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Business - GCSE > S1 - Business in the real world > Flashcards

S1 - Business in the real world Flashcards

1
Q

What is a good ?

A

A physical item that you can touch.

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2
Q

What is a service ?

A

Actions performed by other people to aid the customer.

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3
Q

What are needs ?

A

Things that you can’t live without.

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4
Q

What are wants ?

A

Things you would like to have, but could survive without.

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5
Q

Why might a business be set up ?

A

To better distribute goods (be the middle man), to benefit other people - not-for-profit businesses (charities), or when someone sees a business opportunity they want to fill.

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6
Q

What are the three sectors of the economy ?

A

The primary, secondary and tertiary sector.

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7
Q

What happens in the primary sector ?

A

Produces raw materials - extracted from the ground - quarrying, grown - farming, or collected - fishing.

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8
Q

What happens in the secondary sector ?

A

Manufacture goods - turning raw materials int finished products. Building and construction industries also part of this.

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9
Q

What happens in the tertiary sector ?

A

Provide services, for other businesses or consumers.

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10
Q

What is enterprise ?

A

The activity of identifying new business opportunities, then taking advantage of them. It can involve starting up a new business or helping a pre-existing one.

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11
Q

What is an entrepreneur ?

A

Someone who has an idea for a business and acts upon it - and takes on the risks of enterprise activity.

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12
Q

Why might someone decide to become an entrepreneur ?

A

For financial reasons (profit?), if they see a gap in the market, for want of independence - flexible working hours, to follow an interest or if they are dissatisfied with their current job.

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13
Q

What are some essential qualities of an entrepreneur ?

A

They would need to be: hardworking, organised, innovative and able to take measured risks.

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14
Q

What are the four factors of production ?

A

Land, labour, capital and enterprise.

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15
Q

What is ‘land’ ?

A

Earth’s natural resources: (non-)renewable resources - power, materials from mining, water and animals. Anything that falls under this category are scarce - cant satisfy everyone’s demands.

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16
Q

What is ‘labour’ ?

A

The work done by people who contribute to production process. Different levels education, experience or training affect how valuable people are.

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17
Q

What is ‘capital’ ?

A

The equipment, factories and schools that help in production, capital and land are different as capital has to be made first.

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18
Q

What is ‘enterprise’ ?

A

Entrepreneurs who take risks and create things from the other three factors of production.

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19
Q

What is opportunity cost ?

A

The benefit or thing given up in order to do something else.

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20
Q

What are the main ownership structures ?

A

Sole traders, partnerships and limited companies (private and public).

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21
Q

What are some advantages of being a sole trader ?

A

They’re easy to set up (great for start-up businesses), you get to be your own boss, you decide what happens to any profits.

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22
Q

What are some disadvantages of being a sole trader ?

A

Might have to work long hours and get few holidays, unlimited liability, unincorporated and it can be hard to raise money as banks see sole traders as risky.

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23
Q

What does unincorporated mean ?

A

Business doesn’t have its own legal identity - so if anyone sues the business they’ll sue you personally.

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24
Q

What are partnerships comprised of ?

A

They have between 2 and 20 partners, each having an equal share and say in the business - and they have to sign a deed of partnership outlining specific details.

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25
What are some advantages of being a partnership ?
More owners means more ideas and skills in the business, work shared between more people and more capital can be put into the business alowing it to grow faster.
26
What are some disadvantages of being a partnership ?
Each partner legally responsible for others, unlimited liability, more disagreements between partners and profits are shared so may get relatively little.
27
What are limited companies ?
They're incorporated meaning they have limited liability, it's owned by shareholders - more shares owned the more control over the business, and are more expensive to set up.
28
What is the different between a public and private limited company ?
In a private limited company (Ltd.) shares can only be sold if all shareholders agree, whereas in a public limited company (PLC) shares can be traded on the stock exchange - available to be bought and sold by anyone.
29
Whats are some advantages of an Ltd. ?
They have limited liability, incorporated - continue trading after owner dies, easier to get a loan/mortgage and it's easier to keep control and how people share profits.
30
What are the disadvantages of being an Ltd. ?
More expensive to set up due to legal paperwork, legally obliged to publish its accounts every year (although they don't have to be made public)
31
How is being a PLC advantageous ?
More capital raised than any other business helping to expand and diversify the company, and have limited liability and are incorporated.
32
How is being a PLC disadvantageous ?
Hard to gets lots of shareholders to agree on decisions, easy to buy enough shares to take over the business, accounts have to be made public - allowing competitors to see if they're struggling, and more shareholders means more wanting a share of the profits.
33
What does the legal structure of a business effect ?
Small businesses (sole traders and partnerships) have unlimited liability, while large ones (Ltds or PLCs) have limited liability, and the control - sole traders and Ltds have more than partnerships or PLCs.
34
Can business structures change after a business has been made ?
They can change over time, sole traders may go into a partnership if someone wants to invest for a share of the profits. As they grow they can decide to incorporate their business and may make shares public - most large businesses are public limited companies.
35
What are social enterprises ?
They're a type of not-for-profit organisation that make money by selling products but use profits to benefit society in some way - don't rely heavily on donations and grants.
36
What is charitable not-for-profit organisation ?
They get tax relief, and are able to apply for certain grants, and are funded by mainly these grants and donations - but they can be hard to set up as there are lots of rules.
37
What legal structures can not-for-profit organisations have ?
They can be an unincorporated association - easy to set up but owners have unlimited liability, but bigger organisations tend to be incorporated to have limited liability - they are 'limited by guarantee' meaning some members guarantee they'll pay a fixed amount on behalf of the business if it goes bankrupt.
38
What is the difference between aims and objectives ?
Objectives are more specific than aims, they're measurable steps on the way to an aim - an aim being a wide scale target for the business and objectives are specifically how to achieve this.
39
What are some common business aims ?
Survival, maximising profit, growth, increasing shareholder value, increasing market share, doing what's socially and ethically right, and achieve high customer satisfaction.
40
How can a business grow ?
They can increase the number of employees or products sold or income from sales, and they can grow domestically or internationally.
41
What factors affect what a businesses objectives will be ?
The size of the business, the level of competition they face, and the type of business it is (- legal structure).
42
What external factors would affect how a business changes its objectives ?
It would be because of things such as new legislation, changes in the economy, technological advancements, environmental expectations.
43
How do business objectives change as the business evolves ?
New business would focus on survival, and once it's stable would likely focus on growth and maximising profits, and large ones would focus on international expansion and having the largest market share.
44
How can businesses measure their success ?
They can look back at their objectives after a period of time to see if they've been achieved.
45
What is a stakeholder ?
Any one person or group of people that are affected and have interest in a business.
46
What are dividends ?
Payments that the shareholders get if the company makes a profit - the shares a shareholder owns the higher their dividend will be.
47
What are some examples of important stakeholder groups to most businesses ?
The owners, employees, suppliers, the local community, the governments (via taxes), and customers.
48
Why do stakeholders influence a businesses decisions ?
They need to take into account stakeholders wants and needs in order to survive as a firm.
49
What is the equation for profit ?
profit = revenue - costs
50
What is revenue ?
The overall income earned by a business, revenue = sales × price
51
What kind of costs are there ?
Fixed costs - don't vary with output, and variable costs - dependant on number of sales. (total costs = fixed costs + variable costs)
52
What is average unit cost ?
A calculation of how much each product costs to make, and for a business to be profitable it's prices must be higher than this. (average unit cost = total cost ÷ output)
53
What is a business plan ?
An outline of what a business will do and how it aims to do it.
54
What can having a business plan achieve ?
It forces owners to think carefully about what to do within the business, and can convince financial backers to invest. It can also help realise if a business is a a bad idea in early stages, and if not can help decide on objectives and aims.
55
What sections are commonly found in business plans ?
Executive summary at the beginning then: personal details, mission statement (broad aims), objectives, product description, production details, staffing requirements, and finance.
56
What
Details on the market and competitors, explanation on how a USP will be achieved and a description of marketing strategy using the 4 Ps - all of which supported by market research.
57
What is included in the 'finance' aspect of a business plan ?
HOw much money needed to start up the business, a cashflow forecast and projected profit and loss account and statement of financial position, and ratios to show backers the likely return on their investment.
58
What are some negatives of a business plan ?
Can take up lots of time and money (outweighing the benefits), might be too optimistic so could lead to problems, and sticking to it too rigidly - even in face of unexpected issues - could cause further issues.
59
What are the main factors that influence the location of a business ?
Location of raw materials, labour supply, competition, location of the market and cost.
60
How can the labour supply affect the location ?
Areas of high unemployment would be desirable as wages can be low and there'll be a wide selection of people to choose from and an abundance of workers.
61
How does the competition influence where a business locates ?
Being near competitors could mean it's easy to find skilled labour and there will already be local suppliers, but it could cause reduced sales for them as customers may go to competitors.
62
How does the location of raw materials effect a businesses location ?
If the raw materials required in production nearby it can lower the transport costs.
63
What affect does the location of the market have on a businesses own location ?
Some services locate to where people can easily get to them, some firms pay more transporting the finished product than the raw materials so locating near customers would be cheaper, and for firms that sell products globally setting up production sites in some of these locations would be cheaper as it educes transport tax.
64
How to the general costs of production affect the location of a business ?
Cost of labour - many large firms locate production site in countries where labour is cheaper (India and China), how expensive renting or buying property in some areas is (more expensive places might experience more exposure so higher sales), and sometimes governments give grants or tax breaks for firms that locate in areas of high unemployment - lower total expenditure.
65
What has modern technology achieved in terms of location ?
It means that many businesses can trade over the internet - so they can be more flexible about their location.
66
What are the benefits of being a large firm ?
They can make more products and have more money than small firms, average unit cost falls - due to economies of scale - so have higher profits, but are also then able to charge less so may increase sales and profit - these profits can be reinvested for further expansion.
67
What are economies of scale ?
Purchasing economies of scale and technical economies of scale.
68
What are purchasing economies of scale ?
When a large firm buys its supplies in bulk and so gets them at a cheaper unit price.
69
What are technical economies of scale ?
These occur because a large firm can afford to buy and operate more advanced machinery than smaller firms.
70
What is the law of increased dimensions ?
It means that, for example, a factory 10 times as big will be less than 10 times as expensive.
71
What are diseconomies of scale ?
Areas where growth can also lead to an increase in the average unit costs - bigger firms are harder and more expensive to manage, more complex and more difficult to coordinate production processes, and there're more people so communication takes longer, and people at the bottom of the hierarchy feel unimportant and demotivated so become less productive.
72
What is internal expansion ?
(/organic growth) when a business grows by expanding its own activities.
73
What are the advantages of internal expansion ?
It's relatively inexpensive , and generally means a firm expands by doing what it's already good at so it's less likely to go wrong, and as it grows slowly it's easier to make sure quality doesn't suffer and staff are trained well.
74
What are the disadvantages of internal expansion ?
It can take a long time to achieve growth and some owners don't want to wait this long to start making more money.
75
What are some methods of organic growth ?
E-commerce, opening new stores, and outsourcing.
76
How does e-commerce aid organic growth ?
Lots of people can buy firms product through the internet so business has access to larger market, and it's cheaper than setting up and running a new store, but technology (websites) has to be regularly updated and technical issues can decrease customer satisfaction.
77
How does opening new stores aid organic growth ?
It's fairly low risk - if new stores operate the same as old ones it should be a success and so business can increase sales, but it does mean a lot of extra costs (rent and staff) that need to be payable for the business.
78
How can outsourcing aid organic growth ?
The outsourcing firm may be able to do tasks more quickly, cheaply or to a higher quality than the business could, however it means they lose some control over areas of operations and the outsourcing firm may not prioritise them if they've got other customers, and it could lead to a bad reputation if they have poor standards.
79
What is outsourcing ?
When businesses pay other firms to carry out tasks it could do itself.
80
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Business - GCSE (7 decks)

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