Understanding Business Flashcards
What is a good?
These are physically tangible things. This means that they can be touched and seen e.g. mobile phone, chocolate bar, television.
What is a service?
These are things that are done for others. Services are intangible. This means that they cannot be seen or touched after they are provided e.g. hairdressing, education, banking
What is the definition of a durable product?
These goods and services last for a long time period and can be used again and again e.g. mobile phone, laptop
What is the definition of a non-durable product?
These goods and services do not last for a long time period and are usually only used once e.g. newspaper, food
What is the definition of a consumer?
Theses goods and services are consumed by private individuals to satisfy their needs and wants e.g. game consoles, technology, clothing
What is the definition of Capital?
These goods and services are consumed by businesses so that they can provide other goods and services e.g. vehicles, money
What are the 4 Factors of production?
Land
Labour
Capital
Enterprise
What is the definition of land?
Land is all of the natural resources in it or on it (e.g. oil, wood, animals, crops, etc) that the organisation needs to produce goods and services. Land is paid for through rent.
What is the definition of labour?
Labour is all of the work that is done by people either through physical or mental efforts. Labour is paid for by wages
What is the definition of capital?
Capital is money invested into the business and all of the equipment and machinery it can be used to buy. Capital is paid for through interest. MAN MADE!!
What is the definition of enterprise?
Enterprise is all of the ideas for goods and services a business had and how the other factors are combined to create a viable business.
Name the 3 sectors of industry
Primary
Secondary
Tertiary
Name the 3 sectors of economy
Private
Public
Third/voluntary
Name the 3 different options for sizes of a business
Small
Medium
Large
What is the turnover of a small, medium and large business?
Small business - less than £5.6 million
Medium business - less than £22.8 million
Large business - greater than £22.8 million
How many people are there in a small, medium and large business?
Small business - less than 50 employees
Medium business - between 50 - 250
Large business - more than 250 employees
Name the 3 types of businesses that operate in the private sector
Sole Trader
Partnerships
Private Limited Companies
Give 2 advantages of being a sole trader
One advantage is quick decisions can be made in the business because they are all made by the single owner without interference
Another advantage of being a sole trader is there are few rules or laws that have to be followed when setting up a sole trader. This means that sole trader businesses can be easier to for people with little business experience to set up and operate.
Give 2 disadvantages of being a sole trader
One disadvantage is the sole trader has unlimited liability, this means that if the business is not successful the owner could not only lose the business but also his/her own home, car, possessions to pay off the business debts. As if this wasn’t enough, they could be made bankrupt by the courts.
How many people own/control a sole trader business?
1 person
How many people own/control a partnership?
2-20 people
What agreement do partnerships have?
A partnership agreement
Give 2 advantages of being a partnership
One advantage is the work involved in running a business can be shared.
Another advantage is partners can specialise in different areas (e.g. one specialises in family law and another specialises in criminal law). This would make them well rounded.
Give 2 disadvantages of being a partnership
One disadvantage is they have unlimited liability and could lose everything.
Another disadvantage is there may be arguments between the partners on how to run the business.
If someone has a star in a private limited company, what are they?
A shareholder
Give 2 advantages of being an LTD
One advantage is the shareholders have limited liability. This means that if the business runs out of money, the debt is limited to the money in the business and so the shareholders can only lose the money they have invested in the business.
Another advantage is there can be lots of capital available in the business because it can have lots of shareholders investing. This can allow the business to provide better goods and services.
Give 2 disadvantages of being an LTD
One disadvantage is private limited companies have to follow the legal rules in the Companies Act. This can mean that limited companies can be complicated and difficult for people with little business experience to set up and operate.
Another disadvantage is the profits rom the business are shared between all the shareholders as dividends. This means that each owner makes less money than they would if they were working on their own.
Who are public sector organisations set up and run by?
The government (on behalf of the people)
What is the main aim of a public sector organisation?
To provide services to the general public
What are the most common types of of public sector organisations?
Public corporations
Government funded service providers
Local authorities
