topic 1.4 Flashcards
diff between unlimited and limited liability
-In unlimited liability, there is no distinction between the business and the owner and so any debts that the business owes have to be payed off by the owner’s personal assets.
-In limited liability, the business and the shareholders that own it are distinct and so any debts cna only only be taken form the business.
sole trader, and prose and cons
AD:
-quick and easy to set up
-financial info kept private
-keeps all the profit
DD:
-unlimited liability
-puts alot of pressure on one person
-can be difficult if owner is ill or has to take time off
-may be difficult to raise enough money to estabalish and grow the business
partnership prose and cons
AD:
-risk is shared
-businesses financial info kept private
-easier to raise finance and establish the business
-share expertise and share ideas in buisness decisions
DD:
-profits are shared
-if one partner leaves, business no longer exists
-may be dissagreemtns
-decisions made by one partner may affect all partners
what dies it mean for a business if its owned by shareholders
It is either a PLC or LTD, has limited liability and have to publish their accounts publicly.
+ They have limited liability
+ Reduced risk
+ Increased capital
+ Increased status means they’re more likely to be approved for loans etc.
- Desicions can be limited as company ia owned by many people
- Profit may be the only goal
- Other people can buy more shares and take over
-financial info is shared (PLC)
-more complex to set up (plc)
what is franchising
when one business , the franchisor, gives permission to an enterpenuer, the franchisee to set up a business using its brand name and selling its products
-What is a franchisor and what are their pros and cons?
AD:
-lower risk, business is already successful
-support and training provided by franchisor
-franchisees benefit from national marketing campaigns
DD:
-franchisees have to pay intial fee, ongoing fees and share of profits
-cannot make independednt decisions
-brand reputation may be damaged by other franchisees if they dont maintain standards
factors affecting business location
-Target market and demographics ( so that there will be sufficient people interested in your business)
-Labour (So that you have workers who are able to commute and won’t loose out on your workforce, located near skilled labour)
-Materials (Your product needs be easily manufacturable, close to the warehouse to reduce transport costs)
-Competitors (You may want to be close as it means a similar target market will be nearby. You may want to be far away as they can steal your customers)
Why might the nature of a business’ activity effect its location?
Businesses in the tertairy sector will require to be in city centres as they provide services that may require to be in locations convenient for customers. In the primary sectro, you location may be in rural area as land is cheap and you don’t need to be close to your customers.
What are the benefits and limitations of e-commerce over fixed premises?
+ Reach a larger market of customers
+ Less overhead fees (electricity rent etc.)
+ Less workers to pay
- Customers may be wary of paying online
- Tecnological failures can limit businesses
- Technology may not always be user-friendly
What does the marketing mix consist of?
-place
-price
-promotion
-product
How does technology affect the marketing mix? (What does it introduce)
E-commerce: Being able to use the internet as a place for selling items
Digital communication: Promoting you product to potential customers online
What is a business plan?
A plan for the development of a business identifying things such as:
Business idea
Business aims/objectives
Market research
Forecast revenue
Costs and profits
Cash flow forcast
Sources of finance
The marketing mix
What are the purposes of a business plan?
To think about all aspects of the business.
To reduce risk of failure
To interest potential investors and bank loans
