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Understanding Business Flashcards

1
Q

What is a need?

A

basic requirement that are essential for survival (food, clothing, shelter)

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2
Q

What is a want?

A

are things we would like to have that we don’t need to survive. These are luxuries such as a phone or holidays

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3
Q

What are goods?

A

these are objects that we can see and touch (such as laptops, clothing and food)

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4
Q

What are services?

A

Things that are done for us, we pay for someone to do something for us such as public transport and haircuts.

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5
Q

What is the cycle of a business?

A
  1. Consumer have wants
  2. Business sees these wants
  3. Business produces goods and services
  4. Goods and Services are consumed
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6
Q

Outline the factors of production

A

Land, Labour, Capital and Enterprise

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7
Q

What is land?

A

all natural resources

e.g. oil, water and land itself

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8
Q

What is Labour?

A

human resources, people who work for the organisation

e.g. managers, sales person, accountants.

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9
Q

What is Capital?

A

Man made resources such as machines, tools and factories

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10
Q

What is enterprise?

A

The business idea the entrepreneur has

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11
Q

What are the skills of a entrepreneur?

A

-Can spot a gap in the market
-Good communication
-Leadership
-Finance (Math skills)

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12
Q

What are the qualities of a entrepreneur

A

-Self Confidence
-Resilient
-Risk Taker
-Creative

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13
Q

What are the sectors of Industry?

A

primary, secondary, tertiary

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14
Q

What is the primary industry?

A

Industry that extracts/exploits natural resources from the earth

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15
Q

What is the secondary industry?

A

Businesses involved in manufacturing and construction

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16
Q

What is the Tertiary industry?

A

Businesses involved in providing services

(majority of the businesses are here, around 90%)

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17
Q

What are the objectives of the private sector?

A

-Profit Maximisation: aims to make as much profit as possible
-Survival: Avoid having to close or being taken over by bigger firms
-Customer Satisfaction: treat its customers well by providing excellent service and make them happy with their experience buying

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18
Q

What is a sole trader?

A

-A Business owned and controlled by one person
-They are financed by their own savings, loans and grants

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19
Q

What are the advantages of a sole trader?

A

-Easy and cheap to setup
-You make all the decisions
-You get to keep all the profits

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20
Q

What are the disadvantages of a sole trader?

A

-Unlimited liability
-Difficult to raise finance to start the business
-long working hrs and problems if they fall ill

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21
Q

What is a partnership?

A

-They are owned and controlled by 2-20 partners
-They are financed by own savings, loans, retained profits and grants

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22
Q

What are the advantages of a partnership?

A

-The workload can be shared among the partners
-More finance can be raised since they are more people involved in the business
-Partners can specialize in certain parts of the business

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23
Q

What are the disadvantages of a partnership?

A

-unlimited liability
-arguments can occur between partners
-formal paperwork is required and can be costly

24
Q

What is a private limited company (LTD)?

A

-They are owned by shareholders and controlled by a board of directors.
-They are financed by loans share issue (shareholders investment in the company), retained profits, government grants

25
What are the advantages of a LTD?
-Limited liability -No limit to the number of shareholders=more finance can be raised -Better reputation than sole traders and partnerships
26
What are the disadvantage of a LTD?
-Profits shared among a larger amount of people -Must publish their accounts this means the accounts aren't private -Can't sell shares to the public, restricting finance that can be raised -Expensive to set up
27
What is the public sector?
-It is owned by the government on behalf of the public and is controlled by elected MP and Councillors
28
How is the public sector financed?
-Council Tax (each household in the local authority pays this. It is based on the value of the property) -National Government Funding (funding provided to local authorities from the government) -Charging fees (for the use of council facilities)
29
What are the objectives of the public sector
-The main objective is Provision of a quality service -To be socially responsible, this is when the business aims to not harm the local environment and community
30
What is a local authority?
-They are the local council that provide the us services such as education, housing leisure etc. e.g. East Renfrewshire
31
What are the advantages of a local authority?
-They can make decisions on what to spend their budget on -Each local authority can focus on the best way to meet the needs of the people living in that area -They are the biggest employers in the country
32
What are the disadvantages of a local authority?
-Quality of decisions can vary greatly -Quality of service can vary greatly -Aims and objectives may change depending on the political makeup of the council
33
What is the third sector?
-They aim to help people/environment rather than focus on profit -They include charities and community groups -Social enterprises
34
What is a charity?
-They are owned by trusts, founders, not own by one particular person -They are controlled by a board of trustees -They are funded by mainly donations or grants -They aims is not make a profit to raise money for good causes
35
What is a social enterprise?
-They operate the same as any business in the private sector but the profit is used to benefit the community -Owned by private individuals (They exist to make a profit) -50% of its profits are invested into the local community -Funded by grants and sponsorship
36
What is the importance of providing good customer service?
-The business will receive a good reputation which will keep existing customers loyal and may attract new customers, result in a higher market share -Profits may increase due to increase in trade/customers. This may make shareholders happy as they gain dividends (return on investment) -The business can charge higher price for its products and services
37
What can poor customer service lead to?
-decrease in profits -bad reputation -loss of market share -loss of competitive edge -low staff morale
38
How can a business ensure customers are satisfied?
-Provide high quality product that is reliable and does what the customer wants -Ensure that staff are trained to know the products well and can deal with customer queries and give advice -Providing an after sales service allows customers access to advice and support once they have bought their product
39
What are the benefits of market research?
-effective market research will allow a business to find out the needs and wants of its customers. This means that the product or service can be tailored to these needs, leading to greater customer service
40
What does PESTEC stand for
Political, Economic, Social, Technological, Environmental, Competitive
41
What is the Political Factor?
-It involves any changes in law and regulations. -This is enforced by the government so businesses must oblige. e.g. The government increase the national minimum wage this means that cost for business will increase
42
What is the Economic Factor?
-This involves inflation, unemployment, interest rate rises and boom periods e.g. the economy is going through a boom period this means that sales and profits grow, the organisation invests in developing new products, workforce increases, business expands
43
What is the Social Factor?
-This involves people tastes, trends and lifestyle e.g. Consumers become more health conscious, this means that rise in sales in low fat meals, bottles water and organic products
44
What is the technological factor?
-This involves ICT, research and development, automation and e-commerce e.g. Business needs to update their technology and equipment this means that staff need to be trained to use this technology
45
What is the Environmental Factor?
-This involves physical conditions such as climate change, harsh weather, natural disasters -Also involves green credentials such as recycling and pollution e.g. Consumers are becoming more concerned about the environment and sustainability this means that a business that does not have environmentally friendly products or pollutes may gain a bad reputation
46
What is the competitive factor?
-This involves direct competition in the same market (e.g. apple and Samsung) -Businesses must keep an eye on prices, quality or new products competitors are producing and make sure that they keep up. Otherwise they could lose customers
47
What are the 3 main internal factors?
-Human Resources -Finance -Technology
48
What is the internal factor Human Resources?
-This relates to people who working in the business organisation, it covers managers and employees
49
What is the internal factor of Finance?
-If a business has enough finance, it will be able to expand, make new products or buy machinery -A lack of finance can mean losing staff, delaying new product introduction which means lack of growth and profit for the business
50
What is the internal factor of Technology?
-If the current technology in the business is out of date this means that production may be slow -Introducing new technology means new skill for the workforce and to compete with competitors but staff need to be trained in order to use this new technology
51
What are the owners (internal) main interest, influence and impact in the business?
Interest- A good return on their money that they have invested in the business, a good level of profit, a good reputation for their business. Influence-decide the objectives of the firm, make all the major decisions of the business e.g. hiring/organizing staff Impact- Can make decisions such as objectives or finance meaning the business may grow or introduce a new product, buy machinery or premises
52
What are the shareholders (internal) main interest, influence and impact?
Interest- The profit and value of their shares, healthy dividends Influence- Can vote the annual general meetings to remove or appoint directors and they can sell their share. Impact- Selling shares can result in a fall in share price. The appointment of new directors could make the business more successful
53
What are the managers (internal) interest, influence and impact in the business?
Interest- a good pay, bonuses, job satisfaction, status Influence- make most of the decisions, have a widespread influence, hiring and firing, creating company policies, making day to day decisions and long term decisions. Impact- Impact success, good decisions might increase profits but bad decisions such as changing the packaging or recipe of a product may cause a fall in demand
54
What are the employees (internal) interest, influence and impact in the business?
Interest- good rate of pay, good working conditions, job security, promotional opportunities, job satisfaction. Influence- level of productivity, quality of service, take industrial action Impact- Producing quality product or services then customers will be happy and continue buying products and services meaning steady sales and profits
55
What are the suppliers (external) interest, influence and impact in the business?
Interest- want regular orders from the customers (loyal customers), to pay for any ordered materials quickly Influence- Raising or lowering prices, change the lead (delivery) time for the orders Impact- Prices, discounts or credit terms can impact the amount of finance the business has available and also the prices that can be charged for products
56
What are the customers (external) interest, influence and impact in the business?
Interest- value for money, good quality product, service at a reasonable price, good customer care, treated well by the business Influence- can decide whether or not to purchase from the business, can affect the organisations reputation through word of mouth Impact- They can decide not to buy products or services which could result in the business closing
57
What are the local communities interest, influence and impact in the business?
interest- bring jobs to the area, good, safe environment to live in influence- pressure firms through pressure groups, protesting and petitioning if unhappy at the organisations conduct Impact- Bad publicity in the local community may lead to fewer customers and so impact sales, profit and survival

Business Nat 5 (5 decks)

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