Topic 1.4 Making the business effective Flashcards
What is limited liability
When the shareholders personal assets are not at risk only how much they have invested into the company
What is unlimited liability?
The owner being at risk of losing personal assets.
What are the business that have limited liability?
Private limited company
public limited company
What are the business that have unlimited liability ?
Sole traders
Partnerships
What is a sole trader?
A business that is owned by one individual
What are the advantages of being a sole trader
Simple set up process
No need to publish accounts (they are private)
Retains all profits
Has total control over the business
What are the disadvantage of being a sole trader?
Unlimited liability
fewer access of finance
No one is they to cover if ill or take time off.
What is a partnership?
A business that is a business owned by a minimum of two or more partners.
What is the advantage of partnerships?
Potential for more finance
shared workload
can led to specialized in enterprise (increases productivity)
What are the disadvantages of partnerships?
unlimited liability
shared profits
shared decisions /control (can lead to conflict)
What is private limited companies (ltd)
A company that is owned by its shareholders and run by its directors
What are the advantages of private limited companies?
Limited liability
additional sources of finance
has control of who the share holders are
What are the disadvantage of a private limited company?
No access to stock exchange
shared profits
legal requirements to publish financial accounts
What is a franchisor?
The business that gives the right for the franchisees to sell its product or service
What is a franchisee?
A business that agrees to manufacture, distribute or provide a branded product under license from a franchisor.
What can a franchisee get when they buy a franchise?
- establish brand name
- training
- support
- equipment
- advertisement and promotion
What are the advantages of being a franchise?
brand recognition
easier to start up
higher chance of survival
What are the disadvantage of being a franchise
little freedom on decisions
the cost of initial investment can be expensive
the franchisee has to pay a fee or royalty (percentage of sales revenue)
What are the business location proximities that can have a factor to where the business is located?
- Market
- Materials
- Transport
- Labour
- competitors
How does the nature of business activity influences location?
manufacture - may need to be away from local residents
export- may need access to docks to distribute goods
retailing - may need to be on a busy high street
tourism - near popular tourist attractions
location for ecommerce.
Reduces cost as the business do not need to be on a busy high street.
What is the marketing mix?
Used to identify and understand customer’s needs and wants.
What are the 4 p’s (marketing mix)
Product
Place
Price
Promotion
How can changing needs affect the the marketing mix?
Product - Changes in design and features
Price - How customers pay (contactless payments or adjusting price
promotion - new advertisement can lead to increase of sales
place - changing to ecommerce or channel of distribution
