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Business > Understanding Business > Flashcards

Understanding Business Flashcards

1
Q

Capital

A

the machinery used to produce products or the money used to start up a business

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2
Q

enterprise

A

the person who combines all the factors of production together

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3
Q

land

A

the natural resources used in a business

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4
Q

labour

A

the human resources that work in a business

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5
Q

Primary sector of industru

A

industries that extract natural resources from the ground

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6
Q

secondary sector of industry

A

industries that use primary resources to produce a service

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7
Q

Tertiary sector of industry

A

industries that provide a service

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8
Q

quaternary sector of industry

A

industries which provide information using ICT

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9
Q

Stages of of employment development in the UK

A
  1. Country is dominated by primary industries
  2. country is dominated by manufacturing
  3. service sector becomes the most important
  4. the quaternary sector is sometimes inculted with the tertiary sector as they are both service sectors
  5. between them the tertary and the quaternary sectors are the largest part of the UK economy
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10
Q

Private sector

A

owned by private individuals to make a profit

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11
Q

public sector

A

owned by the government and the main aim is to break even

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12
Q

third sector

A

to help others in need

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13
Q

Private limited company

A

owned by a minimum of one shareholder who are family and friends

board of dircetors make the decisions

identified by having Ltd after the business name

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14
Q

Advantages of a private limited company

A

Shareholders have limited liability

easier to raise finance as new shares can be sold

no limit to number of shareholders

control of the company is not lost

large amount of experience can be gained from shareholders and directors

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15
Q

disadvantage of a private limited company

A

set up costs are expensive and time consuming

accounts have to be published

profits are shared amongst a larger amount of people

shares cannot be sold to the public- difficult to raise finance

meet the requirments of the companies act

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16
Q

Public limited company

A

Owned by a minimum of 2 shareholders with a capital of £50000

decisions are made by a board of directors

shareholders vote at an AGM

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17
Q

Advantages of a public limited company

A

shareholders have limited liability

can raise vast amounts of finance

Plc’s dominate the market

shares can be sold on the stock market

due to size they benefit from economies of scale

18
Q

Disadvantages of a public limited company

A

set up costs are high

you have no control over who buys the shares- risk of takeover

prospectuses have to be produced

must abide by the companies act

must publish annual accounts

separation of ownership and control9

19
Q

Franchise

A

an agreement where a business sells the rights to other businesses allowing them to sell the products or use the company name

20
Q

franchisee

A

the person who buys the rights

21
Q

franchiserthe

A

the company selling the rights

22
Q

franchiser advantages

A

allows market share to increase without much effort

has the power to withdraw the franchise if rules and conditions are not being met

finance for the business is provided by the franchisee

risks are shared betwene franchisee and franchiser

% of profits are achieved

23
Q

franchiser disadvanatges

A

image and reputation depends on the franchisees

24
Q

franchisee advantages

A

franchiser will advertise nationally

franchiser carries out administration and training

begin trading with an established name

customers are familliar with the products

25
Q

franchisee disadvanatges

A

franchisees reputation and profitability depend on the franchiser and the performance of other franchisees

strict rules may be set by the franchiser and the may pose restrictions

a % of profits has to be paid to the franchiser

the franchiser has the power to withdraw the contract

26
Q

Multinational

A

a company that owns production service facilities outside the country in which it is based

have budgets larger than some countries

normally public limited companies

often gain a bad reputation for child labour and poor working conditions for staff

27
Q

benefits of MNC’s

A

an org may be given grants from govts to locate in that country and the grants will not require to be paid back

orgs will become larger which may result in them being safer from takeovers

call allow orgs to increase their sales/profits

take advanatge of economies of scale and reduce unit costs of products

employ cheaper staff

may helt avoid legal restrictions in the orgs own country whihc could allow them to sell/ produce their products abroad

could allow for tax advantages which will increase profitability

avoidance of ariffs/quotas imprsed by governemnts

28
Q

costs of MNC’S

A

legislation may be different in other countries which may require the organisation to alter its product/ service

legislation may exist on how a product/service is marketed and may result in some marketing techinques having to be chnaged

cultural differences will mean that organisation have to be sensitive to countries cultures

different languages will exist and this may mean that organisation have to employ specialist linguists to work with the organistaion

29
Q

Benefits for host countries

A

creation of employment

introduction of technology

improved standard of living

30
Q

Disadvantages for host countries

A

exploitation of workers/resources

profits go back to MNC of origin

MNC’s become too powerful and exert a strong influence on governemnts

social responsibility- damage to environment- use up non renewable energy

low costs of MNC can force local businesses out of business

increased competition for local companies

31
Q

National government organisation

A

owned by central governemnt/ taxpayer

controlled bye elected politicians/ civil servants/ MPS

financed by national insurance/ VAT and income tax

32
Q

Local governemnt organisations

A

owned by central governemnt

controlled by elected councillors/ civil servants

financed by council tax, money form central governemnt. charges for services

33
Q

Public corporations

A

owned by the central government

controlled by board of directors

financed by government grants, selling merchandise, tv license

34
Q

Third sector

A

owned by members, sponsors, founders

controlled by the volunteers or an elected volunteer

financed by donations, appeals, lottery grants, selling items

35
Q

Social enterprise

A

owned by the founder

controlled by a manager

main aim is to help social or environmental issues

they can get donations and grants but it is not their main source of income

they sell goods and services to earn an income

they do make a profit but it is not the main aim

social enterprises are less regulated by the governemnt

to qualfy as a social enterprise at least half of the profit must go to their main aim

36
Q

Advantages of a social enterprise

A

help to solve social and enviro issues whilst making a profit

media attention for the social issue provides publicity for your business

attracts customers who support the issue

can sell shares to raise finance if they are a limited company

grants are available specifically to social enterprise businesses

37
Q

disadvantages of a social enterprise

A

depends heavily on volunteers

paid workers normally are paid a lower wage than those in the private sector

38
Q

private sector objectives

A

survival

growth

provide a qualty good/ service

maximise profit

dominate the market

maximise sales

become more socially responsible

improve their reputation

39
Q

public sector objectives

A

provide an improved service

break even

make best use of taxes

keep within a budget

be socially responsible

cut costs

40
Q

Third sector objectives

A

increase awareness

increase volunteers

open more shops

maximise donations

help people/animals/ protect the environment

41
Q

Stakeholders definition

A

an individual or a group of individuals who have an interets or interest in the success or failure of a business

42
Q

Stakeholder interdependence

A

a reason why one stakeholder needs another

Business (5 decks)

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