Understanding Business (unit 1) Flashcards
Describe and give examples of a “good”
Goods are Tangible. This means that they can be seen and touched. (ex. car, iphone, magazine, GHD’S)
Describe and give examples of a “service”
Services are Intangible. this means that they cannot be seen or touched after they are provided. often they are something that an organisation does for its customers. (Ex. hairdresser, teacher, bank, plumber)
Describe and give examples of a “durable” good
These goods will last a long time (ex. computer, car,toothbrush”
Describe and give examples of a “Non-durable” good
these goods and services DO NOT last a long time. they can only be used once (ex. buscuit, cinema ticket, meal)
Describe and give examples of a “consumer” good
these goods and services are consumed by private individuals to satisfy their needs and wants
Describe and give examples of a “capital” good
these goods and services are bought by businesses so that they can provide other goods and services. (ex. machinery, vehicles, tools)
what is a “need”
needs are the basic requirements for survival. (ex. food,water, shelter and clothing)
what is a “want”
wants are required to make life pleasent for us and include luxuaries and other non-essential items (ex. holidays, moblie phone, new car, PS3)
Explain the “role of business in society”
The buyers are the people who spend the money on the good or service.
the sellers are the people who offer the goods or services in exchange for money.
the consumer is the person who uses the good or service.
EX. the seller sells baby milk, the mum buys the baby milk, but the baby consumers the milk.)
explain opportunity cost
opportunity cost is when you have two options at the same time however you van only take one, the one you give up is the opportunity cost
what is the chain of production
the chain of prodution is split up into three parts INPUTS (the raw materials) PROCESSES ( processing the raw materials into managable materials) ) and OUTPUTS (making the finished product)
EX. inputs ( trees) processes (planks of wood) output (making chairs)
what is the creation of weath
when you at value at each stage of production, you make a profit and this is how you create wealth.
state benefits of customer service
motivated and highly performing staff satisfied and loyal customers customers return to the organisation customers recommend you get a good reputation organisation gains a competitive edge market share increase
state the effects of poor customer service
demotivated staff due to complaints dissatified customers no reccomendations poor reputations are hard to turn around may need to spend more money on advertising to change image
why do people set up their own business
want to be their own boss
theyve been made redundant and use their redundancy money to set up
they have an idea for a new product or service
they have a hobby which could be the basis of the new business
they have the skills but cant find a job and decide to set up on their own
where do people get ‘ideas’ for starting up in business
spotting a gap in the market
improving an exsiting product
listening to people and finding out what they want or need
using a special skill or talent that they have
developing a hobby
combing two or more exsiting products or services
setting out to slove a particular problem
what is an entrupener
someone who has a business idea, or is prepared tp take up someone elses idea and develop it in order to produce a good or service
list entrupeners skills and qualities
SKILLS selling marketing communtcation ict planning coordination delegating controlling
QUALITIES confidence determination enthusiasum leadership organised perswader creative
list and describe the factors of produvtion
LAND
means the natural resources which businesses use. e.g. coal,diamond,forests,water,wood
LAUBOR
means the workforce of a business-human workers of all kind. e.g. employees
CAPITAL
means the tools,machinery,equipment,equipment that a business owns or controls. e.g. money, buildings, equipment, machinery
ENTERPRISE
the entrepreneur himself. enterprise means the business idea that the entrepreneur has on how to use land, labor and capital in his/her business. e.g. the idea
what are the risks of starting a buiness
no one buying the product or service
losing all the money invested
not being able to pay expenses
losing personal assets
how can a business reduce risks
finding out what the customer wants ie. effective market research
predicting cash flow problems and arranging suitable fiance
analysing accounts for comparison and trends using ratio analysis
producing a detailed business plan
what does a business plan include
introduction description of the business the product or service the market competion marketing plan operations plan finacial information
name and describe the sectors of industry
PRIMARY
they carry out the first stage of production- extracting things from nature
SECONDARY
they carry out the second stage of production- mamufactuing, building and processing.
TERTIARY
this includes selling on the finished product to the customer.- selling
name and describe the businesses in the private sector
SOLE TRADER
owned and controlled by a single person
PARTNERSHIP
owned by between 2-20 partners. controlled by general partners who have a say in the running of the business
PRIVATE LIMITED COMPANY
owned by at least 2 shareholders. shareholders have to be invited to be to buy a share in the company
state 2 advantages and disadvantages of the businesses in the private sector
Sole trader
ADVANTAGES
Easy to set up as no legal documents needed
Smaller size means less capital needed
Decisions are quicker to make
Personal attention given to all business matters
Profits do not need to be shared
DISADVANTAGES
Finance can be difficult to raise
Limited discounts due to small size of business
Ill-hea;th, holidays ect can affect business
Unlimited liability
partnership ADVANTAGES Increased money available Opportunity to increase size of business Affairs can be kept private Risks can be spread amongst partners DISADVANTAGES Unlimited liability Disagreements can occur Profits must be shared
Private limited company
ADVANTAGES
Limited liability
Ability to sell share so may have acess to more capital
Larger so can employ specialists
DISADVANTAGES
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 the legal requirements
name the type of business in the public sector?
LOCAL AUTHORITY (council) owned and controlled by the local government they get their funding from the taxes we pay
name the types of business in the third sector (voluntary)
CHARITY
administrated by paid officials and run by volunteers
LOCAL CLUBS
administrated by paid officals
SOCIAL ENTERPRIZES
owned by private people and run by them
what is a franchise
a franchise allows a trader to use a well-known companys trade name and enbles the company to benefit from the experience of local managers
list the aims of a business in the private sector
to maximize profits to expand and grow to survive to increase market share social responsibility
list the aims of a business in the public sector
be efficent
provide a quality service
be cost effective
social responsibility
list the aims of a business in the third sector
maximise donations
to benefit a community
help those in need
provide sevices that would otherwise not be avalible to a community
to improve an area/community/group of people
what is a stakeholder
a stakeholder is a person or group of people who have an intrest in the success of a business. they can also infulence what the business does.
state what interest/ influence means
INTREST- what they want from a business
INFLUENCE- an action that will impact on what the business does
what two categories can stakeholders be divided into
internal and external
name and explain the intrests and influences of the three internal stake holders
OWNERS- want the business to maximize profits so they continue to receive a return on their investment- make all the desisions affectimng the business
SHAREHOLDERS- want the business to maimise profits so they continue to recive a dividend from their shares- vote at meetings to influence the desisions being made
Employees- want a wage, want good working conditions- can vary the quality of their work, can take industrial action
name and explain the intrests and influences of the three external stake holders
Banks- want to make sure the business will be able to pay them back- refuse a loan, can charge the interst rate on a loan
CUSTOMERS- want the good or service purchased to be good quality, want to be treated well by the business- can decide to shop elsewhere
suppliers- want the business to continue to buy from the, want business to pay for the goods- change the price of goods, change the time it takes for goods to be delivered, change the amount of credit they give an organisation
LOCAL COMMUNITY- want the business to provide jobs in the community, want to know if the business will have a negative impact on the local area- can protest if unhappy, can complain to their member of parliament
PRESSURE GROUPS- want to know if the business will have a negative impact on the area or the environment- can protest if unhappy, can complain to their member of parliment
GOVERNMENT- want to know if the business will have an impact on the area/ country, want to know how much profit they earn to charge the correct amount of taxation- can charge the rate of taxation the business has to pay, can introduce or charge laws they have to abide by, can grant/ refuse planning permission to build a new premises
