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Business > Topic 1 What Is Business > Flashcards

Topic 1 What Is Business Flashcards

1
Q

What are business objectives

A

Specific intended outcomes of business strategy and activity
Targets which a business sets to help it achieve its aims

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2
Q

What are the main functions of business objectives

A

State what needs to be achieved
A focus for all activity
Targets for individual and group achievement
A way to measure performance

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3
Q

What are the typical corporate objectives

A

Sales revenue
Profit
Return on investment
Growth
Market share
Cash flow
Value of the business
Corporate image and reputation

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4
Q

What should all business objectives be ?

A

SMART ::::
Specific
Measurable
Achievable
Relevant
Time bound

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5
Q

What is a mission statement

A

The overriding purpose of the business
The reason for its existence
A strategic perspective
Supports the stated ‘vision’ for the future

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6
Q

What is a mission statement not intended to be

A

Statement of goals or objectives
Statement of core values
A statement of how the business intends to compete or position itself in the market

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7
Q

What are the key audiences for a mission statement

A

Employees
Customers
Investors
Society

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8
Q

Example of what would make a good mission

A

A clear sense of business purpose
Excites, the Napier’s and motivates and guides
Easy to understand and remember

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9
Q

An example of a mission statements

A

Our vision is to Create a better everyday life for the many people

IKEA

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10
Q

What are common criticisms of mission statement

A

Not always supported by actions of the business
Often too vague and general

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11
Q

What are costs

A

Costs are amounts that a business incurs in order to make good and or provide service

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12
Q

Why are costs important

A

It’s the thing that drains away the profits made by a business
Show a the difference between making a good and poor profit margins
They are the main cause of cash flow problems

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13
Q

What are variable costs

A

Cost which change as output varies

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14
Q

What are fixed costs

A

Costs which do not change when output varies

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15
Q

What are some examples of variable costs

A

Raw material
Bought in stock
Wages based on hours worked or amount produced

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16
Q

Examples of fixed costs

A

Rent and rates
Salaries
Advertising
Insurance

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17
Q

How do you calculate total costs

A

Total costs(TC) = fixed costs FC + variable costs VC

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18
Q

What are the different forms of business
The over view

A

Private sector
Unincorporated. Incorporated
Sole trader and Private LC
Partnership AND public LIMED

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19
Q

What is unincorporated

A

The owner is the business
Owner had unlimited liability for business actions including debts
More business operate as sole trader

20
Q

What is incorporated

A

Legal difference between the business company and the owner
Owners (shareholders) have limited liability
Most incorporated businesses operate as private limited companies.

21
Q

What is unlimited liability

A

A characteristic of unincorporated businesses
Business owner/s are personally responsible for the debts and liabilities of the business
If the unincorporated business fails the owners are liable for the amounts owed
Unlimited liability adds to the risk of operating as a sole trader or partnership.

22
Q

What is the importance of limited liability

A

An important protection for shareholders in a company
Shareholders can only lose the value of their investment
They are not liable for the debts of the company

23
Q

What is a sole trader

A

Most common type of business form
A sole trader is an individual owning the business on his/her own
A sole trader is an individual owning the business on his her own
Sole trader owns all the business assets personally and is personally responsible for the business debts. Aisle trader has unlimited liability

24
Q

What are the advantages of sole trader

A

Quick and easy to set up business can always be transferred to a limited company once launched
Simple to run-owner has complete control over decision-making
Minimal paperwork

25
Q

What are the disadvantages of sole trader

A

Full personal liability- unlimited liability
Harder to raise finance
The business is the owner-the business suffers if the owner becomes I’ll loses interest
Can pay a higher tax rate than a company

26
Q

What is parterships

A

Where a business is started and owned by more than me person
The legal partnership agreement sets out how the partnership is run,covering areas such as how profit are to be shared
The patterns between them own all the business asserts and owe all business liabilities

27
Q

What are the benefits of partership

A

Quite simple it’s the simplest way for two or more people to form a business
Minimal paperwork once Partnership agreement set up
Business benefits from the expertise and effects of more than one owner

28
Q

What are the drawbacks of partnership

A

Full personal liability - unlimited liability
A poor decision by one parter damages the interest of the other parter
Harder to raise finance than a company

29
Q

What is a limited companies

A

They are separate legal entities to the founders
Companies are owned by their shareholders and run by directors. The shareholders appoint the directors(often the same people) who run the company in the intersection of the shareholders

30
Q

What are the advantages of limited company

A

Limited liability-protects the shareholders
Easier to raise finance - sale of shares and also easier to raise debt
Stable form of structure-business continues to exist even when shareholders change

31
Q

What are the disadvantages limited company

A

Greater admin costs
Public disclosure of company information
Directs legal duties

32
Q

What is a private sector

A

In the private sector businesses are operated and owned by private individuals and companies
Private sector businesses are generally run ‘for profit’ to earn returns for the business owners

33
Q

What is public sector

A

In the public sector, businesses and other organizations are owned and run on behalf of the public either by the government itself or by organizations who are funded and report to government
Public sector business are not generally run for profit but exit to provide goods and services to the public using public funds

34
Q

What is a company

A

A Company is a separate legal entity. The owners of a company are shareholders

35
Q

What is private limited companies

A

Most popular form of incorporated business
Privately-owned
Shares cannot be traded publicly
Usually just 1 or a few shareholders

36
Q

What is public limited companies

A

Minimum share capital 50,000
Shares may be traded on public stock market
Usually many shareholders
Costly to administer

37
Q

What is a share

A

An individual part of the issues share capital of company

38
Q

What are dividends

A

Payments made to shareholders by the company from earned profits

39
Q

What is capital growth (capital gain)

A

Arises from an increase in the value of the business
Reflected in an increase in a share price

40
Q

What is share price

A

Like any other price a share price is determined by the interaction of supply and demand

41
Q

What are factors within the company’s control

A

Financial performance
Dividend policy
Management reputation

42
Q

Factors outside the company control

A

State of the economy
General market sentiment
Industry developments potential for takeover

43
Q

What is market capitalization formula

A

Share price(per share) x number of shares in issues

44
Q

What is revenue formula

A

Revenue = volume sold (units) x selling price per unit

45
Q

What does demand mean

A

Demand is the quantity that consumers are willing and able to purchase at various prices during a given period of time

46
Q

What is revenue

A

The sales value of what a business actually sell

Business (5 decks)

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