Real World Flashcards
What are stakeholders
Someone who is interested by a businesses decisions
Factors affecting location
Supplier
Competition
Location of market
Labour supply
Cost
What is enterprise
Involves identifying new business opportunities and taking advantage of them. Spotting a gap in the market
Characteristics of entrepreneurs
Hard working
Calculated risk
Organised
Innovative
Factors of production
Land
Labour
Capital
Enterprise
What is opportunity cost
Benefit given up in order to do something else
Advantages of sole trader
Easy to set up
Your own boss
You decide what you want to do with profit
Disadvantages of sole trade
Long hours and little holiday
Unlimited liability
Unincorporated(business does not have its own legal identity)
Hard to raise profit
How many partners can be in a partnership
2-20
Advantages of partnerships
More owners-more ideas/range of skills
Share the work
More capital
Disadvantages of partnership
Legally responsible for other partners descions
Unlimited liabillity
Decreased income
What are the two types of companies
Private
Public
Private company advantages
Limited liabillity
Easier to get loans or mortgage
Owners keep control
Private company disadvantage
More expensive
Legally obliged to publish account
PLC(public) advantages
Much more capital
Helps company expand and diversify
Limited liabillity
PLC(public) disadvantages
Hard to agree on decisions(a lot of shareholders)
Easy for individuals to buy all shares
More shareholders-less profit per person
Examples of not for profit organisation
Help community
Charity
Fund projects
Why do businesses use aims and objectives
Monitor success
Examples of stakeholders
Local community
Employees
Customers
Governments
What is revenue
Income earned by a business
Equation for revenue
Revenue=sales x price
What are fixed cost and examples
They don’t vary with outcome
Insurance
Fixed salaries
What are variable cost
Will increase if a fir expands output
How to calculate total cost
Total cost=variable cost+fixed cost
Average unit cost
How much each products costs to make
Average unit cost equation
Average unit cost=total cost divide output
How to calculate profit
Profit=revenue-costs
What are the 7 sections of a business plan
Personal details
Mission statement
Objectives
Product description
Product details
Staffing requirements
Finance
Drawback of a business plan
Cost time and have a cost
What is economies of scale
Buys from supplier in bulk to get a cheaper unit price
Diseconomies of scale
Where are areas grown can lead to increases in average unit cost
Internal expansion
When a business grows by expanding it’s own activities
Internal expansion description
Low risk but slow
E-commerce
Act of buying and selling goods online
M-commerce
Act of buying and selling goods on handheld devices
Outsourcing
Paying other firms to carry out tasks it could do itself
Franchising
Where a company expands by giving other firms the right to sell its product(or use it’s trademark)
Benefits of franchising
Increases market share
Increases brand awareness
External expansion
Using other businesses to expand
Examples of external expansion
Merger
Take over
What is a merger
Two firms that join together to form a new larger firm
What is a take over
Existing firm expands by buying more than half the shares in the other firm
What is a social enterprise
A business that is set up to help society rather than make a profit
What is a gap in the market
When a group of consumers have a need for a new product that is not being supplied by existing business
What are the four factor of production(CELL)
Capital
Enterprise
Land
Labour
What is opportunity cost
What is given up as a consequence of a particular decision of choice
What is the primary sector and examples
The first stage of production, examples include agriculture, forestry, mining.
What is the secondary sector and examples
Converts resources from the primary sector into products, examples include car manufacturing, construction
What is the tertiary sector and examples
Comprises businesses that supplies services, examples include education and health care.
What are characteristics of entrepreneurs
Willingness to take risks
Hardworking and committed
Innovative
Organised
What is interest rate
The cost of borrowing money or the reward for saving money, expressed a percentage
What is exchange rate
The price of one currency expressed in terms of another, for example £1 - $1.50
What are the 4 functions of a business
Operations-involves producing a good or service
Marketing-a business will succeed if it understands what it’s customers want and supplies these products
Human Resources-all businesses employ people so they have to be managed
Finance-business depend on money so they have to raise it to function
What is globalisation
The trend for markets to become worldwide in scope
What is a business plan
A document setting out what a business does and what it hopes to achieve in the future
What are the advantages of business planning
It offers opportunities for planners to think analytically about their business using data that has been gathered for this purpose
It can help to persuade stakeholders(such as potential investors)that the business has been thought through and should succeed
It includes targets by which the business’s progress can be monitored. This helps managers to make good-quality decisions at the right times
