Mocks Flashcards
Define profit
Money left over from sales after all costs have been paid
Define revenue
The amount of money which a business receives from selling what it produces or provides
How to work out revenue
Price x quantity sold
How to work out profit
Revenue - costs
What are sole traders
A business that is owned and controlled by one person , they can still employ other people
Advantages of sole trader with description
- set up, it’s an extremely easy and cheap to set up
- financial information, is private
- ownership, owner is able to keep all profits
Disadvantages of a sole trader with description
- Shortage of capital, so may find it hard to operate/grow and get a bank loan
- shortage of skills, may not be able to complete some jobs that other businesses can
Unlimited liability- the owner of business risks losing all of personal possessions to pay off debts
Define partnership
A business which can have a minimum of 2 but maximum of 20 owners
Disadvantages of a partnership
- profit has to be shared
- may be disagreements
- partnerships with unlimited liability risk personal possession of partners
Advantages of partnerships
- different skills to offer
- more capital raised , helps growth and operation
- easy and cheap to set up
- financial information is private
Define sleeping partner/limited partner
People who invest money into the business but don’t take part in the day to day running of the business or any decision making
What is a deed of partnership
A legal document which:
- Gives names+ signatures of partners involved
- shows how much capital each partner invested
- states how profit and losses are to be shared
What is limited liability
The owner of these business will not be personally responsible for any debts
Do plc and lords have limited or unlimited liability
Limited liability
Who are the owners of plc and Ltd
Shareholders
What is a dividend
A share of profit at the end of each year
Why do shareholders get
A say in the business
A dividend
What % of shared do you need to own to be the majority shareholder
51%
What is a multinational
A company based in one country but manufactures and sells products in a variety of other countries
What are economies of scale
Arise when unit costs fall as output rises
Advantages of multinationals
- Manufacturing bases can be nearer to the markets they serve
- economies of large-scale production can be obtained
- production can be located in countries when lower production costs can be obtained
Disadvantages of multinationals
- communication problems , can’t speak face to face
- high costs of transporting goods between countries
- different legal requirements in different countries
- fluctuation exchange rates from different currencies
Define franchise opportunities
When an already established business offers to for sale to other businesses or individuals the right to use its product, services and logo
3 Advantages of franchises
- Franchisor does all advertising
- get products to market quickly and cheaply
- franchisor will pay for training
3 disadvantages of franchises
- Annual royalty payments may be required
- franchises doesn’t have much choice of what to sell
- all supplies usually bought from franchisor
Define royalty payments
A payment made go the franchisor based on sales revenue or profit of franchisee
Who are public corporations owned and controlled by
National or local government
How do public corporation generate revenue
Through charges it makes for the service provided
How do the government benefit for public corporations
They get any surplus money
What is a public sector
A business activity owned and funded by local or national government
2 advantages of public limited companies
- liquidity, shareholders label to buy and sell their shares
- capital raised, by selling shares
2 disadvantages of public limited company
- Pay out dividends
- expensive to set up
2 advantages of private limited company
- shares can be sold to raise capital
- continuity, the business can be sold, individuals can sell shares of shareholder dies business will be unaffected and trade normally
Define stakeholder
An individual group of people who have an interest in a business and its activities
What does PIGSS stand for
The business objectives: Profit Increase market share Growth Survival Service
Define satisficing
When other businesses aim to make just enough profit to pay for future plans
Define private sector
Businesses that are Owens’s by private individuals
Define entrepreneur
An individual who has the skills and knowledge to set up and run their own business and is willing to take risks
4 reasons why a business may fail
- wrong location
- competition
- lack of demand for product
- bad management
Define insolvency
A term to describe a firm that cannot meet its financial commitments
Define merger
When 2 companies join together to form a new larger business
Define takeover/acquisition
Where control of another company is achieved by buying a majority of its shares
What do businesses in the primary sector produce
Raw materials for other businesses to use
What do businesses in the secondary sector do
Use raw materials to manufacture products
What do businesses in the tertiary sector do
Provide a service
Define hostile takeover
When a takeover isn’t wanted by an organisation
What is horizontal integration
Organisation in same industry and stage of production merge/takeover
What is backwards vertical integration
When organisation merge/takeover an organisation in a different stage of production below their current operation
What is forwards vertical integration
When organisation merge/takeover an organisation in a different stage of production above their current operation
What is diversification/conglomerate
When merge/takeover a business in an unrelated business activity
What is 1 disadvantage for horizontal, backwards vertical and forwards vertical integration
Less choice for customer
Reason for change in primary sector
- raw materials used up
- more machinery
- foreign competition
Reason for change in secondary sector
- machinery
- foreign competition
Reason for change in tertiary sector
- rise in population
- increase in wealth
- increased leisure time
- businesses are putting more emphasis on customer service
Define interdependence
The way in which a business I different sectors depend upon each other
4 factors affecting the location of a business
- access to materials
- access to customers
- the cost of location
- transport and infrastructure
3 ways a business may internally grow
New products, stores and factories
What are the 2 types of unincorporated businesses
Sole traders and partnerships
What are the 2 types of incorporated businesses
Plc and ltd
Define job description
Document that describes the duties of a worker
Define person specification
A profile of the type of person needed for a job
Define internal recruitment
When a vacancy is filled with someone who already works in the organisation
Define external recruitment
When a vacancy is filled with someone from outside the organisation
2 advantages of internal recruitment
- cheaper to advertise
- person will already know about the organisation,its aims and objectives
2 advantages of external recruitment
- new ideas
-
2 disadvantages of external recruitment
- take longer
- more expensive
What is a cv
A written document by the candidate often 1 or 2 a4 sides
Cv advantages
- Shows the ability of candidate to organise information
- Easy to see essential information at a glance
Cv disadvantages
- may be exaggerated
- may be too long and so won’t be read
Advantages of and applicant form
- only provide information directed by employer
- easy to compare
- more up to date
What will referees do
Describe the personal qualities of the applicant and how well they did in their previous job, attendance,punctuality
What are scenario tests
When the employer gives the candidate a scenario and the candidate has to how they would deal with it
What is psychometric testing
Tests that help to identify a candidates skills, knowledge and personality. 2 types:
Personality tests which analyse how you fit with the business
And aptitude test which access whether you’ve got the right skill set
3 tips for interviewees
- turn a positive into a negative
- dress smartly
- do company research
Methods of selection: group activities
Purpose is to see how well people work with strangers, to see who the obvious leader is and to see who has right skills
Methods of selection:presentation
When applicant is asked to give a talk to the employer on a given subject. Shows personal qualities and opportunities for applicant to give ideas about job
Methods of selection:tests
Applicant is given a pencil and paper test or a practical test , these give specific information
3 things a recruitment agency does
- draws up person specification and job description
- advertised post
- reviews applicants
What is a recruitment agencies function
To find the most suitable person for a job vacancy they have been asked to fill
How does a recruitment agency recieve fees
They have to place someone in a job
Advantages of using recruitment agencies
- doesn’t take up businesses time
- would be quicker
- access to more candidates
Disadvantages of using recruitment agencies
- costs more
- may have miss communication
- different opinions
Define motivation
The will/desire to work and to do a good job
Maslow hierarchy of needs from top to bottom
Physiological needs Safety needs Social needs Esteem needs Self-actualisation
Define self-actualisation
The need to feel you’ve been able to use the talent you have to achieve your potential
Define esteem needs
The need to feel that other people value what you are/do
Define social needs
Need to be with other people and to get on with them and have fun
Define safety needs
Need to feel safe from physical danger that might put you at risk
Define physiological needs
Basic needs that all humans must satisfy in order stay alive
Define time rate
Worker is paid a set sum of money for each hour worked
Define overtime
Worker works extra hours and most likely paid extra
Define commission
Paid to workers who sell foods or services the amount paid is a percentage of the value the workers sell
Define piece rate
Used where work of worker can be measured, worker is paid for each completed item
Define fringe benefits
When firm gives worker non money rewards
Define profit-sharing
Worker paid a share of any profits that firm makes
Define bonus
Worker has to achieve target level of production to receive
Leadership styles: autocratic
- full control of decision making
- uses power to get others to carry out work as a result of this Decision making
- employees have little/no input
- motivation through rewards
Leadership styles: democratic
- focus of power more with the group as a whole
- employees have greater involvement in decision making
- emphasis on delegation and empowerment
Leadership styles: laissez-faire
- gives employees little direction
- responsibility lies with the group
- leaders get employees to choose how to complete on times,make decisions and resolve problem on their own
Define appraisal
A formal assessment of an employees perfomance
What’s included in an appraisal
Review of current performance
Targets of upcoming year
Training/support identified
Appraisal benefits of employee
More motivated
Meet self esteem needs
Know what they need to improve on
Appraisal benefits of employer
Worker is more productive
Helps worker improve
Define IIP
The Investors In People award is a scheme for businesses who provide opportunities for staff development the opportunities include training and promotion . Business can be awarded IIP of staff development programme meets a certain criteria
Define life long learning
The idea that workers will need to keep learning different skills during their working lives
Sex discrimination act 1975
Law intends to stop females and males being treated differently from member of the opposite sex
Equal pay act 1970
Law to make sure that women are pair the same men when doing similar work
Employments rights act 1996
Law means a business must give workers a “statement of particulars”. This document includes information such as job title, pay, when worker will be paid and how many hours they must work
Race retaliation act 1976
Law to stop people of different race, nationality or ethnic origin being treated differently from those origins
Minimum wage legislation
Law ensures workers can’t be paid below a certain amount decided by the government (depending on age)
Health and safety at work act 1974
Law makes it responsibility of the employer to protect worker from dangers in the workplace
Disability discrimination act 1995
Law designed to give equal opportunities to disabled people this men’s they can’t be discriminated against during recruitment and that employers are expected to make reasonable changes to premises
Define employment tribunal
A special court of law that deals with disputes between workers and employees
Define treads unions
Organisations that represent workers and give individuals a way of communicating with their employers even in large organisations
3 things trade union aim to improve for workers
The pay
The working conditions
Safety at work
What 2 things do workers get in return for paying a subscription
Members receive benefits such as legal assistance and representation
How do members of trade union vote
Through ballots
Define strike
When workers withdraw their labour
Define overtime ban
When workers only work the hours stated on their contract
Define work to rule
When workers will only do what is included in their contract
Define redundancy
When employment is ended because the firm no longer needs the work that is done by and employee
Why might business make staff redundant
- business is closing/moving
- need to cut costs
- new machinery to replace job
Define single union agreement
Where workers and employers agree that workers will only be represented by one union
Why does ACAS stand for
Advisory Conciliation and Arbitration Service it is an organisation which helps to settle disputes between workers and employers
Define organisational charts
Diagrams that show the internal structure of the business
3 benefits of organisational charts
- a promotion route
- to who you are responsible for and who you take orders from
- who is responsible for which function and tasks
Define span of control
The number of employees/subordinates from whom a manager is responsible
Define layers
The number of levels or layers Ina business organisation
Define chain of command
Way in which responsibility for employees is organised within a business
Define authority
The power that one person has to make decisions and to control what other workers do
Define accountability
The responsibility that a person has for a job meaning that they will take the blame for what goes wrong as well as credit for what goes well
Define line manager
A person who is directly responsible for other workers in the organisation
Define subordinates
The workers that a line manager is responsible for
Define delegation
Process of giving a manager authority to a subordinate to make decisions for which that manager is responsible
Define tall structure
An organised structure that has many levels of hierarchy
Define flat structure
An organised structure that has few levels of hierarchy
Define delayering
Process of removing layers from a hierarchy
2 advantages of a tall structure
Many promotion opportunities
Span of control is smaller so may have more contact with manager
2 advantages of a flat structure
Speed of communication is quicker
Messages will be more accurate as passed through less layers
2 advantages of a narrow span of control
- manager can communicate quickly with employees under them and control them more easily
- more support and easier to monitor
2 disadvantages of a narrow span of control
- subordinates may feel over-supervised
- more costly
2 advantages of a wide span control
- cost less money as not as many managers needed
- subordinates feel more valued as have more resposibility
2 disadvantages of a wide span of control
- supervision more difficult
- stress levels are higher
Define internal communication
Communication between people employed in the same organisation
Define external Communication
Communication between people in an organisation and others outside that organisation
Define Horizontal Communication
Communication between people on the same level of the hierarchy in an organisation
Define Vertical Communication
Communication up or down the hierarchy within an organisation
Define Formal Communication
Communication that uses official channels of Communication within an organisation
Define informal Communication
Communication that are outside the official channels of communication within an organisation
Define one-way Communication
When the sender send the message but doesn’t receive a message in return
Define two-way communication
When the person receiving the message can reply to the sender
3 methods of communication
Written
Verbal
Communication using images
Advantages of non-verbal communication
- there is a record of the message
- receiver can reread message
Disadvantage of non-verbal communication
- not possible to check immediately that receiver has understood
- success of letter depends on how clearly it was written
Advantages of communication with images
- people often like looking at images
- more impact, easier to remember
Disadvantages of communication with images
-may not be possible to check immediately that the receiver has understood
Advantages of verbal communication
- person can check message has been understood by asking for feedback
- person can emphasise point by tone of voice
Disadvantages of verbal communication
- no permanent record
- if receiver doesn’t like what they hear they may cause trouble
Communication barriers: attitude to sender
Sender may “talk down” to the receiver do that they like what they here
Communication barriers: language used/clarity
Sender may not make the message clear to the receiver
Communication barriers: time when communication is sent
Message may be sent at the wrong time
Communication barriers: wrong method of communication used
Use one type of communication but the receiver won’t necessarily reply for example they might not check their emails regularly
Communication barriers: feedback is not received or is not appropriate
Sender may not check with the receiver that they have understood the message
Communication barriers: problem with means of communication
Message may not be received if the receivers ,for example, computer doesn’t work
On the job training
Employers receive training whilst remaining in the work place , shown what to do my a more experienced employee through demonstration or shadowing
Coaching
When the coach offers suggestions about how the coaches may improve
On the job training advantages
- Cheaper
- worker still produces during it
On the job training disadvantages
- trainee may produce less,worse quality products than they would when working
- trainer may have to leave there work to help trainee
Off the job training
When employees are taken away from the workplace to be trained
Off the job training advantages
- experts may provide training
- trainee can use specially designed training equipment
Off the job training disadvantages
-more expensive
Areas of training: management skills
Worker who has been given/seeking a promotion will have to learn skills required to managed other people, control budgets, solve problems etc
Areas of training: personal skills
Develop personal skills such as communications skills
Areas of training: technical skills
Skills needed to use a machine or upgrade skills to deal with new machines
Areas of training: knowledge of new products
Workers need to be told about new products that they have to sell so they know what information to give customers
Areas of training: personal development
Developing a person in ways not directly connected to work to raise self esteem, their ambitions and their motivation
Areas of training: group working
Training about how to work together well and how to get the best out of each other
Define induction training
Training aimed at introducing new employees to a business and its procedures
Non monetary methods of motivation: job rotation
Involves Workers performing different jobs during the day
Non monetary methods of motivation: job enlargement
Involved giving the worker more tasks to do
Non monetary methods of motivation: job enrichment
Involves giving the worker more responsibility
Non monetary methods of motivation: team working
Involves putting worker into teams and giving each person a particular task
Non monetary methods of motivation: award schemes
When the work of a worker is recognised in some way for doing something positive
Non monetary methods of motivation: promotion
Involves giving worker a higher position to recognise their achievements
Non monetary methods of motivation: fear
Involves using threats such as being told off or being sacked to motivate workers
