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Business Management > Understanding Business > Flashcards

Understanding Business Flashcards

1
Q

Document setting out the external rules and relationships of an organisation

A

Memorandum of Association

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2
Q

Document setting out the internal rules and relationships of an organisation

A

Articles of Association

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3
Q

Document enabling a PLC to begin trading

A

Certificate of trading

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4
Q

Document confirming that an organisation has company status

A

Certificate of Incorporation

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5
Q

Company controlled by individuals and restricted groups

A

Private Ltd company

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6
Q

Organisation which operates and trades in a number of different countries

A

multinational

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7
Q

Part-ownership of a company

A

Share

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8
Q

The return to the shareholder of a company

A

Dividend

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9
Q

Company whose shares are traded on the Stock Exchange

A

Public Limited Company (PLC)

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10
Q

A formal agreement setting out the legal details of a partnership

A

Deed of partnership

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11
Q

A business association of between 2 and 20 owners who have clear rights and responsibilities to each other

A

Partnership

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12
Q

A partner who is not involved in the day-to-day running of a partnership

A

Sleeping Partner

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13
Q

An arrangement whereby the debts of a part-owner of an organisation are restricted to how much they have put into the organisation

A

Limited liability

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14
Q

Describe a good

A

A good is a product that can be seen and touched, for example a phone, car or book

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15
Q

Describe a service

A

A service is something that cannot be seen or touched, they are provided, for example a hairdresser, teacher or bank

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16
Q

What is a need?

A

Needs are requirements for survival, needs can be satisfied for the vast majority of people, for example shelter, food and water

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17
Q

What is a want?

A

Wants are required to make life pleasant for us, this includes luxuries and other non-essential items, such as holidays, cars and mobile phones

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18
Q

What are the factors of production (CELL)?

A

Capital
Enterprise
Land
Labour

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19
Q

Describe Capital

A

Capital is the tools, machinery and equipment that a business owns or controls. This also includes the finance (money) that is invested in the business by the owner.

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20
Q

Describe Enterprise

A

The entrepreneur him/herself. Enterprise is the business idea that the entrepreneur has on how to use land, labour and capital in their business.

21
Q

Describe Land

A

Land is the natural resources which the business uses, this includes water, trees, fields, and things they produce such as oil and fish.

22
Q

Describe Labour

A

Labour means the workforce of a business - human workers of all kinds, the return for labour is Wages.

23
Q

Describe the creation of wealth

A

Wealth is created by using Land, Capital, and Labour to make a product/provide a service which people find valuable. You then sell your product/service for more than it cost to make/do, giving you a profit.

24
Q

What are the sectors of industry?

A

Primary
Secondary
Tertiary

25
Q

Describe the Primary Sector

A

The primary sector extracts. They carry out the first stage of production - extracting things from nature. NATURAL RESOURCES.

Examples are: farming, fishing, oil and gas exploration, forestry and mining.

26
Q

Describe the Secondary Sector

A

The secondary sector manufactures. They carry out the second stage of production - manufacturing, building and processing. Turn RAW MATERIALS (natural resources) into finished goods.

Examples are: food manufacturers, sawmills and oil refineries

27
Q

Describe the Tertiary Sector

A

The tertiary sector provides services. This includes selling on the finished product to the customer.

Examples are; insurance, banking, education, hairdressing, and transport

28
Q

What are the sectors of economy?

A

Sole Trader
Partnership
Private Limited Company

29
Q

What is a Sole Trader?

A

Businesses that are Sole Trader are owned and controlled by a single person.

30
Q

How are Sole Traders funded?

A 
Owners own savings
Loans - family/friends
Bank Loan
Mortgage
Government Grant
31
Q

What is a Partnership?

A

They are owned by between 2-20 people. They are controlled by general partners who have a say in the running of the business.

32
Q

How is a Partnership funded?

A

Partners own savings
Bank Loans
Mortgages
Government Grant

33
Q

What is a Private Limited Company?

A

They are owned by at least 2 shareholders. Shareholders have to be invited to buy a share in the company, and the companies are controlled by an elected Board of Directors.

34
Q

How are Private Limited Companies funded?

A

Shareholders investing in shares
Bank Loan
Mortgage
Debentures

35
Q

How do you maximise customer service?

A

Customer service can be maximised by having well trained, polite staff.

36
Q

Why is customer service important to the success of the business?

A

If the staff do not have good customer service your business will start to develop a bad reputation. Whereas if your staff have good customer service you will gain customer loyalty and they will tell their friends/family which will build up your market share

37
Q

What are the advantages of being a Sole Trader?

A 
Easy to set up - no legal documents needed
Smaller size means less capital needed
Decisions are quick to make
Profits do not need to be shared
Business affairs can be kept private
Can choose own hours of work
38
Q

What are the disadvantages of being a Sole Trader?

A

Finance can be difficult to raise
Limited discounts due to small size of business
Ill-health, holidays, ect can affect business
Personal possessions endangered by unlimited liability

39
Q

What are the advantages of being in a Partnership?

A

Increased money available compared to a Sole Trader
Opportunity to increase size of business
Affairs can be kept private
Risks spread amongst partners
Workload, responsibility and decision making shared
Partners can specialise in specific roles

40
Q

What are disadvantages of being in a Partnership?

A

Unlimited liability
Disagreements can occur
Profits must be shared
A legal document known as a Partnership Agreement needs to be created

41
Q

What are advantages of a Private Limited Company?

A

Limited liability
Ability to sell share so may have access to more capital
Larger so can employ specialists

42
Q

What are disadvantages of a Private Limited Company?

A

Shares cannot be sold to the general public on the stock market
Financial information is not completely private
A limit on the amount of capital that can be raised through selling shares
More difficult to set up due to legal requirements

43
Q

Advantages of a Social Enterprise

A

Social aims can endear a social enterprise to customers
Good quality employees who believe in the social ‘mission’ are attracted to the organisation
They are likely to receive government grants due to their positive impact on society
‘Asset lock’ means that, should the enterprise be closed down, the sale of any assets and any profits will be used to benefit their cause

44
Q

Disadvantages of a Social Enterprise

A

Have to compete in the commercial market and face the same challenges and risks common to all businesses
Having the necessary resources and skills to move towards becoming a social enterprise
Will introduce certain controls and restrictions as defined by its constitution, and that it will be expected to operate commercially, generating a proportion of its income from trading

45
Q

Advantages of being a Charity

A

Helps people in need
Helps the community
Public recognition and trust
Tax relief

46
Q

Disadvantages of being a Charity

A

They relay on donations - might not make enough money

Restrictions and requirements

47
Q

Advantages of being a Public funded Organisation

A

Erase of raising funds

Speedy decisions

48
Q

Disadvantages of being a Public funded Organisation

A

Political interference
Consumer interests ignored
Financial burden

Business Management (5 decks)

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