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topic 1 Flashcards

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1
Q

what is an enterprise

A

another name for a business it describes the actions of someone who takes a risk by setting up or investing and running a business

an entrepreneur is someone who takes those risks

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2
Q

reasons for starting a business

A

making a profit

skills & interest

investing money

being your own boss

work- life balance

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3
Q

what are the aims of start up entrepreneurs vs established entrepreneurs

A

start up are generally more money focused as they need to survive

established can do charity related things as well

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4
Q

business definition

A

an organization that exists to produce goods and services on a commercial basis to customers

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5
Q

what are needs

A

goods and services that we have to consume if we are to live - e. g warmth , shelter, food

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6
Q

what are wants

A

goods and services that we would like but do not have to consume in order to survive - e.g holidays & smart phones

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7
Q

what is an opportunity cost

A

measuring the cost of what you purchase in terms of the alternative that you have given up e.g going to a concert

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8
Q

what are objectives of social enterprises

A
  • protect the environment
  • donate to charities
  • making an impact rather than profit
  • provide job opportunities for unemployed youth
  • ethical business practice
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9
Q

what are the production sectors

A

primary
secondary
tertiary

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10
Q

what is primary sector

A

involves extracting raw materials from natural environment e.g mining , farming, fishing

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11
Q

what is secondary sector

A

transforming raw materials into finished products , e.g steel , manaufacturing, clothing , construction

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12
Q

tertiary sector

A

providing services , e.g cleaning , retail shops

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13
Q

changes in business environment

A 
legislation (laws)
economic
social
environmental 
political
technological
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14
Q

what is a sole trader

A

individuals owning business on his/ her own. they can also employ people but don’t share ownership of business , e.g hairdresser , gardeners, plumbers and electrician

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15
Q

disadvantage of being a sole trader

A

all money is at risk if you fail, may not have all skills you need , making all decisions can be stressful , can be difficult to raise finance - heavy workload

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16
Q

what is a private limited company

A

can raise funds from investors , such as friends & family but not from general public e.g river island , wilkinson and clark’s

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17
Q

what is unlimited liability

A

when it comes to money owed by a business , the owners have to use their own personal funds to pay for any debts (by selling homes or other assets ) if there is not enough money in the business to do so they are liable for any debts that the business incurs

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18
Q

what is liquidation

A

turning assets into cash

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19
Q

advantages of partnership

A
  • simple to form business
  • minimal paperwork once partnership agreed and set up
  • partners provide specialist knowledge and skills
  • jobs can be shared
  • greater potential to raise finance
  • any losses will be shared
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20
Q

disadvantages of partnership

A
  • unlimited liability
  • partners hv to live with decisions of others
  • decision making takes longer
  • harder today raise finance than a company
  • profit has to be shared
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21
Q

advantages of a private limited company

A

limited liability protects personal wealth of shareholders

easier to raise finance as can sell shares

stable form of structure - company continues to exist even when shareholders change

original owners are likely to retain control

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22
Q

disadvantages of private limited company

A

shareholders have to agree abojt how profits are distributed

finance limited to ‘friends and family ‘

less privacy - public disclosure of company information but not as extreme as PLC

directors legal duties are stricter

greater administrative costs then setting up as a sole trader or partnership

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23
Q

what is a public limited companies

A

most of largest business in country e.g BP, boots and barclays

PLC are complicated & expensive to set up but can raise large sums of money through lifting shares on stock exchange

trading shares can make company vulnerable to possible takeover

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24
Q

advantages of public limited companies

A
  • limited liability protects personal wealth of shareholders

can raise large sums of finance via the stock exchange which is permanently invested

stable form of structure - business contributes to exist even when shareholders change

form is more prestigious

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25
Q

disadvantages of public limited company

A

shareholders hv to agree about profit distribution

greater administrative costs

finance can be limited by stock market valuation of company

public can see company information and accounts

risk of company being taken over

separation of ownership and control

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26
Q

differences between PLC and LTD

A

LTD shares sold only to family and friends

PLC public share holders

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27
Q

profit maximization

A

profit is main objective for most business this is the reward to entrepreneur for their hard work and risks undertaken

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28
Q

market / share sales maximization

A

some business will be more concerned with increasing market share or becoming market leader

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29
Q

growth

A

not all business want to grow but most do, this means that they can increase their profits and value of business

30
Q

social / ethical responsibilities

A

increasingly businesses are aware of their respsonsibilities to the society in which they operate , related to correct ethical behavuoir

31
Q

customer satisfaction

A

some businesses pride themselves on providing a quality service of selling quality products

32
Q

shareholder value

A

a company will be interested in how much their dividend payment will be or share the price

33
Q

what is purpose of setting business objectives

A

direction - clear objections allow to decide on what direction it takes

focus for employees- follow business in objections

allows planning- clear objectives allow for consistent planning

measurement of success- can then connect on change business strategy if it’s not working

34
Q

objective of size

A

over half of new businesses fail with inv five years and many new do not survive much beyond launch. customer satisfaction or being ethical could be an objective to help complete

35
Q

level of competition

A

if a business doesn’t have much competition it may focus on profit maximization whereas if there is a lot of competition a focus on customer satisfaction on maintaining market share will be important

36
Q

type of business objective

A

not- for - profit organization may focus on social or ethical objectives

a sole trader may focus on survival rather than growth

37
Q

what is a stakeholder

A

any individual or organization who has a vested interest in the activities and decision making of a business

38
Q

shareholders or owners objective

A

return on investment & profits and dividend , success and growth of business proper running of business

39
Q

managers & employees objectives

A

rewards , including basic pay and other financial intentions, job security and working conditions , promoting opportunities and job satisfaction and status moviation, roles and responsibility

40
Q

customer objectives

A

value for money, product quality and customer service

41
Q

suppliers objectives

A

continued profitable trade with the business, financial stability

42
Q

banks & other finance providers objectives

A

profitability and cash flows of the business, growth in profits and value of business

43
Q

government objectives

A

correct collection and payment of taxes, helping businesses to grow- creating jobs , compliance with business legislation

44
Q

local community objectives

A

success of business- creating and retaining jobs, compliance with local laws and regulations (e.g noise pollution )

45
Q

what is trade union

A

group that looks afyer rights of workers

46
Q

factors affecting location decisions

A

proximity to market : need to be located near particular center of population

competitions : where there is a gap in the market there is no competitor and might be a good reason to locate

raw materials: more important for primary sector jobs and manaufacturing

costs: having premises means a business has to pay rates, insurance and many other ongoing costs as well as rental purchase costs. costs of premises and labor varies in diff locations

labor : intensive businesses often look to locate in areas of traditionally low wages or higher unemployment

47
Q

what does a business plan have

A

describes business

objectives and aim

strategies

markets

financial forecasts

48
Q

why do we need a buesinss plan

A 
organization
more ideas
direction
contingency plan 
more profit potentially
investors
monitor how you are doing
provides a focus
49
Q

what are costs

A

costs are amounts that a business incurs in order to make goods and or provide services

50
Q

what are variable costs

A

costs which change as output varies - lower risk for a start up : no sales = no variable costs

51
Q

fixed costs

A

costs which do not change when output varies - fixed costs increase risk of a start up

52
Q

what are semi-fixed costs

A

some costs are fixed in short term but chancd once a certain level of output is reached

53
Q

equation for total costs

A

total costs = fixed costs + variable costs

54
Q

what is internal growth

A 
franchising opening new business 
introducing new product ranges
opening new stores
outsourcing - when company puts someone to work for them 
e commerce
55
Q

external growth

A

merger (2 complained joint to make 1)

takeover / acquisition

56
Q

internal growth definition

A

also known as organic growth and achieved by selling more of its products

57
Q

external growth definition

A

also known as integration it is achieved by joining with another business

58
Q

what is horizontal integration

A

a business joins a business at the same stage stage of production process

59
Q

what is vertical integration

A

a business joins with its suppliers (backward and vertical ) or it distributors

60
Q

what is conglomerate integration

A

a business joins a business in a different market

61
Q

factors affecting method of growth

A 
size of business
nature of product
position in the market 
financial position of business
regulation
62
Q

what is streamlining

A

look at business where jobs are duplicated , they get rid of one. how they get round that increase of employees

63
Q

adaptations of growth

A 
economies of scale
access to more retailers / outlets
greater brand awareness
less vulnerable to take over
greater range of rewards for staff
diversify/ spread the risk
64
Q

disadvantages of growth

A 
diseconomies of scale
slower decision making
communication more difficult
employees may become demotivated
co ordination can be more difficult
increases costs
65
Q

what is an opportunity cost

A

cost of doing one tbing VS another

66
Q

how are economies of scale achieved

A

when cost per unit falls as production increases

67
Q

how do diseconomies of scale occur

A

when cost per unit increases as the scale of production increases

68
Q

why do ineffiencies arise as business gets larger

A

control - problems in monitoring productivity and work quality / increasing wastage of resources - workers may get away with low production

communication - more difficult in a big business , as organization , structure becomes more complex and chains of command become larger. this can make decision making slower and communicate innacurately and workers become demotivated

69
Q

avergae cost per unit equation

A

total costs divided by output

70
Q

markup equation

A

avergae costs per unit X 5%

business gcse (1 decks)

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