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[archive] business > Topic 1.4- Making the Business Effective > Flashcards

Topic 1.4- Making the Business Effective Flashcards

1
Q

What is limited liability?

A

Limited liability means that when paying back debts, the owner’s business assets are only at risk ( not personal)

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2
Q

What is unlimited liability?

A

Unlimited liability is when both personal and business assets are at risk when paying back debts.

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3
Q

Give 2 features of a business owner operating at limited liability.

A
  • has its own legal identity,

- owners are not personally responsible for its debts.

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4
Q

Give 2 features for a business owner operating at unlimited liability

A
  • does not have its own legal identity

- personally responsible for all debts of the business.

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5
Q

What is a sole trader?

A

A sole trader is a business that is owned and run by one person. ( usually small businesses)

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6
Q

Give 3 advantages of operating as a sole trader

A
  • quick and easy to set up
  • makes own decisions
  • keeps the profits
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7
Q

Give 3 disadvantages of operating as a sole trader

A
  • risk of unlimited liability
  • high level of responsibility
  • works long hours
  • harder to obtain finance- no access to share capital
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8
Q

What is a partnership?

A

A partnership is a type of business that has 2 or more owners ( usually lawyers or doctors)

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9
Q

Give 3 advantages of operating as a partnership

A
  • quick and easy to set up as there is more finance being invested
  • shared decision-making by the owners- expertise
  • shared responsibility for debt by the owners
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10
Q

Give 3 disadvantages of operating as a partnership

A
  • profit and rewards are shared
  • there is the risk of unlimited liability
  • conflict amongst owners can occur
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11
Q

What is a private limited company (LTD) and who are they owned by?

A

An incorporated company owned by shareholders ( invited by the business)

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12
Q

Give 3 advantages of operating as an LTD.

A
  • the owners have limited liability
  • shares can be sold to raise money
  • shares are known to the shareholders- less conflict
  • ideas can be shared
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13
Q

Give 3 disadvantages of operating as an LTD.

A
  • shared profits - diluted
  • financial documents are released to the public
  • no access to the stock exchange- harder to raise finance
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14
Q

What is a franchise?

A

the right given by one business to another to sell goods or services using its name.

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15
Q

What is a franchisee

A

buys a franchise and usually pays a fee

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16
Q

What is a franchisor?

A

a business that gives franchisees the right to sell their products and services in return for a fixed sum of money

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17
Q

Give 3 advantages of setting up a franchise

A
  • established business ( including customer base)
  • lower risk ( than setting up a new business)
  • the franchisor provides support and training
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18
Q

Give 3 disadvantages of setting up a franchise

A
  • profit is shared with the franchisor
  • no independent decision making
  • expensive to set up- high start up costs
  • if reputation is damaged in one store it can affect the franchise as a whole
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19
Q

Name the factors that influence business locations

A

proximity to :

  • the market
  • labour
  • materials
  • competitors
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20
Q

What is E-commerce?

A

The selling and buying of goods or services over the internet

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21
Q

How does e-commerce impact location decisions?

A

Allow businesses to choose cheap locations, because there is no requirement to be located near to customers

22
Q

Give 3 benefits of e-commerce

A
  • lower costs
  • flexible working hours
  • access to a much larger market of potential customers
23
Q

How does proximity to the market affect business location?

A
  • needs to be located near target market

- passing trade benefits

24
Q

importance of proximity to labour when making decisions on business locations ( 2)

A
  • located in an area with high unemployment means wages can be kept low
  • located in an area that has people with skills relevant to the job role
25
Q

Why is proximity to raw materials important when making decisions on business locations?

A
  • allows a business to save money ( transport costs are less)
26
Q

Why is proximity to competitors important when making decisions on business locations?

A
  • access to skilled labour, local suppliers

- when located closer, there will be wide access to customers

27
Q

Give two ways the nature of a business’ activity affect its location? (manufacturing vs retail)

A
  • retail businesses will be in city centres as they provide services that may require to be in locations convenient for customers.
  • manufacturing business may be in rural area as land is cheap and you don’t need to be close to your customers.
28
Q

What is the marketing mix?

A

Product, Price, Place, Promotion

29
Q

Why is Product an important element in the marketing mix?

A
  • products need to stand out from competitors so that customers buy from it.
  • This can be a USP
30
Q

what is the design mix?

A
  • aesthetics ( appearance)
  • function (USP?)
  • cost
31
Q

What is Price?

A

Price is the amount of money consumers are charged to buy a product

32
Q

What are the 4 different pricing strategies- x

A
  • penetration pricing
  • priced skimming
  • competitor pricing
  • cost plus pricing
33
Q

What is penetration pricing?

A

product sold at low price to generate sales before price is increased

34
Q

What is price skimming?-x

A

high initial price to attract buyers with a strong desire for the product then lowering prices

35
Q

What is competitor based pricing?- x

A
  • businesses who price products based on competitors to reduce risk of overpricing
36
Q

What is cost plus pricing?-x

A

a pricing method where a fixed percentage is added on top of the cost to produce one unit of a product

37
Q

What does Place refer to in the marketing mix?

A

Place refers to where the customer is able to purchase the product or service.

38
Q

Define distribution channel

A

The different ways in which a product gets from the producer to the consumer.

39
Q

Give 3 different types of distribution channels

A

1) manufacturer → customer
2) manufacturer → wholesaler → customer
3) manufacturer → wholesaler → retailer → customer

40
Q

What is a wholesaler?

A

A business that buys products in bulk from the producer

41
Q

What is a retailer?

A

A store (or person) that sells products directly to customers.

42
Q

What is promotion in the marketing mix?

A

the methods a business uses to create interest in its products and services to a customer

43
Q

Give 3 different types of promotion

A
  • digital marketing
  • sponsorship marketing
  • social media
44
Q

What is digital marketing?

A

promotion of products using the multimedia

45
Q

What is the competitive environment?

A

A market where there are other businesses producing the same or similar products and services.

46
Q

Give 3 ways a business can gain a competitive advantage

A
  • create a USP
  • offering a product or service that fills a gap in the market
  • offering sales promotions
47
Q

Give 3 ways a business could adapt to change customer needs

A
  • introducing new products
  • changing the selling price of products
  • introducing e-commerce
48
Q

What is a business plan?-x

A

A business plan is a document created by a business which outlies what a business will do and how it aims to do it

49
Q

Give 4 features of a business plan-x

A

Any from these:

  • business idea
  • business aims and objectives
  • target market
  • cash flow forecast
  • sources of finances
  • revenue forecast
  • sources of finance
50
Q

What is the purpose of a business plan?- x

A
  • to minimise the level of risk when setting up a business

- help educate and persuade potential investors

[archive] business (13 decks)

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