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Business > Topic 1 - What is business ? > Flashcards

Topic 1 - What is business ? Flashcards

1
Q

What are the functional areas

A

Marketing
Finance
Operations
Human resources

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2
Q

Why does a business exist

A
  • show people what they can achieve
  • be their own boss
  • to supply goods and services
  • provide employment
  • create new good and services to enhance customer lives
  • improve a countries reputation
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3
Q

What are some common business objectives

A 
Profit optimisation 
Profit maximisation 
Growth 
Cash flow 
Survival 
Social and ethical
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4
Q

What is a business mission

A

Aim for a business that is settled upon by a boss turned into a motivational statement

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5
Q

What are objectives

A

The steps that needs to be taken to achieve the aim and mission

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6
Q

What do objectives need to be

A 
S - specific 
M - measurable 
A - agreeable 
R - realistic 
T - timely
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7
Q

Why do businesses set objectives

A
  • to be able to distribute power
  • motivating to have a clear goal
  • objectives are the basis for devising a strategy
  • know what is needed to be done to achieve mission
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8
Q

What is revenue

A

sales x sales price

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9
Q

What are fixed costs

A

Costs that don’t change with output

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10
Q

What are variable costs

A

Costs that change directly with output

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11
Q

What are total costs

A

fixed costs + variable costs

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12
Q

What is the primary sector

A

Business extract or grow raw materials

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13
Q

What is the secondary sector

A

Manufacture goods using raw materials

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14
Q

What is the tertiary sector

A

Provides services

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15
Q

What is the order of business objectives

A

Mission
Corporate aims
Corporate objectives
Functional. team and individual

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16
Q

What is unlimited liability

A

Finances of the business are inseparable from the owners

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17
Q

Describe the features of a sole trader

A
  • one owner
  • small amount of employees
  • faces all the burdens alone
  • gains from all financial success
  • unlimited liability
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18
Q

Disadvantages of sole traders

A
  • limited sources of finance
  • long hours of work
  • difficulties of running business during periods of ill health
  • unlimited liability
  • all the responsibility for making business decisions is yours
  • harder to retain employees
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19
Q

Describe the key features of a partnership

A
  • two or more people start a business

- unlimited liability

20
Q

Advantages of sole traders

A
  • They are the easiest type of business to set up.
  • The sole trader gets to be their own boss.
  • The sole trader decides what to do with the profit.
  • It is easy to change the legal structure if circumstances change.
21
Q

What is limited liability

A

Legal duty to pay debts remains with the business

22
Q

Describe the features of a private limited company

A
  • shares cannot be sold without everyone’s agreement
  • cannot be listed on the stock market
  • ## limited liability
23
Q

Describe the features of a public limited company

A
  • on the stock exchange

- publish financial accounts in companies house

24
Q

Advantages of limited companies

A
  • confidence to expand

- can raise capital

25
Q

Disadvantages of limited companies

A
  • financial information must be made available

- more rules to follow

26
Q

What is a public sector organisation

A

Owned by the government

27
Q

What is a private organisation

A

Not owned by the state

28
Q

What is a co operative

A

Worker owned or customer owned

29
Q

What is a mutual

A

Have no shareholders and no owners

Exist for the benefit of its customers

30
Q

What is a charity

A

Not for profit organisation that is able to get certain grants and tax benefits

31
Q

Ordinary share capital

A

Amount of finance raised through selling shares to shareholders

32
Q

Market capitalisation

A

number of shares x current share price

33
Q

Dividends

A

A proportion of business profit shared with shareholders

34
Q

The role of shareholders

A
  • provide capital to the business

- get influence over the business

35
Q

Why shareholders invest

A
  • for a profit
  • receive annual dividend
  • agree with company aims and values
36
Q

Influences on share price

A
  • business performance
  • economic performance
  • news
  • confidence
37
Q

Impact of share price changes

A
  • struggle to get investors if decreasing

- higher - easy to get share capital

38
Q

Effect of ownership on mission, objectives, decisions and performance

A
  • dictates what real mission is e.g. profit
  • timescale of projects and mission achievement
  • take long termism or short termism approaches
39
Q

What external factors affect costs and demand

A
  • competition
  • market conditions
  • incomes
  • interest rates
  • demographic factors
  • environmental issues and fair trade
40
Q

How does competition affect costs and demand

A
  • customers may look for a competitive advantage
  • invest in research and development
  • may have to change how they compete like lowering prices
41
Q

How do market conditions affect costs and demand

A
  • recessions may cause lower demand
  • recession may cause a business to cut costs
  • lower customer confidence means lower sales
  • customer tastes and fashion
  • innovation and technology
  • competitive structure
42
Q

How does changes in income affect costs and demand

A

Incomes fall

  • increased demand of inferior goods
  • increase in usage of discount stores
  • cut back in benefits
43
Q

How does interest rates affect costs and demand

A

Higher interest rates

  • lower demand for luxury goods
  • lower demand for items bought on credit
  • affect operating costs and therefore increase costs and lower profit
  • lower level of long term investment
44
Q

Affect of demographic factors on costs and demand

A

Age
- higher demand for companies targeting these audiences
Gender
Ethnicity
- higher demand for products targeted at specific ethnicities

45
Q

How would environmental and fair trade affect costs and demand

A
  • marketing tool allowing higher demand

- increase costs

Business (21 decks)

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