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business > topic 1- what is a business > Flashcards

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
Q

who are the owners of limited companies?

A

shareholders- they have limited liability and not responsible for companys debts

26
Q

how can shareholders lose their money?

A

they can only lose money they have invested in the business in the form of shares

27
Q

what are private limited companies?

A

they have Ltd. after their name

28
Q

who owns private limited companies?

A

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
Q

what are advantages to a private limited company?

A

.limited liability
.separate legal identity
.access to more capital
.more privacy than plc
.more flexible than plc

30
Q

what are disadvantages to a private limited company?

A

.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
Q

what are public limited companies?

A

have plc. after the name and sales can be sold to the public via a stock exchange.

32
Q

what are the advantages of a public limited company?

A

.limited liability
.separate legal identity
.more capital can be raised through the sale of shares

33
Q

what are disadvantages of a public limited company?

A

.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
Q

what are the 4 issues with different types of business forms?

A

.unlimited and limited liability
.ordinary share capital
.dividends
.market capitalisation

35
Q

what is ordinary share capital?

A

an external source of finance available to companies

36
Q

what are dividends?

A

a percentage of profit paid to shareholders as a reward for their investment

37
Q

what is market capitalisation?

A

number of shares x market price
the value of all the shares issued by a plc

38
Q

what are shareholders?

A

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
Q

why should shareholders invest?

A

long term gains- increase in share price
short term gains- receipt of dividends

40
Q

5 influences on share price?

A

.national economy
.global economy
.company performance
.investor confidence
.political stability

41
Q

what do share price changes show?

A

-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
Q

what is a private sector organisation?

A

sector of the economy that is owned and controlled by individuals or group rather than the government

43
Q

examples of private sector organisations?

A

.sole traders
.private limited companies
.public limited companies

44
Q

what is a public sector organisation?

A

sector of the economy tat is owned and controlled by the government rather than individuals or group of individuals

45
Q

examples of public sector organisations?

A

.state education
.Nhs
.police, army, navy and air force

46
Q

what are non- profit organisations?

A

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
Q

examples of non profit organisations?

A

.social enterprises
.charities

48
Q

what are mutals?

A

organisations that operate for the well being of their members

49
Q

What are costs?

A

are the value paid or to be paid for the acquisition of goods and services by businesses

50
Q

What is demand?

A

The amount customers are willing and able to buy at a set price at any given point in time

51
Q

What is competition ?

A

the number and relative power of firms trading in the same or similar markets

52
Q

What are market conditions?

A

the defining characteristics of the market e.g. trends, level of sales

53
Q

What are incomes?

A

the earnings of consumers that will directly influence sending power

54
Q

What are interest rates?

A

the cost of borrowing or the reward for saving

55
Q

What are demographic factors?

A

the statistical characteristics of the population

56
Q

What are environmental issues and fair trade?

A

the variety of factors that impact on the environment during to the operations of businesses

business (5 decks)

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