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topic 1- what is a business Flashcards

1
Q

what are business objectives?

A

they are quantifiable targets or goals to be achieved within a given time frame.

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2
Q

What are the main 6 business objectives?

A

.growth
.survival
.profit
.cash flow
. social
.ethical

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3
Q

why is profit important?

A

to achieve sales revenue that is higher than total costs

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4
Q

why is growth important?

A

— to increase in size either by value of sales or volume of sales
— may be done organically (opening new stores) or externally (taking over businesses)

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5
Q

why is survival important?

A

— to continue to exist as a business
— may be the primary objective of a start up business

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6
Q

why is cash flow important?

A

— to make sure sufficient cash is available to fund day to day expenses
— it is the flow of cash into and out of a business over a period of time

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7
Q

why is being social important?

A

— to behave in a way which benefits society
— businesses could create employment, support the local community or improve educational standards

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8
Q

why is being ethical important?

A

— to behave in a way which is considered morally correct
— this could include treating stakeholders fairly or reducing negative impacts to the environment

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9
Q

what are aims ?

A

long term goals to be acheived

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10
Q

what are objectives?

A

short term targets that must be met in order to acheive aims

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11
Q

what is a mission statement?

A

a brief written statement of the purpose of a company or organisation

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12
Q

why do businesses set objectives?

A

.common sense of purpose
.motivate employees
.create reward systems
.measure and review performance
.inform decisions to improve performance

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13
Q

what is the formula for profit?

A

revenue - total costs

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14
Q

what is revenue?

A

the money coming in from the sale of goods and services

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15
Q

what is total costs?

A

the money going out to provide for and generate those sales

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16
Q

how do you calculate you revenue?

A

selling price x quantity sold

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17
Q

what’s are fixed costs?

A

they stay the same regardless of output e.g. rent and managers salaries

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18
Q

what are variable costs?

A

they change in relation to the no of items produced

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19
Q

what are total costs?

A

they are total costs + variable costs

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20
Q

what are 4 different forms of business?

A

. sole trader
. private/public limited companies
. private/public sector organisations
. non-profit organisations

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21
Q

what is a sole trader?

A

An individual who runs their own business.

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22
Q

advantages of being a sole trader?

A

.cheap and easy to set up
.all profits go to the sole trader
.autonomy in decision making
.financial records remain private

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23
Q

disadvantages of being a sole trader?

A

.unlimited liability
.limited capital for investment
.difficult to cover when ill
.little specialist skills e.g.owner is a ‘jack of all trades’

24
Q

what are limited companies?

A

they exist at their own right and owners and the company are separate legal entities therefore companies finances are separate form owners personal finances.

25
who are the owners of limited companies?
shareholders- they have limited liability and not responsible for companys debts
26
how can shareholders lose their money?
they can only lose money they have invested in the business in the form of shares
27
what are private limited companies?
they have Ltd. after their name
28
who owns private limited companies?
owned by shareholders who are known to the company e.g. family and friends. they can only sell shares onto other shareholders i.e. cannot sell them openly on a stock exchange.
29
what are advantages to a private limited company?
.limited liability .separate legal identity .access to more capital .more privacy than plc .more flexible than plc
30
what are disadvantages to a private limited company?
.unable to sell shares to the public .some loss of control as shareholders have voting rights .more complicated to set up due to complicated legal requirements
31
what are public limited companies?
have plc. after the name and sales can be sold to the public via a stock exchange.
32
what are the advantages of a public limited company?
.limited liability .separate legal identity .more capital can be raised through the sale of shares
33
what are disadvantages of a public limited company?
.lack of privacy- financial performance is available for all to view .some loss of control as shareholders have voting rights .risk of hostile takeovers
34
what are the 4 issues with different types of business forms?
.unlimited and limited liability .ordinary share capital .dividends .market capitalisation
35
what is ordinary share capital?
an external source of finance available to companies
36
what are dividends?
a percentage of profit paid to shareholders as a reward for their investment
37
what is market capitalisation?
number of shares x market price the value of all the shares issued by a plc
38
what are shareholders?
investors who are part owners of a company, their liability is limited to the amount invested and promised and they receive dividends in return for their investments
39
why should shareholders invest?
long term gains- increase in share price short term gains- receipt of dividends
40
5 influences on share price?
.national economy .global economy .company performance .investor confidence .political stability
41
what do share price changes show?
-indication of managers performance -can effect ability to raise finance from other sources -will be watched carefully by competitors and other businesses -affects consumer confidence in the economy as a whole
42
what is a private sector organisation?
sector of the economy that is owned and controlled by individuals or group rather than the government
43
examples of private sector organisations?
.sole traders .private limited companies .public limited companies
44
what is a public sector organisation?
sector of the economy tat is owned and controlled by the government rather than individuals or group of individuals
45
examples of public sector organisations?
.state education .Nhs .police, army, navy and air force
46
what are non- profit organisations?
do not have the main objective of profit, and may have an objective to do good for society and any surplus made is ploughed back into achieving that goal.
47
examples of non profit organisations?
.social enterprises .charities
48
what are mutals?
organisations that operate for the well being of their members
49
What are costs?
are the value paid or to be paid for the acquisition of goods and services by businesses
50
What is demand?
The amount customers are willing and able to buy at a set price at any given point in time
51
What is competition ?
the number and relative power of firms trading in the same or similar markets
52
What are market conditions?
the defining characteristics of the market e.g. trends, level of sales
53
What are incomes?
the earnings of consumers that will directly influence sending power
54
What are interest rates?
the cost of borrowing or the reward for saving
55
What are demographic factors?
the statistical characteristics of the population
56
What are environmental issues and fair trade?
the variety of factors that impact on the environment during to the operations of businesses

business (7 decks)

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