Unit 1 - 1 Flashcards
what is a need
These are basic goods and services that we must have if we are going to be able to survive
What is a want
These are goods and services that we do not need to have to survive they are only wanted by us because they would make our lives easier to provide pleasure. they are sometimes called luxuries
Examples of needs
Good
Clothing
Shelter
Examples of wants
Holidays
jewellery
fancy clothes
car
What is an economy
And area where goods and services produced and you
What are consumers
These are people who buy goods to satisfy the needs and wants
What is consumption
This is the process of consumers creating or buying and then using up goods and services to satisfy their needs and wants
What is a business
Business is an organisation that is formed to provide goods and services
What are goods
These are physically tangible things this means that they can be seen and touched
Examples of good
Car newspaper washing machine
Examples of services
Hairdresser cleaner taxi driver bank
What is the definition of durable
He’s a good and services which last for a long period of time
Give examples of durable items
Car computer fridge washing machine
Is the definition of non-durable
These goods and services are single use items
Give examples of non-durable items
Newspaper cinema ticket meal
What are the four factors of production
Capital enterprise land labour
What is the description of capital
Actual describes money and oll of the equipment it can be used to buy. capital is a man-made resource
(Man made goods we use as well as money)
What is the description of enterprise
Enterprise covers all of the ideas for goods and services a business has and the organisation of resources undertaken by it in order to make these ideas turn into real good and services. enterprise earns profit
(The actual business)
What is the definition of land
London is the Earth and all of the natural resources in it for example oil weird animals crops etc
(Here, you set up your resources)
What is the description of labour
Are you there is all of the work that is done by people aka Human Resources
(People who work for you)
What is the input stage
At the input stage a business will have to gather to gather the raw materials that will be needed to make a good or service
What is the process stage
At the process stage business transforms the role materials into the goods or services.
What is the process stage
At the process stage business transforms the role materials into the goods or services.
What is the output stage
At the output stage the business will have created the final good or service that it wants to provide
What is the business cycle
The process of businesses using factors of production to produce goods and services that will satisfy the needs and wants of consumers
What is in the business cycle
- People ( consumers ) have needs and wants
- Businesses identify these needs and wants By doingwants by doing research
- Businesses produce goods and services to satisfy customer needs and wants and make a profit
- Consumers by the goods and services produced by the business and consume them.
What is an entrepreneur
You entrepreneur is the person who brings together the workers, the natural and the man-made resources to produce goods and services
Where does an entrepreneur is money come from
Entrepreneurs he is their own money or borrow money to put all the necessary resources together. They often have to give up other work on their regular income. They invest the time money and effort on a business idea that me or may not work.
Why entrepreneurs risktakers
They can stand to lose everything if the idea doesn’t work. many entrepreneurs use franchising as A mean of starting up your own business this reduces the risk of failure support and guidance is provided by the franchiser
Give examples of entrepreneurs
Bill Gates and Microsoft
Richard Branson and virgin
What is the definition of industrial sector
A group of organisations which produce a similar type of goods or service
What are you different industrial sectors
Primary secondary tertiary
What is the primary sector
Primary sector organisations are responsible for extracting from the earth for the raw materials needed for the Input stage of production
Examples of primary sector
Farming Oil exploration fishing forestry
What is the secondary sector
Secondary sector organisations are responsible for manufacturing goods using The raw materials from the primary sector
Examples of secondary factors
Call manufacture furniture maker use paper computer manufacture
What is the tertiary sector
Tertiary sector organisations are responsible for providing services this includes sales of goods from the secondary sector
Examples of tertiary sector
Salespeople hairdressers banks lawyers
What are the main factors which make businesses different from each other
Business size
economic sectors
Objective
sector of industry
What are the three main sizes of businesses
Small medium large
How many workers are in a small business
Between one and 50 workers
How many people are in a medium sized business
50 to 250 workers
How many people in a large business
More than 250 workers
What is the economic sector
The term economic sectors describes a group of organisations which are set up and run by their owners for similar purpose
What are the three different economic sectors
Public sector private sector third sector
Describe public sector organisations
owned by government controlled by government and money comes from tax
They are set up to provide goods and services that should improve the quality of life for any member of the public uses them
Examples of public-sector organisation
Healthcare education emergency services transport
Describe private sector business
Private owned by private individual controlled by private individuals money comes from them like savings or shareholder
There set up to provide goods and services only to consumers who can afford to pay for them
Give the three types of private sector
So trader partnership private limited company
What are Raw Material
These are the parts that have to be put together to make the good or service
What is a production chain
For many goods and services the output stage for one business is the start of input from another all of the businesses whose production processes are linked together to make one good or Service
Advantages of so trader
Positions can be made and completed quickly which allows the business to respond to problems that may need to be allocated rapidly
All the profits made by the business can be retained by the owner
All information about business Are kept private this includes information about my earnings
DisAdvantages of a sore cheater
Owner has unlimited liabilities
Hard to increase finance as money will be loaned by friends and family
All losses will have to be accepted by the owner which could mean the end up with far less money than they once had
Owner goes on holiday the whole business Will have to stop
What are unlimited liability
If the business goes on that it is not limited to the money in the business and so the owner will have to pay the rest using your own personal belongings like a car or even a house
Main features of a partnership
Two to 20 owners who have you could investigate some of the start-up capital for the organisation
Each partner has a say in the decision making process how much control each partner has set out in the partnership agreement
Advantages of partnerships
Any losses in the business will be shared between all partners this means each individual owner will take a smaller personal loss in a bad year
Decision-making is shared between the partners which means less stress for each owner
The skills of the different partners can I load the business to expand and make more profit
They do not have to share information about the business businesses financial issues(except government for paying tax)
What are the disadvantages of partnership
Unlimited liability
How to make decisions as there has to be an agreement between all partners before something can be done
The profit from the business Is shared between all the partners
Main features of private limited companies
At least two oh knows you have invested some of the start-up capital for the organisation
each of these owners are called shareholders
Shares can only be bought privately from existing shareholders.
Decision-making in a limited company is made by a group of senior management known as the board of directors
Advantages of private limited companies
Limited liability
Lest just for each individual during decision-making
Different skills of the board of directors can I like the business to expand and make more profit
Losses can be shared between all the share holders
What is the definition of limited liability
This means that if your business runs out of money the debt is limited to the money in the business and so the shareholders may have invested in the business
Disadvantages of private limited company
Private limited companies have to share some information about the business when registering it manually
Hard to make decisions in your business because there has to be an agreement between the board Befor governors befor something can be done
Profits of the business are shared between all shareholders
Is more difficult to keep workers happy and well motivated and a big organisation
Describe Third sector businesses
Consists of non-governmental organisation which have been set up to provide goods and services to benefit special groups that need special assistance
two things in 3rd sector businesses
Charity ,social enterprise
What charities
Charities organisations which have been set up for the sole purpose of providing public benefit
Give examples of charitable purposes
Poverty Education Religion Health Human right Equally
How do you charities make money
They do not make their money by trading and learning projects encourage the public to give the money to pay for their work through the use of advertising campaigns and fundraising events this money which is given by the public is known as a donation
Who are charities managed by
Charities will have volunteer and paid employees who are managed by a group of managers known as trustees
Features of a social enterprise
They cannot be part of a public-sector organisation
They aim to generate the funds through grants and making profit through trading activities
Social enterprises would have volunteered and paid employees who are managed by a board of directors
Social enterprises must be done in an ethical manner which reflects their aim to be of benefit to society this will be seen through actions such as offering their staff satisfactory wages terms and conditions and to your en social enterprises must be done in an ethical manner which reflects their aim to be of benefit to society this will be seen through their actions such as environmental policies
Give examples of objectives
Profit maximisation
GrowTh
Survival
Maximise customer satisfaction
What is profit maximisation
The aim is to take as much money as possible out of the business this is the most obvious objective but it is not always possible to achieve along with the other objectives
What is growth
To grow and increase market share the business may have more profits as its cost will be higher and it may be selling at reduced prices
What is survival
For some small firms this is the most important objective they want to avoid having to close being taken over by bigger firms
What is maximise customer satisfaction
When you’re organisations will be interested in maximising can’t customer satisfaction so that the public and their customers think positively about the business and continue to support it.
To create and maintain high levels of customer satisfaction Businesses will be interested in delivering customers high quality marketing work high quality products
Common objectives for public sector
Customer satisfaction enterprise provider service
Common objectives for private sector
Maximise profit survival consumer satisfaction market share enterprise
Common objectives for third sector
Social responsibility customer satisfaction marketshare Enterprise
What is a grant
Money available from government to help businesses set up
Duration of grants
Short-term
Advantages of grants
Source of finance from central or local government the eu etc
it is often motivates new business to set up in a particular area of high unemployment
Disadvantages of grants
One off payments that once received are not usually repeated
sometimes difficult to receive
What is Hire purchase
Often used to obtain equipment for vehicles
the cost plus interest is paid in equal instalments over a set period of time
Duration of hire purchase
Short-term
Advantages of higher purchase
The cost of spread making the item easier to afford
a fixed repayment help with budgeting
Disadvantages of hire purchase
Items are owned by the higher purchase company until the last instalment is paid
What is an overdraft
faculty at the bank to Overdraw on your account
Duration on overdraft
Short term
Advantages of overdraft
Can be agreed in advance and for many friends are permanent facility can be available
Disadvantages of overdraft
Interest rates can be quite high
What are retained profits
Keeping profit from here to be used in the next year to expand et cetera
What is a duration of retained profits
Short-term
Advantages of retained profit
Profits can be kept back from previous years could be used to purchase assets
Disadvantages of retained profits
Companies that self financing retained profits often find it difficult to grow at a speed they would like
Hello what are trade credit
Your suppliers give you time to pay
What is adjudication of trade credit
Short term
Advantages of trade credit
Because you don’t have to pay immediately you can sell for goods before you have to pay for them this improves your cash flow
Disadvantages of trade Credit
Your customers may also expect time to pay If the period is too long you may find it hard to get I suppose you will do the same
What are Bank loans/mortgages
Borrowing money from the bank to finance improving cash flow within the business
What is the duration of B Bank loans and mortgages
Long-term
Advantages of bank loans and mortgages
Budgeting and planning is easier as many payments are made in regular instalments
Dis advantages of bank loans and mortgages
You have to repay the amount borrowed Plus interest
What is share issue
Increasing amount of money available to the business very selling shares in the business
What is the duration of the share issue
Long time
Advantages of share issue
This source of finance is available to companies shareholders have limited liabilities shareholders you receive an annual dividend in return for their investment does not need to be repaid
Disadvantage of share issues
The cost of issuing shares can be expensive and it is difficult to estimate an appropriate selling price of shares
Give examples of message to obtain finance
Grants overdraft mortgage bank loans
Impact of poor customer Service
Decreased sales
Poor reputation
Poorly motivated staff
Problems with recruitment
Reasons for poor customer service
The business does not have a clear complaints procedure or complaints are on satisfactorily dealt with
The company does not provide all staff with suitable and sufficient customer service training
The business is not listening to customer feedback about its products and services
How to improve customer satisfaction
Providing the latest quality product Having a customer care strategy Having a customer complaint procedure Making sure employees are trained Having an after sales service
Why is customer satisfaction important in a business
If customers are happy to be more to the business which means they return in the future and make my purchases
It gives the business a good reputation
It can help to increase the organisation share of the market
Allows organisations to remain ahead of competition
Main features of a sole trader
One owner this is the person who invested money to start up the Organisation
The owner has all the power to make decisions for the business this includes decisions made on a day-to-day basis as well as judgements which influence the future of the business or traders usually have a couple workers or may work unaccompanied
What are the three internal factors
Finance
Human Resources
Technology
How does finance affect a business
Business cannot expand if they do not have the money therefore the objective of growth cannot be achieved
