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UNDERSTANDING BUSINESS Flashcards

1
Q

Explain the advantages of franchising for the franchiser.

A

-It is a quick way to to enter new geographical markets and the franchisers name becomes more well known as their expanding
this meaning the franchiser can get more sales while being more well known meaning more customers

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2
Q

Distinguish between the features of NHS Scotland and a PLC in terms of ownership and control.
(3) marks

A

Definition
A PLC is a generally large company with a minimum of £50000 in market share ,PLC members must also sign a memorandum of Association

In terms of the CONTROL The NHS is ran by the Scottish government/Scottish parliamentt Whereas a PLC is ran by shareholders
In terms of Ownership The NHS is Owned by the government Whereas a PLC is owned by a board of directors

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3
Q

Describe the benefits of being a multinational company
(5marks)

A
  • An increase in market shares
    -A decrease in cost of production such as lower wages due to operating in other companies(cheaper)
    -lower tax rates in different countries
    -To take advantages of government grants available
    -secure cheaper premises and labour
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4
Q

all private sector organisations

A

sole trader

partnership

Private limited company

public limited company

franchise

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5
Q

describe the advantages and disadvantages of a sole trader

A

-its easy to set up and also cheap compared to other private sector organisations as there isn’t any legal formalities
-The owner has complete control and takes all decisions.
-Profits are kept by the owner
-business affairs kept private

Disadvantages
Unlimited liability
Limited capital
New ideas are limited
Commitment to the business

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6
Q

what objectives would businesses have

A

-maximising profits
-survival i.e staying alive
satisfying i.e hitting an objective of profit to keep the stakeholders happy
-CSR (corporate social responsibility) i.e good reputation
-growth

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7
Q

What is Horizontal Integration
Advantages and Disadvantages

A

-Two organisations joining together at the same stage of production

A=can dominate the market as the company has gotten larger
A=benefit from ecnomies of scale
A=Due to reduced competition,the new business can raise prices therefore increasing profits

D=merger could break EU laws/break laws making it illegal
D=Overall quality of product may drop because of lack of competition
D=customers may have to pay higher prices for the same goods due to less competiton

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7
Q

what are the four factors of production

A

land,labour,capital and enterprise

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7
Q

what is “land”

A

land is the natural resources businesses use to create products

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7
Q

what is “labour”

A

labour is the human resources used,i.e businesses employ people to make/manufacture products

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7
Q

what is “capital”

A

capital is the man made resources required to create the products

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7
Q

what is “enterprise”

A

Enterprise is the combination of land,labour and capital that the entrepreneur use to create the product

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8
Q

what are the four sectors of industry

A

Primary,secondary,teritary and Quaternary

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8
Q

What do primary,secondary,teritary and Quaternary DO

A

primary-Raw materials
Secondary-Produce goods
Quaternary-Knowledge based services
Teritary-sales and goods

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9
Q

What does the primary sector do

A

businesses taking natural resources from the land

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10
Q

What does “teritary sector” do

A

businesses that provide services instead of goods i.e messages

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11
Q

What does the “secondary sector” do

A

Involved in manufacturing and construction i.e take natural resources and turn them into goods that can be sold

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12
Q

what does the “quaternary sector” do

A

businesses providing information and knowledge based services

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13
Q

What are the 3 sectors of the economy

A

Private,public and charity

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14
Q

What is a private sector organisation

A

owned by a private individual and a board of directors/investors

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15
Q

What is a public SECTOR organisation

A

owned by the government and also has a board of directors

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16
Q

What is a third sector organisation

A

organisations that are set up for a good cause to raise money

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17
Q

Benefits/disadvantages of a partnership

A

A=increased capital
-shared workload
-holiday/sickness cover
D=unlimited liability
=profits are shared
=disagreement and fallout

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18
Q

Advantages/disadvantages of a PLC(private)

A

A=Increased capital
-limited liability
-less risk of business failure
D=Dividends only paid to shareholders if profits are made
-must be registered with companies house(legal proceddings are costly

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19
Advantages/disadvantages of a PLC(public)
A=limited liability -can dominate the market -more capital than Private limited companies due to shares being issued through stocks Easier for PLCS to borrow money D=must publish account -Formation highly expensive (legal and admin) -dividends need to be shared among shareholders Diseconomies of scale (rising average of costs)
20
Multinationals advantages and disadvantages
-provide Jobs and income,increasing the brands reputation -economies of scale (Lower average costs -lower tax rates -legislation is relaxed D=All profits go back to parent nation D= Language barrier D=cultural differences D=exploiting workers with lower wages could lower the companies reputation
21
Difference between public sector organisation and a public limited companies
Public sector organisations serve the General public and public limited companies this sells shares
22
Advantages and disadvantages of social enterprises
A social enterprise is is an organisation that exists with a decisive goal to help the community but runs the organisation like a business.All money is reinvested Advantage -help tackle social problems -attract customers who support the cause Disadvantages -lack of support and funding if grants are not available -the initiative may require hard work to achieve success
23
What are the 3 business objectives
Survival CSR Profit maximisation
24
Profit maximisation
Make as much profit as possible Two ways to do this include I-ncrease/sales/selling price -reduce costs
25
CSR
CSR is an organisation aiming to act in a ETHICALWAY or in any way that benefits either society or the environment
26
Positives of CSR
Business gets a good reputation for being kind/care Customers are more likely to use the business
27
What is managerial objectives
Usually large organisations with many managers
28
What is satisficing
To have a “satisfactory result” instead of an exceptional one Because it may not be ideal to maximise profits due to external factors
29
What does growth means -advantages and disadvantages
Growth means expanding sales and increasing profits this would be a business objective Ad Reduces the risk of failure Increases profits Avoids being taken over
30
What are some advantages of customer service
-Increased sales and profits -Less staff turnover as staff will be more motivated -good word of mouth
31
Objectives of public sector businesses (PRIVATE and PUBLIC limited companies)
Private limited companies -growth -profit maximisation Public limited companies Growth Profit maximisation
32
What does a Public sector organisations objectives
Public corporations -provide a quality product -to make best use of funds
33
what is internal and external growth
Internal growth also known as organic growth is besically a business growing naturally i.e through staff/new branches external is through joining with another organisation usually by takeover or merger
34
Advantages of a merger and disadvantages
market share and resources are shared, increasing profits -economies of scale customers may dislike the changes a merger can bring marketing the merger may cost loads in advertisement
35
advantages and disadvantages of a takeover
Advantages risk of failure reduced competition reduced -economies of scale Disadvantages expensive to take over a business less competition could mean higher prices Quality of products can go down
36
What is backward and forward Vertical integration
Backward forward integration -Business joining with a supplier e.g previous stage ,starbucks taking over a coffee bean plantation Forward vertical Integration business joining with the next stage -breward taking over a pub
37
What is backward and forward integration
backwards business joining with their supplier forward business joining with sales/retail like a alcohol company joining with a pub
38
Advantages of Forward and backwards integration
Forward business can control supply of stock increase profits as no middleman backwards cheaper stock/supply costs quality can be controlled
39
advantages and disadvantages of diversification/Conglemerate integration
(conglomerate integegration) Joins with another organisation in a completly different market Advantages business is larger and more fiancially secure -business can reduce risk -business gains customers and sales -can overcome seasonal fluctuations Disadvantages -business could become to big to handle -business may not know much about the market too many products can make the company lose focus
40
advantages and disadvantages of outsourcing
-Could be cheaper to outsource -business can concentrate on what their good at -could be more expensive trying to get a specilist -communication needs to be clear
41
advantages and disadvantages of a merger
-each new branch can focus on what they specialise --they can run more efficiently -expensive to market and brand the new branches -customers may be put off and not go to either company
42
Describe a Tall hierarchical system
-many levels of management -commands go from top all the way to the bottom -long chain of command
43
Describe a flat structure along with the advantages and disadvantages
-few levels of management -shorter chain of command -managers have a wider span of control advantages -employees have more authority -decision making is quicker disadvantages -employees onload a greater workload -fewer promotion opportunities
44
Adantages and disadvantages of delayering
advantages -quicker communication -moneys saved on salaries as less people can get promoted disadvantages -less promotions -wider span of control
45
Entrepreneurial management system
One boss advantages decisions are made extremely quick decision makeing doesnt need to consult other staff disadvantages can annoy employees as there thoughts and ideas are stifled heavier workload
46
What is centralised management system Advantages and Disadvantages
Decisions made from HQ,senior managers -Decisions made for whole organisation -Benefit from economies of scale -greater uniformity in the organisation run more smoothly disadvantages -slower decision making -slower communication -less responsive to external factors
47
Decentralised MANAGEMENT system (Advantages and disadvantages)
Advantages -empower staff/motivates staff -decisions can match local needs -business can react well to external factors Disadvantages -less supervision -decisions made differ from each branch -transfer of staff may lead to confusion due to different practices -Slower decision making
48
Downsizing Advantages and Disadvantages
-costs are cut -the business is more effective -valueable skills and resources are lost -staff feel vulnerable
49
What is functional grouping
Departments where staff have similar skills and expertise and do similar jobs
50
What are the advantages and disadvantages of functional grouping
Advantages Allow specialisation Clear organisational structure Disadvantages Organisation may become too large and unwieldy May be unresponsive to change
51
What is Product/service grouping
Divisions/departments that each deal with a different product range
52
Customer grouping advantages and disadvantages
Each division has varying customer needs Customer loyalty can build due to personal connections Expensive due to staff costs for each New staff lose feelings of importance
53
Customer grouping
Customer groups are divisions dealing with different types of customers
54
Advantages and disadvantages of product/service grouping
-easy to identify low sales in products -expertise can develop in dealing with each product/service -Duplication of effort -divisions may end up competing with each other
55
What is location grouping
Staff divided into divisions each dealing with a geographical area
56
Advantages and disadvantages of location grouping
Advantages Can cater for local needs/tastes -better response times to customers Disadvantages -Duplication of effort and resources Very costly to staff to be relocated
57
Technology grouping
Grouping their business according to technology or production process
58
Advantages and disadvantages of technology grouping
-increased specialisation amongst staff -quicker and cheaper to train staff Specialist training requires Higher salaries for skilled special workers
59
Advantages and disadvantages of corporate culture
-employees feel part of the organisation -staff loyalty -staff may resist change -hard to introduce staff culture
60
What does PESTEC stand for
Political Environmental Social Technology Environmental Competitive
61
What is political factors
Actions taken by the government -change in VAT rates -change in income tax rates
62
What are some examples of Economic factors
-Economic growth -interest rates -exchange rates
63
Economic influence -unemployment rate
Advantages -high unemployment means a larger pool for vacancies-people -low unemployment means higher disposable income Disadvantages -low unemployment means less people to choose from -High unemployment means consumers feel insecure about their future
64
Economic factor-Interest
Lower interest means it’s cheaper to pay back a loan thus businesses can expand as it’s easier for a loan -lower interests means consumer can take out loans for cheap to fianance large purchases -high interest means businesses will hold of from expanding -high interest means consumer will save more
65
Economic factor-Economic factor
-changes by the chancellor may increase consumer spending meaning more disposable income meaning more sales and profits -changes to ecnomic policy means the banks will be unable to lend money as freely
66
Social factor-changes in taste
Market research may indicate holes in the market which businesses can exploit as a development opportunity Having a market based orientated approach means the business needs to constantly watch the market
67
technology-social media
increasing access to more customers thus increasing sales and profits costs of administration i.e keeping the website up
68
environment-Recycling
use recycling as a marketing method which enhances their public image adds to overall costs as specific bins might need to be added to recycle effectively all the different kinds of waste futhermore increased wages as pick up men will have to paid for more frequently
69
Environment-weather
Depending on the product Summer might cause an increase in sales compared to in winter poor summer could mean a businesses crop has a poor harvest decreasing sales as sales have fallen
70
Competitive-Competitive influence
Improves the market as more competition means businesses have to improve their quality over their competitors wider choice for customers expensive as businesses will have to conduct more market research to develop their product
71
What are stakeholders and what are the 3 "I" when answering a stakeholder question
groups of individuals who have an interest in and stand to be affected by the success or failure of an organisation Identify-who are they Interest-what do they want with the business influence-how will what they want affect the business
72
internal stakeholders
owner/shareholders-want high profits, high dividends managers-want promotions, job security employees-better wages, job security
73
External stakeholders
Government-can change legislation i.e tax banks-can grant/deny loans
74
what are the 3 types of decisions
Strategic,Tactical,Operational
75
Strategic Decision making
-Long term -Made by CEO or board of directors
76
tactical Decision making
-made by middle level managers -try to hit the strategical decision -made over weeks and months
77
Operational Decision making
-short term day-to-day activities -made by the lowest in the company i.e employees day managers
78
SWOT Strenghts and weaknesses
-Identifies strengths and weaknesses -allows weaknesses to be focused on Time consuming to make chosen decisions could be biased
79
Role of a manager
Planning Organising delegating co-ordinating commanding
80
What does diversification mean
Diversification is when a business reduces risk by expanding their goods and services
81
What does delayring mean
-This Involves cutting layers of management within the organisation which in turn flattens the structure
82
Private sector
Organisations are owned and controlled by private individuals and investors
83
Public sector
Organisations are owned and controlled by the government
84
Third sector
Organisations are set up raise money for a good cause
85
What is the difference between Privately owned Organisations and publicly owned organisations
Privately owned businesses are business which sells us things Publicly owned things are things done for us by the government hospital and school
86
What is a social enterprise
A social enterprise is a business that trades for a social and or environmental purpose They are specifically set up to generate their income by selling goods and services rather than through grants and donations
87
Franchisee benefits and downsides
A=takes over a known brand,winning formula A=franchiser still controls and owns their business A=franchise benefits from centralised advertisement A=low risk form of growth for franchiser D=may not agree with decisions made by franchiser D=A large fee and royalties is paid to the franchiser D=franchisee doesn’t have complete freedom D= reputation easily damaged as one poor performance from a different franchise can damage every franchise
88
Difference between public sector and public limited
Public sector organisations serve the general public, while public limited companies sell shares to the general public
89
Advantages and Disadvantages for a tall structure
A=more promotion opportunities A=employees will know immediate bosses A=clear lines of responsibility and communication A=Narrow span of control, managers have more time for planning D=many layers of management D=slow decision making D=higher labour costs due to many labours increasing (salary demands) D=managers have more time to supervise employees which could make them nervous, influencing them into making a mistake
90
What happens when interest rates are high
Customers are less likely to borrow money banks have to pay out more money
91
Reasons why a businesses profit for the year could increase
Increased sales revenue decreased expenses
92
What is the private sector
Organisations ran by private individuals and controlled by private individuals/shareholders/investors
93
What is the public sector
organisations ran and owned by the government

BUSINESS HIGHER (7 decks)

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