Understanding Business Flashcards
What is land, within context with the factors of production
This is the naturally occuring materials that a firm would use eg water, cotton
What is labour, within context of the factors of production
This is the human resources used by the organisation eg staff, manager of production
What is capital, within context with the factors of production
This is the money and machinery used in the firm
What is enterprise, within context of the factors of production.
The entrepreneur, the risk taker, the idea
What are the sectors of industry
Primary
Secondary
Tertiary
What is primary, within context of sectors of industry
This is the extraction of resources that are later used for goods and services eg farming fishing forestry
What is the secondary sector, within context of the sectors of industry
This is the manufacturing of the products with usage of the extracted resources from the ground ie shipbuilding, glass maker
What is tertiary, within context of the sectors of industry
This is providing the community with a service eg schools, banks, hospitals
What are the sectors of economy
Private
Public
Not for profit (third)
What is private, within context of sectors of economy
This is a profitable organisation, aim to make profit
What is public, within context of sectors of economy
This is an organisation funded by the public purse
What is not for profit, within context of the sectors of economy
An organisation which is not for profit
What are the methods of maximising customer service
Researching what their customers really want, something that makes them happy eg surveys
Inviting customers to make comments on their goods/services eg comment cards
Charging fair prices that reflect the product being offered eg not raising gas prices when it is cold
Providing services that their customers want
What is a sole trader
A company run and owned by one single person eg corner shops, hairdressers
What is a partnership
Company owned by between 2-20 people eg dentists, opticians
What is an LTD
Firm that sells shares in business to only family and friends
What is a local government organisation
Organisation ran by and funded by gov
What are the advantages and disadvantages of a sole trader
Adv Owner makes all decisions Owner takes all profits Firm easy to debt up Decisions easily made
Disadv
Stressful - little time off work
Unlimited liability
Limited sources of finance so little expansion
What are the advantages and disadvantages of a partnership
Adv
More capital available
Workload shared
Partners can bring in areas of different expertise to business
Disadv Partners can disagree Profit has to be shared Unlimited liability If partner dies leaves or joined a new partnership agreement has to be set up which is quite costly
What are the advantages and disadvantages of an LTD
Adv
Can raise more capital
Limited liability
Don’t need to publish annual accounts
Disadv
Have to seek other shareholders permission before selling share to family/friends
Expansion limited to how much money is invested in business
What are the advantages and disadvantages of a PLC
Adv
Shares quoted on stock market
Business run by board of directors
Disadv
Shareholders can freely sell shares
Shares can fall in value
What is an entrepeneur
This is a dynamic individual who takes their idea into practice and faces potential humiliation from family and friends if they fail at their idea
What were the characteristics of an entrepreneur
Identifying new business opportunities and developing the idea
Taking the risk to lose all/part of their investment
Combining all the factors of production together
Setting target for the business
Using his/her money to finance cost of resources
What are the objectives
Profit maximisation Sales maximisation Increase market share Growth Survival Provison of a service Social responsibility Improving customer satisfaction
