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Higher Business > Understanding Business > Flashcards

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
Q

Organic Growth?

A

Natural growth

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26
Q

ways to organically grow?

A

Open new stores
Hire more staff
Introduce new products

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27
Q

ADV of Organic Growth?

A

no loss of control as outsiders not involved
hiring more staff brings new ideas and skills
opening new stores will increase customers base

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28
Q

DISAD of organic growth?

A

very slow
may be limited by finance

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29
Q

Horizontal Integration?

A

When two companies at the same stage merge

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30
Q

ADV of horizontal integration?

A

Removes a competitor
Increases customer base

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31
Q

Disadvantages of Horizontal Integration?

A

Business may argue about best way to run business
Hostility for Jobs
Can be expensive to purchase another company

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32
Q

Forward Vertical Integration?

A

When a business take over another business at a later stage eg. Pixar buys Netflix

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33
Q

ADV of forward vertical integration?

A

ensures outlet to sell produce
more control over pricing and product display

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34
Q

Backwards vertical integration?

A

Business buys another company at an earlier stage eg. Ford buying a tire manufacturer

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35
Q

ADV or backwards vertical integration

A

Guarantees high quality of materials for final product
Ensures high supply of stock
Limits supplies to competitors

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36
Q

Diversification?

A

when firms move into different markets from their original business

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37
Q

Conglomerate Diversification?

A

When business move into a market completely different from the original product

38
Q

Lateral Diversification?

A

When business move into markets related to their original products

39
Q

EG of conglomerate diversification?

A

Grocery store merged with bank

40
Q

Eg. of lateral diversification?

A

Hairdresser merged with beauty therapist

41
Q

ADV of diversification?

A

Risk spread across different markets
Increases customer base
Business gains customers/ assets from merging business
Experience/ Knowledge from different business

42
Q

DISAD of diversification?

A

May not have knowledge or funds to run new business
Entering new market may affect original product

43
Q

External Factors

A

Political
Economic
Social
Technological
Environmental
Competition

44
Q

Political factors affecting business

A

New legislation or laws may increase minimum wage or corporate tax meaning product price may need to be increased which may reduce sales

45
Q

Economic factors affecting business

A

Employment
Book/ Recession
Inflation Rates
Interest rates

46
Q

Social factors affecting business

A

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
Q

Technological factors affecting business

A

New technology always coming out so business needs to keep up to date with technology to stay competitive

48
Q

Environmental factors affecting business

A

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
Q

Competitive factors affecting business

A

Customers may look at rival business for better prices and products before purchasing

50
Q

Internal Factors affecting a business?

A

Corporate Culture
Finance
Technology
Staffing

51
Q

Corporate Culture

A

Way things are done in the business
staff uniforms, logo and colour scheme, incentives etc

52
Q

ADV of Corporate culture?

A

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
Q

DISAD of corporate culture

A

Takes time to develop brand image
Time and Money used on improving brand imaging and adapting new staff

54
Q

Staffing Impacts on business?

A
  • Staff may be poorly trained so don’t produce high quality products
  • Staff may take industrial action which reduces production
55
Q

Financial Impacts on business?

A
  • 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
Q

Technological Impact of business

A
  • 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
Q

Internal stakeholders

A

Managers
Employees Shareholders

58
Q

Interest of Employees?

A

Good Salary
Good working Conditions
Promotional opportunities
job security

59
Q

Influence of employees?

A

May take part in industrial action
Can change standard and rate of work/ production

60
Q

Interests of Managers

A

Good salary/ bonuses
Responsibility and status

61
Q

Influence of managers

A

Make decisions such as hiring staff, buying new assets

62
Q

Interest of shareholders?

A

Getting back good dividend
Want business to be profitable

63
Q

Influence of shareholders?

A

Choice to sell shares
Can influence decisions within business

64
Q

External Stakeholders?

A

Suppliers
Banks
Government
Local Community
Customers

65
Q

Interest of Suppliers

A

Will want business to be successful to ensure sales of materials

66
Q

Influence of suppliers?

A

Change price
Offer discounts eg. bull buying

67
Q

Interest of banks?

A

Will want business to be successful to ensure repayment

68
Q

Influences of Banks?

A

Increase interest rates
refuse/ accept loans

69
Q

Interest of a government?

A

Job creation in local areas
Increased corporation tax

70
Q

Influence of Government

A

Set Legislation
Increase tax rates

71
Q

Interest of local community?

A

Ensures business is operate ethically
Creates jobs so reduces unemployment
Businesses offer goods/ services

72
Q

Influence of local community

A

Can make complaints
Can protest against company

73
Q

Interest of customers?

A

Want best quality product at lowest price
Want to receive a good customer service

74
Q

Influence of customers?

A

Can choose whether or not to buy products
May recommend business to relatives

75
Q

Hierarchical Stricture?

A

Lots of layers of managerial positions
Long chain of command
Managers have narrow span of control

76
Q

ADV of Hierarchical Structure?

A

Great deal of supervision
Defined roles
Promotion opportunities

77
Q

DIASAD of Hierarchical Structure?

A

Decisions can take a long time

78
Q

Flat structure?

A

Delayering- less layers of managerial positions
Shorter chain of command
Managers have wider span of control

79
Q

ADV of flat structure?

A

Decisions made more quickly as less deliberation

80
Q

DISAD of flat structure?

A

Less chance of promotions
Less defined roles, may lead to conclusion

81
Q

Matrix structure?

A

often used during products
experts from different department work together
team leaders but no mangers

82
Q

ADV of matrix structure?

A

Experts from all departments work together meaning high quality product
Allows relationships to be built within business

83
Q

DISAD of matrix structure?

A

No clear manager, can lead to confusion
Expensive to set up and run

84
Q

Entrepreneurial Structure?

A

Decisions made by few key middle member of organisation

85
Q

Centralised Structure

A

All decisions made my top managers

86
Q

Decentralised Structure?

A

Decisions made by different department depending on decision subject

87
Q

Types of decisions?

A

Strategic
Tactical
Operational

88
Q

Strategic Decisions

A

Made by senior managers
Long term decisions
Concerned with aims of business
eg. changing name

89
Q

tactical decisions?

A

medium term
made my middle managers
concerned with how strategic decisions will be achieved
eg. opening more stores

90
Q

Operational Decisions?

A

Short Term Decisions
Made in response to daily problems
Made by all managers
eg. dealing with complaints

91
Q

SWOT analysis meaning

A

Strength
Weaknesses
Opportunities
Threats

Higher Business (5 decks)

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