed costs__________

Revenue - Variable costs

71
Q

What is a income statement

A

a financial statement that shows revenue and expenses a business has received over a period of time

72
Q

Gross profit

A

revenue minus cost of sales

73
Q

Net Profit

A

gross profit minus expenses

74
Q

Assets

A

Resources owned by a business - cash. machinery, motor vehicles

75
Q

What is meant by a cash flow forecast

A

a prediction of money flowing in and out of the business

76
Q

What is meant by a cash flow statement

A

the actual flow of money going in and out

77
Q

Formula of net cash flow

A

Receipts - Payments

78
Q

Formula of closing balance

A

Net cash flow + Opening balance

79
Q

What is a stakeholder

A

an individual or group who has an interest in a business and may be directly affected by the activities of that business

80
Q

Name 10 stakeholders

A

Employee, Owner, - Internal

Local Community, Customers, Suppliers, Financial Businesses, Local and Central government, Trade Unions, Shareholders, Pressure groups - External

81
Q

What is a income statement

A

A financial statement which shows how much profit or loss a business had made

82
Q

What are two types of Profit

A

Gross Profit and Net Profit

83
Q

Gross Profit Formula

A

Revenue - Cost of Sales

84
Q

Net Profit Formula

A

Gross Profit - Expenses

85
Q

What is meant by Cost of sales

A

The amount the business has paid to create or make available a product or service that has been sold

86
Q

Assets

A

resources owned by the business, such as cash, machinery, motor vehicles

87
Q

Expenses

A

the amount the business has paid to operate the business day by day

88
Q

What is a social factor

A

things that are affected our lifestyle, eg. demographic issue, attitudes to work, disposable income, social trends, cultural beliefs

89
Q

External Influences

A

Factors outside the business that are not in the owners control

90
Q

What is retained profit

A

the money remaining within a business once all costs, taxes and dividends have been deducted

91
Q

Environmental Factors

A

green or sustainability issues that exists in a business surrounding area

92
Q

What aims could stakeholders have?

A 
Fast Payments
High Prices
Low Wages
High Wages
Low Pollution
High Sales
Creating Employment
Good Service
93
Q

Characteristics of Managers

A

Organise
Make Decisions
Plan
Control

94
Q

Characteristics of Employees or Staff

A

a business needs staff to carry out its activities

pay level varies of skill, age, location, qualification and other factors

95
Q

Characteristics of Customers

A

they buy the goods or services produced by the firms

They may be individuals or other businesses

96
Q

Characteristics of Suppliers

A

firms get resources they need to produce the goods and services from suppliers
two way process, suppliers depend on the firms to supply

97
Q

Characteristics of Community

A

firms and communities exist in a two way relationship
local community may often provide many of the firms staff and customers
community can fell aggrieved by some aspects of what the firm does

98
Q

Characteristics of Government

A

successful firms are good as they create wealth and employment
Economic policies affect firms cost through taxation and interest rates

99
Q

Characteristics of Trade Unions

A

trade unions ar e interested in McDonalds to ensure workers are being treated right and work in the right conditions

100
Q

Name some sources of finance

A

Mortgage, Trade credit, Venture Capital, Overdraft, Savings, Retained Profit, Credit Card, Hire Purchases, Loan

101
Q

Advantages and Disadvantages of a Loan

A

Advantages, Payments spread over a long period of time, good for budgeting

Disadvantages, Banks may require security on the loan, can be expensive due to interest payments

102
Q

Advantages and Disadvantages of Overdraft

A

Can be used day to day running costs and to cover the period between money going out of the business and money coming in, cheaper than bank loan

Can be expensive if used over long period of time

103
Q

what is the economy

A

production of goods and consumption of goods and the movement of money

104
Q

Name some Technological Factors

A

Automation, communication, purchasing/sales, mobile

UNIT 1 BUSINESS EXAM JANUARY 2021 (1 decks)

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