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Understanding Business Flashcards

1
Q

Sectors of Economy

A

Primary (gathering raw materials)
Secondary ( manufacturing)
Tertiary (providing a service)
Quaternary (Information Services eg IT)

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2
Q

Sectors of Economy

A

Private
Public
Third

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3
Q

Aims of Private Sector

A

Survive
Make a profit
Growth
Operate ethically
Maximise sales
Provide a service

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4
Q

Aims of Public Sector

A

Use taxpayers money in the best way
Provide a service to local community
Work within budget
Provide a service
Operate ethically

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5
Q

Aims of third sector

A

Maximise funds/ donations
Raise awareness
Increase volunteers
Operate ethically

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6
Q

Types of organisations?

A

Sole Trader
Partnership
PLC
LTD
Multinational
Franchise

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7
Q

Sole Trader?

A

Business set up and owned by one person who’s trying to make a profit

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8
Q

ADV of sole trader

A

Keep all profit
Make all decisions
Business is run how they want

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9
Q

DISAD of some trader

A

Unlimited Liability
Hard to raise finance
Long hours

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10
Q

Partnership?

A

Business run by 2 to 20 people

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11
Q

ADV of partnership?

A

Jobs are split so workload is shared
Different partners bring different expertise
Easier to raise finance

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12
Q

DISAD of partnership?

A

Arguments likely due to shared decisions/ might need to compromise
Unlimited Liability
Profits are shared

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13
Q

PLC?

A

company with 20+ partners
owned by shareholders who are random members of the public

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14
Q

ADV of PLC?

A

Easier to raise finance through selling shares

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15
Q

DISAD of PLC?

A

No control who is buying shares
Shareholders could buy enough shares to take over entire business
Directors may make decisions shareholders don’t agree with

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16
Q

Ownership and Control of PLC?

A

Owned by shareholders
Controlled by Directors

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17
Q

LTD?

A

Business with more than 20 partners
Owned by shareholders known to the business

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18
Q

ADV of LTD?

A

Limited Liability
Easy to raise finance by selling shares etc
Profits only shared between stakeholders

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19
Q

DISAD of LTD?

A

Legal costs are expensive
Hard to motivate workers who do not own shares

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20
Q

Multinational Company?

A

Company which has HQ’s in one country but operates in other countries

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21
Q

ADV of multinational

A

Increased availability of skilled workers
Some countries may have reduced Corporation Tax etc
Countries may have more relaxed laws such as reduced minimum wage
Reduced costs for exportation etc
Creates jobs

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22
Q

DISAD of multinational?

A

Exploiting workforce
Not keeping profits in host country
Relying on deskilled workers in less developed countries

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23
Q

Ownership and control of Public Sector

A

Owned by Government
Controlled by Government

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24
Q

Corporate Social Responsibility examples?

A

Reducing Carbon Footprint
Improve if working conditions
Reducing, Reusing, recycling where possible

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25
Organic Growth?
Natural growth
26
ways to organically grow?
Open new stores Hire more staff Introduce new products
27
ADV of Organic Growth?
no loss of control as outsiders not involved hiring more staff brings new ideas and skills opening new stores will increase customers base
28
DISAD of organic growth?
very slow may be limited by finance
29
Horizontal Integration?
When two companies at the same stage merge
30
ADV of horizontal integration?
Removes a competitor Increases customer base
31
Disadvantages of Horizontal Integration?
Business may argue about best way to run business Hostility for Jobs Can be expensive to purchase another company
32
Forward Vertical Integration?
When a business take over another business at a later stage eg. Pixar buys Netflix
33
ADV of forward vertical integration?
ensures outlet to sell produce more control over pricing and product display
34
Backwards vertical integration?
Business buys another company at an earlier stage eg. Ford buying a tire manufacturer
35
ADV or backwards vertical integration
Guarantees high quality of materials for final product Ensures high supply of stock Limits supplies to competitors
36
Diversification?
when firms move into different markets from their original business
37
Conglomerate Diversification?
When business move into a market completely different from the original product
38
Lateral Diversification?
When business move into markets related to their original products
39
EG of conglomerate diversification?
Grocery store merged with bank
40
Eg. of lateral diversification?
Hairdresser merged with beauty therapist
41
ADV of diversification?
Risk spread across different markets Increases customer base Business gains customers/ assets from merging business Experience/ Knowledge from different business
42
DISAD of diversification?
May not have knowledge or funds to run new business Entering new market may affect original product
43
External Factors
Political Economic Social Technological Environmental Competition
44
Political factors affecting business
New legislation or laws may increase minimum wage or corporate tax meaning product price may need to be increased which may reduce sales
45
Economic factors affecting business
Employment Book/ Recession Inflation Rates Interest rates
46
Social factors affecting business
Things that affect customers spending habits eg. age, lifestyle, trends etc old people more likely to need food shopping delivered as they are more frail
47
Technological factors affecting business
New technology always coming out so business needs to keep up to date with technology to stay competitive
48
Environmental factors affecting business
Weather conditions maybe delay material deliveries meaning production is delayed therefore resulting in customers waiting longer for their products Hotter weather increases sales of ice lollies, Colder weather increases sales of hats
49
Competitive factors affecting business
Customers may look at rival business for better prices and products before purchasing
50
Internal Factors affecting a business?
Corporate Culture Finance Technology Staffing
51
Corporate Culture
Way things are done in the business staff uniforms, logo and colour scheme, incentives etc
52
ADV of Corporate culture?
Staff will feel like they belong to the business Staff will feel motivated due to rewards Business can be easily recognised by brand image
53
DISAD of corporate culture
Takes time to develop brand image Time and Money used on improving brand imaging and adapting new staff
54
Staffing Impacts on business?
- Staff may be poorly trained so don’t produce high quality products - Staff may take industrial action which reduces production
55
Financial Impacts on business?
- Firm may not have enough money to buy new technology - Firm may not have enough money to hire enough staff - Firm may not have enough to research and develop product + Enough finance to increase wages which increase productivity
56
Technological Impact of business
- Breakdowns of machines are expensive as loss of production - May not have up to date tech + effective use of machinery can give business competitive advantage + business can use social media to increase customer base and advertise
57
Internal stakeholders
Managers Employees Shareholders
58
Interest of Employees?
Good Salary Good working Conditions Promotional opportunities job security
59
Influence of employees?
May take part in industrial action Can change standard and rate of work/ production
60
Interests of Managers
Good salary/ bonuses Responsibility and status
61
Influence of managers
Make decisions such as hiring staff, buying new assets
62
Interest of shareholders?
Getting back good dividend Want business to be profitable
63
Influence of shareholders?
Choice to sell shares Can influence decisions within business
64
External Stakeholders?
Suppliers Banks Government Local Community Customers
65
Interest of Suppliers
Will want business to be successful to ensure sales of materials
66
Influence of suppliers?
Change price Offer discounts eg. bull buying
67
Interest of banks?
Will want business to be successful to ensure repayment
68
Influences of Banks?
Increase interest rates refuse/ accept loans
69
Interest of a government?
Job creation in local areas Increased corporation tax
70
Influence of Government
Set Legislation Increase tax rates
71
Interest of local community?
Ensures business is operate ethically Creates jobs so reduces unemployment Businesses offer goods/ services
72
Influence of local community
Can make complaints Can protest against company
73
Interest of customers?
Want best quality product at lowest price Want to receive a good customer service
74
Influence of customers?
Can choose whether or not to buy products May recommend business to relatives
75
Hierarchical Stricture?
Lots of layers of managerial positions Long chain of command Managers have narrow span of control
76
ADV of Hierarchical Structure?
Great deal of supervision Defined roles Promotion opportunities
77
DIASAD of Hierarchical Structure?
Decisions can take a long time
78
Flat structure?
Delayering- less layers of managerial positions Shorter chain of command Managers have wider span of control
79
ADV of flat structure?
Decisions made more quickly as less deliberation
80
DISAD of flat structure?
Less chance of promotions Less defined roles, may lead to conclusion
81
Matrix structure?
often used during products experts from different department work together team leaders but no mangers
82
ADV of matrix structure?
Experts from all departments work together meaning high quality product Allows relationships to be built within business
83
DISAD of matrix structure?
No clear manager, can lead to confusion Expensive to set up and run
84
Entrepreneurial Structure?
Decisions made by few key middle member of organisation
85
Centralised Structure
All decisions made my top managers
86
Decentralised Structure?
Decisions made by different department depending on decision subject
87
Types of decisions?
Strategic Tactical Operational
88
Strategic Decisions
Made by senior managers Long term decisions Concerned with aims of business eg. changing name
89
tactical decisions?
medium term made my middle managers concerned with how strategic decisions will be achieved eg. opening more stores
90
Operational Decisions?
Short Term Decisions Made in response to daily problems Made by all managers eg. dealing with complaints
91
SWOT analysis meaning
Strength Weaknesses Opportunities Threats

Higher Business (5 decks)

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