Understanding Business Flashcards
What is the difference between a good and a service?
A service is intangible
While goods are tangible
What is an example of a service?
Teaching or childcare
What is an example of a good?
A chocolate bar or car
What are the four factors of production?
Land, Capital, Labor, Entrepreneurs
What is the land?
Give an example
Land is natural resources, not created by human effort.
Trees are an example
What is capital?
Give an example
Capital are the tools equipment and factories used in production.
Tractors are an example
What is labor?
Labor includes people and all their effort and abilities.
What are entrepreneurs?
Entrepreuners are individuals who start a new business or bring a product to market
Name 4 qualities an entreprenuer should have
Communication Skills
Finance Skills
Motivational Skills
Risk Taker
What are the three sectors of industry?
Primary, Secondary and Tertiary
What is the primary sector of industry?
The primary sector develops natural resources, like timber.
What is the secondary sector of industry?
Uses primary extracted materials to create finished products
What is the tertiary sector of industry?
Provides services such as retailing and distribution
What is the quaternary sector?
Provides services based around IT
What are the 3 sectors of economoy?
Private, Public, Third
What is in private economy?
Private Limited, Public limited, Franchise, Multinationals
What is in public economy?
National Gov, Local Gov
What is in third economy?
Charity, Social Enterprise
What is a private limited?
Shops, hairdressers, joinery, small to medium businesses
What are some advantages of Private Limited?
A:Owners have limited liability
A:Ownership not lost
A:Business can retain a close knit friendly feel with customers
What are some disadvantages of Private Limited?
D:Profits split
D:Shares can’t be sold on stock market
D:Legal process and documents need to be completed
What are some advantages of PLC?
A:Easier to borrow money
A:Potential to dominate markets
What are some disadvantages?
D:Divdends shared
D:Controls can be lost
What is a franchise?
A franchise is a business opportunity that allows the franchisee to start a business by legally using someone else’s name, expertise, ideas and processes
What is an advantage and disadvantage of a franchiser?
Advantage:Low risk as Franchisee invest majority of money
Disadvantages:Only a share of profits is received
What is an advantage and disadvantage of a franchisee?
Advantage:Benefits from national advertisements
Disadvantage:Royalties have to be paid
What is a multinational?
Businesses that operate in more than one country.
What are some advantages of a multinational?
Wages and materials are cheaper.
Can avoid quotas and tariffs
Can help create a global brand.
What are some disadvantages of a multinational?
Language barriers.
Cultural differences.
Time differences hinder communication.
