Topic 1.4 Flashcards
Unlimited liability
Level of risk goes beyond the amount invested so the personal assets of the owners can be used to pay off the business debts
Unincorporated
Business that is not registered as a company so the owner and the business are seen as the same in the eyes of the law
Sole trader
When 1 person sets up a business on their own
Partnership
When 2 or more people set up a business and share the financial risk, decision making and profit
Limited liability
Companies have limited responsibility for the business debts
Franchise
When 1 business gives another permission to trade using its name and products in return for an initial fee and a share of the profits
Franchisor
An established business that gives permission to an entrepreneur to trade using its name and products
Franchisee
Entrepreneur who pays a fee to trade using the name and products of an established business
Competitive advantage
Refers to the factors that allow a company to produce goods better or more cheaply than their rivals
Product differentiation
Designing a product with unique features that distinguish it from similar products
Product
What a business sells / provides
Price
Amount a business charges its customer
Penetration pricing
When a business breaking into a market purposely reduces its price to tempt customers
Skimming pricing
When a business introduces a new product that is clearly superior to its competitors it can be sold at a higher price
Place
Refers to where the customer can buy the product / service
