Topic 1 Flashcards
What is a variable cost?
Variable costs change depending on the output
What is the stock market?
The stock market is a place where anyone over the age of 18 can buy shares in a company
What is a fixed cost?
A fixed cost is a cost that stays the same regardless of the output
What is a vertical takeover?
When a company takes over another business in the same department but different stages
e.g. Tesco buying a farm
Define partnership
A business with 2-20 people with unlimited liability
What is a stake holder?
Someone who has an interest in the business
What’s the difference between an aim and objective?
Aim- somethings general you want to achieve like growth
Objective- a specific goal you want to achieve
What are some aims of a business?
-profit
-growth
-market share
Define PLC (public limited company)
PLC is a company that is on the stock market and has limited liability
4 main characteristics of an entrepreneur
- confident
- creative
- risk taker
- determined
What does a business plan show?
- future ideas for a business
-marketing research
-human research
-capital
What’s profit?
Profit= revenue- total cost
What is a horizontal takeover?
When a business takes over another company in the same field
E.g. Tesco taking over Aldi
Define LTD (private limited company)
A company with a minimum of 2 people who have limited liability. And only friends and family can buy shares
Define a sole trader
A business owned by 1 person with unlimited liability
What’s the difference between limited and unlimited liability?
Limited liability- you can only loose your investment
Unlimited liability- you can loose all of your assets
Two advantages of a PLC
-limited liability
-banks are more willing to lend money
-on the stock market
Two disadvantages of a PLC
-expensive to go on the stock market
-give information about your business to the government
Two advantages of a partnership
-smaller
-easier to run
Two disadvantages of a partnership
-unlimited liability
-partners may have conflict
Define Entrepreneur
A person who sets up a business or businesses, taking on the financial risks in the hope of profit
What is a business plan? (BP)
A written document that’s describes your business
Why do Entrepreneurs start businesses?
-profit
-freedom
-passion/ hobby
-be their own boss
What’s is the difference between goods and services?
Goods- physical item that you can touch
Service- cannot physically touch (intangible)
What are two advantages of an LTD
-limited liability
-work with friends and family (they can buy shares)
What are two disadvantages of an LTD?
-might fall out with owners
-can’t sell shares to the public
What is an internal and external stakeholder?
Internal- someone inside the company e.g. employees, manager
External- someone outside the company e.g. customers, suppliers
What is the purpose of a business?
To provide goods and services that customers want and to profit
Why are business plans produced?
- helps a business succeed
- reducing risk of failure
- identifying markets
- helps with obtaining finance
What does the term “merger” mean
When 2 businesses combine
What does the term “takeover” mean
When a business buy out another business
What are 2 examples of external growth
-A company buying another company
-A company merging with another company
What are the positives of external growth?
-quicker
-expertise shared
-mix of customers
What are the negatives of external growth?
-high risk
-might upset stakeholders
What are some positives of internal growth
-low risk
-cheap
-keep stakeholders happy
What are some negatives of internal growth?
-slow
