Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

business > Section 1 - understanding business activities (Chap 1 - 5) > Flashcards

Section 1 - understanding business activities (Chap 1 - 5) Flashcards

1
Q

Why do businesses exist

A

-fame
-profit
-trade/ exchange (buy & sell)
-customer satisfaction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Define economic problem

A

-people wants are unlimited
-resources are limited
-causes scarcity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Define value for money

A

-product/ service is worth the money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Define needs

A

-basic things needed for survival

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Define wants

A

-things not needed for survival but for satisfaction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Define demand

A

-the need to satisfy wants and need

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Define scarcity

A

-lack of sufficient products to fulfil the total wants of the population

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Define opportunity cost

A

-next best alternative given up by choosing another option
-sacrifice something
-try to make as low as possible

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

2 types of outputs of business

A

-physical goods
-service

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How do businesses function

A

-input
-transformation process
-output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What does transformation process need

A

-factors of production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what are factors of production

A

-resources needed to produce goods
-land = natural resources
-Labor = people
-Capital = finance, equipment
-Enterprise = people who run the business (Board of Directors)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What do the Broad of Directors do

A

-controls business
-decide on major policies
-selects Chief executive officer (CEO)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what does Chief executive officer do (CEO)

A

-manage day-to-day business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Define specialisaiton

A

-people & businesses concentrate on what they are best at
-causes division of labor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

define businesses

A

-combination of factors of production to make goods/ services which satisfy customers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

define division of labor

A

-when production process is split into diff tasks & each worker performs the task
-form of specialisation
-increases production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

advantages of division of labor

A

-increase efficiency & output
-less time wasted
-quicker and cheaper to train workers (less skills taught)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

disadvantages of division of labor

A

-workers get bored = efficiency might fail
-productions stops if a worker is absent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

what does the transformation process do

A

add value to input

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

define adding value

A

-difference btw selling price of a product & cost it’s bought in (materials & componenets)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

diff. economic sectors

A

-Primary
-Secondary
-Tertiary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Define primary sector

A

-industry that extracts natural resources (raw materials)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

define secondary sector

A

-industry that manufactures raw materials into final products

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

define tertiary sector

A

-industry that provides service and distribution of goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

define industralisation

A

-moving from primary sector to secondary sector

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

define deindustralisation

A

-decline in primary & secondary sector

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

diff. ownership

A

-Public sector
-Private sector

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Public sector:
-who owns
-objective
-funds

A

-gov.
-provide service to people
-taxes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Private sector:
-who owns
-objective
-funds

A

-individual owned
-profit
-savings/ loans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

diff. economic systems

A

-Planned economy
-Mixed economy
-Free market economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Define planned eocnomy

A

-economy is mostly led by public sector
-eg. health, electricity supply, education
-usually associated with communism

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

define mixed economy

A

-economy is led by public and pvt. sector

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

define free market economy

A

-economy is led mostly by pvt. sectors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

define capital

A

money invested in business by owners

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

define enterprise

A

-actions of a person who takes initiative by taking a risk to start the business
-the business / company itself

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

define entrepreneur

A

-person who organizes, operates & takes risks for business opportunities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

disadvantages of being an entrepreneur

A

-risk
-capital
-lack of knowledge
-opportunity cost form being a worker for another business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

benefits of being an entrepreneur

A

-independence for choice
-can implement ideas on business
-may be famous
-may be higher pay than other workers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

diff. btw inventor and entrepreneur

A

-inventor: make product
-entrepreneur: market the product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Define business plan

A

-doc containing important details of business and objectives created by entrepreneur

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Define business idea

A

-what products/ service business will provide

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

What does business plan contain

A

-business description & objectives
-details of product/ services
-target market
revenue forecast
cash flow forecast
-finance
-location & distribution
-organizational structure
-business strategy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

how does gov. help support starting businesses

A

-give loans
-grants businesses to train employees
-organizing training for entrepreneurs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Factors on size of business

A

-no. worker
-annual sales ( revenue/ turnover)
-capital employed
-value of output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

How is no. of employees measured

A

-capital intensive = machinery & tech. more than worker
-labor intensive = more workers than machinery & tech.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

How is annual sales measured

A
  • Quantity sold x selling price
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

How is capital employed measured

A

-money used in business
(investments)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

How is value of output measured

A

-how much produced converted into sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

what does profit measure

A

-efficiency
-not business size

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

define turnover

A

total value of sales over a period of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

define capital employed

A

total money used in business

53
Q

4 diff business sizes

A

-micro
-small
-medium
-big

54
Q

EU standard of micro:
-no. workers
-annual sales
-capital employed

A

-less than 10
-up to 2 mil
-2 mil

55
Q

EU standard of small:
-no. workers
-annual sales
-capital employed

A

-10 - 15
-btw 2- 10 mil
-2 - 10 mil

56
Q

EU standard of medium:
-no. workers
-annual sales
-capital employed

A

-51 - 250
-10 - 50 mil
-10 - 34 mil

57
Q

EU standard of big:
-no. workers
-annual sales
-capital employed

A

-more then 250
-more then 50 mil
-more than 34 mil

58
Q

ways for business growth

A

-internal
-external (vertical, horizontal & coagulometer integration)

59
Q

define internal business growth

A

-business expands its existing operations

60
Q

Ways for internal growth

A

-more products/ services
-expand branches

61
Q

define external business growth (integration)

A

-business expands by taking over or merging with another business

62
Q

define merging business

A

-2 businesses are combined mutually

63
Q

define take over (acquisition)

A

-a business is bought over to be part of the business which bought it

64
Q

types of integration

A

-horizontal
-vertical
-conglomerate (diversification)

65
Q

define horizontal integration

A

-2 similar businesses from the same industry merge

66
Q

Advantages of horizontal integration

A

-reduce competition
-bigger power

67
Q

Disadvantages of horizontal integration

A

-people lose jobs

68
Q

2 type of vertical integraiton

A

-vertical backward
-vertical forward

69
Q

define vertical integration

A

-business mergers with a business in same industry but different production stage

70
Q

Advantages of vertical integration

A

-better control of materials
-cheaper
-assure of supply

71
Q

advantages of vertical backward integration

A

-better distribution of products
-cheaper

72
Q

Define conglomerate integration (diversification)

A

-a businesses merges with a business from a diff industry

73
Q

Advantages of conglomerate integration

A

-diverse customers
-if 1 business fails, still have another

74
Q

Disadvantages of growth

A

-should be slow
-external is more expensive than internal
-risky
-management
-finance

75
Q

why do business usually fail

A

-people change what they like
-financial issues
-lack management skills
-business expands too quickly

76
Q

types of business org in pvt. sector

A

-sole trader
-partnership
-Pvt. Ltd company
-Pub. Ltd company

77
Q

what do businesses in pvt. sector need to operate

A

-license which needs to be renewed every year by paying a fee
-needs a legal structure recognised by gov.

78
Q

define sole trader

A

-business owned by 1 person
-simplest form of business
-usually small

79
Q

advantages of sole trader

A

-you’re your own boss
-keep all money
-flexible work time
-less capital = less money to start business
-make all decisions

80
Q

disadvantages of sole trader

A

-unlimited liability
-lack of continuity

81
Q

define unlimited liability

A

-person is liable for company’s debts

82
Q

define limited liability

A

-shareholder of company is liable for debt depending of how much they invested in business

83
Q

define partnership

A

-business owned by 2 or more owners
-usually 2 - 20

84
Q

advantages of partnership

A

-more capital to start business
-unlimited liability but debt is shared
-share work - specialisation - more efficient
-no need to work sometimes

85
Q

disadvantages of partnership

A

-unlimited liability
-slow to decision making
-lack of continuity
-disagreements = lead to business fail
-share profit
-if one dies, partnership ends unless LLP

86
Q

define unincorporated business

A

-business with no legal identity
-sole traders & partnerships

87
Q

define incorporated business

A
88
Q

define LLP

A

-Limited liability partnerships
-Partners have limited liability but shares cannot be bought & sold & still exist after the death of one partner

89
Q

define Deed of partnership

A

-a legal written doc that contains agreements between partners to prevent future dispute

90
Q

define Ltd company

A

-businesses that have a legal identity & owned by majority shareholder (51%)
-incorporated business
-continue existing if 1 owner dies
-company accounts are separated form owner’s accounts
-Pvt or Pub

91
Q

define shareholder

A

-owners of a limited company who buy shares

92
Q

define shares

A

represent part- ownership of company

93
Q

how does shares of businesses work

A

-each businesses share is valued depending on how well they’re doing
-shareholders buy shares
-can sell shares for profit
-shares are traded trough stock exchange
-when business make profit, it’s divided among shareholders depending on no. shares they have

94
Q

Why buy shares

A

-get divided profit
-share prices can change

95
Q

what does a legal identity do for Ltd comapny

A

-company is recognised as a person
-can buy things in its name
-can be sued

96
Q

diff btw Pvt and Pub. Ltd companny

A

-Pvt. - limited to who can buy shares
-Pub. - anyone can buy shares

97
Q

benefits of pvt. Ltd company

A

-capital from shares
-limited liability form shareholders
-separate legal identity
-continuity even after owner death

98
Q

disadvantages of pub ltd company

A
99
Q

disadvantages of pvt ltd company

A

-cannot sell shares to public
-legal formalities
-accounts are available for public to see
-not easy to transfer shares

100
Q

benefits of pub. Ltd company

A

-can sell shares to public
-rapid expansion is possible
-limited liability
-continuity even after owner death

101
Q

disadvantages of pub ltd company

A

-legal formalities
-divorce between ownership & control
-discloses accounts & info

102
Q

define Annual General Meeting (AGM)

A

-a mandatory annual meeting where all shareholders of Pub. Ltd. company are invited to vote on next Board of Directors

103
Q

define dividends

A

-division of profits among shareholder for investing in company

104
Q

2 Business forms

A

-franchise
-joint venture

105
Q

define franchise

A

-business that uses brand names and logo of an existing successful business
-needs to buy license from franchiser to operate

106
Q

advantages of franchise

A

-guarantees success
-franchisor pays for advertising
-all supplies from franchisor
-staff training & management provided by franchisor

107
Q

disadvantages of franchise

A

-dependent on franchisor
-no control over business
-have to pay franchise fee
-share profits

108
Q

define public corporation

A

-business owned & controlled by gov. to provide service to people in a non- profit basis in public sector

109
Q

advantages of public corporation

A

-can nationalize important businesses failing
-provides public services

110
Q

disadvantages of public corporation

A

-no pvt. shareholder to insist efficiency
-no close competition = lack to increase efficiency/ consumer choices
-gov. control business for political reasons

111
Q

types of businesses in pub & pvt sectors

A

pvt:
-sole trader
-partnership
-pvt/ pub limited company
-franchise
-joint venture
pub:
-public corporation

112
Q

disadvantages of joint venture

A

-share of profits
-disagreements over important decisions
-they have different ways of running business

113
Q

advantages of joint venture

A

-share of cost
-local knowledge if venture is based in country
-shares risks

114
Q

define joint venture

A

-2 or more business start a new project tgt & share risks, capital & profit

115
Q

define business objective

A

-aims the business works towards

116
Q

what does a business objective do

A

-give a sense of purpose
-a target
for:
-profit maximization
-survival of business
-growth
-increase shareholder’s return
-increase market share
-service to community

117
Q

define profit

A

revenue is more than total cost

118
Q

define revenue

A

total income of business

119
Q

define profit maximization

A

-to get max profits

120
Q

define business survival

A

-make sure business doesn’t collapse from:
-competition
-new businesses
-recession = sales go down

121
Q

Define market share

A

what % of market sales is held by the business

122
Q

how to find market share

A

sales of business/ sales of entire industry x 100%

123
Q

define stakeholder

A

-people who are affected by business decisions
-internal:
owners, workers, managers
-External:
customers, gov., community, banks

124
Q

what must businesses try to make sure about stakeholders

A

-try to make them all happy, if not the most important ones = careful in decision making

125
Q

define social enterprise

A

-social objectives & aim for profit

126
Q

types of social enterprises

A

-social - provide jobs
-environmental - protect environment
-financial - make profit to invest in social enterprise

127
Q

note: business objectives change over time

A
128
Q

business objectives of pvt & pub sectors

A

pvt:
-profit
-growth
-increase shareholder’s return
-increase market share
-survival
-service to community
pub:
-stakeholders must be happy

business (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions