Topic One, Part 2 - Constraints and Functions Flashcards
What are constraints?
Factors that limit the business operation
What are the four constraints for a business?
- Competition
- environment
- legalisation
- economy
How can competition be a constraint?
They will innovate their products to surpass yours and increase market share
How can environment be a constraint?
Local and national factors concerns for the environment impact operations
How can legislation be a constraint?
Investment in equipment and training to keep up with new requirements
How can economy be a constraint?
- Inflation and interest rates impact mortgages, loans and finance
What is the function of accounting and finance within a business?
- monitors and controls financial resources
- Keeps detailed records
What is the function of operations management within a business?
Oversees production for efficiency
What is the function of marketing and support within a business?
- Monitor customer behaviour to adjust branding
- Ensure good Customer support and public relations
What is the function of human resource management within a business?
- responsible for employee well being
- recruitment and training
What is a sole trader?
Someone who owns a business and responsible for all decisions
What are the advantages of being a sole trader?
- Sole trader keeps all profit
- Cannot be subject to a hostile takeover
What are the disadvantages of being a sole trader?
- Owner is responsible for business debts
- Harder to raise capital
What is a partnership?
When two or more people run a business together
What are two examples of a partnership?
- Law firms
- estate agents
What are the advantages of being in a partnership?
- Easy to establish
- Losses are shared
What are the disadvantages of being in a partnership?
- Disagreements
- Partners are equally responsible for debts
What is a private limited company?
Cant sell shares on the open market, but requires no minimum share capital
What is an example of a private limited company?
Family business
what is a public limited company?
Sell shares on the open market, but requires a minimum share capital of £50k
What are the advantages of being a company?
- Raise capital through shares
- limited liability
What are the disadvantages of being a company?
- Expensive setup
- Public company accounts
