TMA1 Flashcards
What are the factors of production?
Land(oil,…)
Labour(workers,…)
Capital(iPhone,…)
Enterprise(the idea for a business)
What are the sectors of industry?
Primary sector, secondary sector, tertiary sector
What is the primary sector?
if a business grows or extracts a product from the ground. e.g. farmers
What is the secondary sector?
These are business’ who manufacture products e.g. glassmakers
What is the tertiary sector?
These are businesses who provide a service e.g. shops, banks
What are the sectors of the economy?
Private
The Third Sector
Public
What is a private organisation?
An organisation with a profit motive
What is the third sector?
Organisations which are not for profit
What is a public organisation?
Organisations that are funded by the ‘public purse’
What are some of the characteristics of an entrepreneur?
Identifies new business ideas and DEVELOPS the idea
Take the RISK to lose all or part of the investment
Combine factors of production
Hand out strategic and tactical decisions
What is a sole trader?
-Someone who is owned and controlled by themselves.
-All of their profits go to them alone.
-Their own boss, therefore they are responsible for buying stock and paying bills
What are limited liability companies?
They are companies owned by shareholders and controlled by the board of directors
What is a franchise?
A partnership between more than one company
What do the roles of business within society involve?
They involve taking RESOURCES and using them to produce GOODS and SERVICES that peoples use to satisfy their NEEDS and WANTS
Why is customer satisfaction important for a business?
It makes customers return to buy more things, and encourages the customers to spread the shops name and give it a better reputation which increases the business’s sales and profit
What are the advantages of a partnership?
-They can bring in different areas of expertise,
-More finance is available,
-Workload can be shared,
-Easier to raise finance from lenders.
What are the disadvantages of a partnership?
-Partners have unlimited liability
-Profits have to be shared between partners
-Partners may disagree
-If one partner leaves or dies, a new Partnership Agreement has to be set up
How are shares traded in a private limited company?
They are not traded publicly, instead sold to either family or friends
What do private limited company’s need before selling shares?
The permission of the shareholders
How many shareholders can a private limited company have?
There must be a minimum of 1 shareholder and a maximum of 50 shareholders
What does a private limited company need to produce?
It must produce a Memorandum of Association stating the responsibilities of directors and rights of shareholders.
What is a Private Limited Company?
It is a company which is owned by shareholders and controlled by the board of directors
What is a need?
A need is something that is essential to our survival
What is a want?
A want is something that we desire
What is the capital factor?
It is a product which is man made
What is the land factor?
The natural resources use to create a product
What is the Labour factor?
It is the workers which do the jobs, eg. Plumbers, engineers,
What is the enterprise factor?
It is the idea for a business
what are durable goods?
Durable goods are goods that can be used more than once such as mobile phones, fridges/freezers and bicycles.
what are non-durable goods?
Non-durable goods are goods that can only be used once or that only last for a short period of time such as a piece of cake, and a single journey bus ticket.
why may someone decide to start up their own business?
-to make money;
-they have been made redundant and see it as an alternative option;
-they have spotted a gap in the market, e.g. they may have noticed there is demand for a service in the local area such as cleaning;
-they wish to pursue a hobby/interest, e.g. someone may enjoy baking and decide to make a business out of it;
-to be their own boss - some people prefer doing their own thing rather than being told what to do.
what are the advantages of being a sole trader?
-it is a relatively easy type of business to set up as it does not involve completing complicated legal documents;
-owner does not have to discuss or compromise on decisions meaning they can be made quickly;
-owner gets to keep all profit made to themselves.
what are the disadvantages of being a sole trader?
-owner has no one to consult or share ideas with which can make running a sole trader stressful;
-owner will find it difficult to take time off for holidays or if they are sick;
-owner has unlimited liability.
what are the advantages of a partnership?
-different partners can bring different skills and experience to the business;
-workload and decision-making can be shared between partners;
-larger amounts of finance can be raised compared to a sole trader.
what are the disadvantages of a partnership?
-disagreements and arguments can occur when partners don’t agree on a decision;
-profits have to be shared between partners;
-partners have unlimited liability.
what are the advantages of Private Limited Companies (LTD)?
-by selling shares - known as a share issue - the business can quickly raise a large amount of finance;
-control of the company cannot be lost to outsiders;
-shareholders have limited liability.
what are the disadvantages of Private Limited Companies (LTD)?
-setting up a private limited company is a much more lengthy and legally complicated process than the other types of private sector businesses;
-annual accounts must be produced and shared publicly;
-profits have to be shared between shareholders.
what are social enterprises?
businesses which operate very much like a private sector business except that all profit that is made by a social enterprise is invested into good causes.
what are the benefits to operating a social enterprise?
-they help a social or environmental cause;
-they can apply for grants and funding only available to social enterprises;
-helping a worthy cause will give the organisation a good image which will attract more customers;
-they will find it easier to attract high quality staff who want to work for an organisation and make a difference to society;
-they might be able to charge a higher price for their products as customers will be willing to pay more if they know the money raised is helping a good cause.
what are the business objectives of private sector?
-survival
-profit
-sales maximisation
-customer satisfaction
-market share
-corporate social responsibility
-enterprise and innovation
describe the ‘survival’ business objective: (private sector)
The first objective of all organisations will be simply to survive. Survival means to keep the business open and trading.
describe the ‘profit’ business objective: (private sector)
Most private sector businesses will have the primary objective of making a profit. Making a profit is essential for the long-term survival of the business, but it is also one of the rewards the owner receives for starting and running the business.
describe the ‘sales maximisation’ business objective: (private sector)
Sales maximisation is where the business aims to sell as many goods and services as it possibly can. Common strategies used by businesses to achieve sales maximisation are through increased advertising and promotional activities, and reducing the price of the goods and services.
describe the ‘customer satisfaction’ business objective: (private sector)
The objective of customer satisfaction is when an organisation aims to treat its customers well by providing excellent customer service and to make them happy with their buying experience from the business.
describe the ‘market share’ business objective: (private sector)
Market share is the number of customers in the market who buy from a business, an organisation might set the objective of increasing market share. This means increasing the number of customers in the market who buy from them.
describe the ‘corporate social responsibilty’ business objective: (private sector)
Corporate social responsibility (CSR) is when the business aims to act in ways which are beneficial to the environment, their staff or the communities in which they operate
describe the ‘enterprise and innovation’ business objective: (private sector)
This objective is about the business aiming to continue coming up with new ideas for products or making improvements to existing ones. This is important in keeping up with changing customer tastes and demands; a business needs to be as responsive to these as possible
what objectives will Government organisations in the public sector have?
-provide vital services to the public such as healthcare and education;
-make best use of the funds it has been allocated by the government;
-stay within an allocated budget;
-continually aim to improve the quality of the services offered;
-cut costs and reduce spending where possible;
-corporate social responsibility
what objectives will organisations in the third sector have?
-help their specified cause;
-raise as much in funding and donations as possible to help their cause;
-raise and increase awareness of their cause;
-increase the number of volunteers helping them;
-provide a service to those in need;
-survive and be able to continue to help their cause;
-continually aim to improve the quality of the services offered;
-corporate social responsibility
what are the benefits of excellent customer service?
-image and reputation will improve, which is likely to attract more new customers to the business;
-the business will be able to charge a higher price for its products and services;
-happy customers will recommend the business to their family and friends as well as posting positive reviews online;
-fewer unhappy customers will result in fewer complaints;
-the business will experience an increase in sales and profits.
-Customers will become loyal to the business
