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HIGHER BUSINESS > understanding business > Flashcards

understanding business Flashcards

1
Q

what are 3 sectors of economy

A

private, public, third

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2
Q

what are the 4 sectors of industry

A

primary, secondary, tertiary, quaternary

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3
Q

what are the 4 factors of production

A

land, labour, capital, enterprise

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4
Q

how is a private limited company owned controlled and financed

A

owned -by at least 1 share holder
controlled -by a board of directors
financed- shares sold privately to family and friends

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5
Q

2 advantages of a private limited company

A

more finance can be raised from shareholders and leaders.
shares are not sold to the public , control of the company is not lost to outsiders

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6
Q

2 disadvantages of a private limited company

A

shares can’t be sold to the general public.
must abide by the companies act.

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7
Q

how is a public limited company owned controlled and financed

A

owned- by at least two shareholders
Controlled- by a board of directors
Financed- shares sold publicly on the stock exchange

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8
Q

2 advantages of a public limited company

A

huge amounts of finance can be raised by selling shares on the stock exchange
limited liability - only lose money you invest
easy to borrow money due to their large size therefore easier to grow and diversify

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9
Q

2 disadvantages to a public limited company

A

no control over who buys shares
threat of taking over as the public can buy shares there is always the threat that someone may buy enough to take over

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10
Q

what is a franchisor

A

a franchisor sells the right to use a business idea in a particular location

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11
Q

what is a franchisee

A

a franchisee buys the right from a franchisor to copy a business format

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12
Q

what are 2 advantages of a franchisor

A

fast method of expanding without heavy investment
provides royalty payments

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13
Q

2 disadvantages to a franchisor

A

only receive a share of the profits
poor franchisee can damage a companies reputation

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14
Q

2 advantages of a franchisee

A

reduced marketing costs
reduced risk of failure as brand is already established

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15
Q

2 disadvantages to a franchisee

A

products, price and layout of store may be dictated
Initial set up cost is expensive

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16
Q

what is a multinational

A

a company which has headquarters in one country but has assembly of production facilities in other countries e.g cocacola

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17
Q

what are 2 advantages of a multinational

A

cost of land and labour will be cheaper in developing countries for example sweat shops in Far East.
increase market shares- as this will mean they can target market wider this increases brand awareness

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18
Q

two disadvantages of a multinational

A

cultural barriers - mc Donalds can’t sell beef in India
exploitation of labour - workers can work for below minimum wage e.g. Nike

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19
Q

how is the public sector owned controlled and financed

A

owned- by the government
controlled - by local/central government
financed- through taxes

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20
Q

give an example of public sector

A

NHS, police scotland…

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21
Q

how is the third sector owned controlled and financed

A

owned- by trustees
controlled- board of trustees
financed- grants from many fund raising and public donations

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22
Q

3 advantages of social enterprise

A

help tackle social problems it has chosen
attract good quality staff who want to help the social cause
some funding/support is only available to social enterprises

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23
Q

what are 3 private sector aims and objectives

A

to survive and continue trading, every business needs to make enough profit
maximise profit, make as much profit possible to allow the business purchase new resources
improving working conditions of employees will motivate existing staff and attract new staff into the business
reduce carbon footprint can improve company reputation as they are seen as eco friendly

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24
Q

what are 3 public sector aims

A

to provide a high quality service
to stay within a specific budget
to make good use of taxpayers money

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25
Q

2 third sector aims

A

to raise awareness for a good cause
maximise donations

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26
Q

what does PESTEC stand for

A

Political
Economic
Social
Technology
Environment
Competitive

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27
Q

what is organic growth

A

when a business grows naturally

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28
Q

what are 2 advantages of organic growth

A

hiring new staff will bring new ideas
investing in equipment will increase production

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29
Q

2 disadvantages of organic growth

A

can be a slow method of growth
restricted to the amount of finance available

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30
Q

describe horizontal integration

A

when two companies at the same stage of production process merge or takeover each other

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31
Q

2 advantages of horizontal integration

A

removes competitor from the market
business gains greater market share

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32
Q

1 disadvantage of horizontal integration

A

can be expensive to purchase another company

33
Q

describe forward vertical integration

A

when a business takes over a company at a later stage in the production process

34
Q

2 advantages of forward vertical

A

guarantees an outlet to sell products
more control over pricing and product display

35
Q

1 disadvantage of forward vertical

A

entering new markets may affect core activities as resources and enterprise need to be shared

36
Q

describe backward vertical integration

A

when a business takes over a company at an earlier stage in the production process e.g business taking over suppliers

37
Q

2 advantages of backward vertical

A

greater control over quality measures ensuring high standard of goods
guarantees its own supply of inventory

38
Q

1 disadvantage of backward vertical

A

entering new markets may affect core activities as resources and enterprise need to be shared

39
Q

describe diversification

A

when firms move into new markets that are different from there core business

40
Q

1 advantage of diversification

A

allows companies to spread risk and grow and expand brand name

41
Q

describe lateral integration

A

when a business moves into a different market but within a related industry e.g hairdresser merging with a beauty therapist

42
Q

2 advantages of lateral integration

A

spreads risk across different markets
targets new markets increasing customer base

43
Q

1 disadvantages of lateral integration

A

may not have the knowledge required to successfully run the new business

44
Q

identify 6 ways of achieving growth

A

merger, takeover, acquisition, adversising, product development, increasing staff

44
Q

identify 6 ways of achieving growth

A

merger, takeover, acquisition, adversising, product development, increasing staff

45
Q

describe merger (achieving growth)

A

when two companies decide to join together in equal terms
e.g. when Halifax and bank of Scotland merged to create HBOF

46
Q

describe takeover ( achieving growth )

A

when a company buys out a rival . Kraft food bought Cadbury in 2010 for £12 billion

47
Q

describe acquisition ( achieving growth )

A

when one company buys assets or operations of another company

48
Q

describe advertising ( achieving growth)

A

can be used to increase awareness of the company’s products and can be used to inform customers on new products

49
Q

describe product development ( achieving growth )

A

allows a company to target new markets and expand their product range

50
Q

describe increasing staff ( achieving growth )

A

the productivity of a business will grow and there may be increased levels of customer satisfaction

51
Q

identify 6 ways of funding growth

A

retained profits,diversment, demerger, buy-in , buyout, outsourcing

52
Q

describe retained profits (funding growth)

A

a business can hold back profit each year from its shareholders to reinvest into the business

53
Q

describe divestment (funding growth )

A

when a company sells off an asset to raise finance

54
Q

describe demerger ( funding growth)

A

when a firm divides or breaks into more than one company

55
Q

describe buy-in ( funding growth )

A

this is when managers who are not employed by the company purchase the business as they believe they can run it more profitably

56
Q

describe buy-out (buy out)

A

when managers or employees who are currently employed by the business purchase the business from the owners

57
Q

describe out sourcing ( funding growth )

A

when a company hires another business to do some work for them. Many firms outsource cleaning or IT operations.

58
Q

what are two advantages of outsourcing

A

outsourced firm provides specialist eqipment- saving costs.
allows firms to focus on their core activity

59
Q

two disadvantages of outsourcing

A

the organisation will have reduced control which may cause conflict between staff.
firm my take a long time to complete the job

60
Q

two advantages of tall structure

A

staff gain more support from their line manager
more opportunities for promotion

61
Q

two disadvantages of tall structure

A

span of control and chain of command is long
many levels of hierarchy

62
Q

two advantages of flat structure

A

few levels of hierarchy
line of communication are short- quick response

63
Q

2 disadvantages of flat structure

A

fewer promotional opportunities can lead to staff leaving
wide span of control, employees may feel stress

64
Q

describe entrepreneurial structure

A

found in smaller businesses where the owner/manager makes decisions without consulting with staff

65
Q

what is one advantage of entrepreneurial structure

A

staff are clear who is in charge

66
Q

what is a disadvantage of entrepreneurial structure

A

staff can become demotivated due to not being empowered

67
Q

1 advantage of matrix structure

A

a good way of having different viewpoints and skills involved in a project

68
Q

1 disadvantage of matrix structure

A

very expensive if many different teams are required for the project

69
Q

describe centralised structure

A

most decisions are taken by senior managers and then passed down the organisational hierarchy

70
Q

2 advantages of centralised structure

A

decisions are made to benefit the organisation as a whole
they can lead to greater consistency as each branch of the business will be using standardised proceedures

71
Q

2 disadvantages of centralised structure

A

senior managers carry heavy burden of decision making
this structure are less responsive to localised external pressures

72
Q

describe decentralised structure

A

each department within an organisation has the authority to make their own decisions

73
Q

one advantage of decentralised structure

A

decisions can be specific to the needs of the department or local area

74
Q

one disadvantage of decentralised structure

A

overall control of the organisation is delegated to department managers

75
Q

Identify the tree types of decision making

A

Strategic, tactical and operational

76
Q

describe strategic decision making

A
  • made on long term basis
  • set out company objectives
  • made by top management usually owners
77
Q

describe tactical decision making

A

-made on monthly/yearly basis
-made by middle management
-made to help achieve main objectives e.g launching new products

78
Q

describe operational decision making

A
  • made on daily/weekly basis
    -made by junior managers and supervisors
    -often reactive when change occurs e.g. calling repair service

HIGHER BUSINESS (3 decks)

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