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Business (Tina) > Unit 1 (1.1, 1.2, 1.4) > Flashcards

Unit 1 (1.1, 1.2, 1.4) Flashcards

1
Q

What is a business

A

An organization that uses resources to produce goods and services that satisfies the needs of consumers

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2
Q

Business Outputs

A

Goods

  • Tangible products sold by businesses

Services

  • Non-tangible - e.g. banking, education
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2
Q

Primary Sector

A

Extraction, harvesting and conversion of natural resources for use by firms

  • E.g. coffee, metals, fruit
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3
Q

Secondary Sector

A

Manufacture and production of products from raw materials

  • E.g. clothing, mobile phones, input for other companies (e.g. steel)
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4
Q

Tertiary Sector

A

Service industry, e.g. banking, insurance, education, tourism

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5
Q

Quaternary Sector

A

Businesses involved in intellectual, knowledge based activities regarding information

  • E.g. R&D, ICT, drug research
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6
Q

Entrepreneur
(Definition)

A

Someone who:

  • Takes the financial risk
  • Starting and managing a new company
  • In return for profit
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7
Q

Challenges and opportunities for starting up a business

A

Challenges:

Financial Problems:

  • Lack of own start up capital
  • Lack of cash flow (liquidity)
  • Dont have enough money to pay your bills
  • Lack of customers
  • Strong Competition
  • Poor Marketing - unwanted product, wrong pricing, etc.
  • Hiring the wrong people and managing them poorly

Opportunities:

  • Money
  • Inheritence - taking over the family business
  • Autonomy - be your own boss - can choose hours, salary, etc
  • Challenge - personal satisfaction and self-esteem
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8
Q

Business Plan

A

Document that sets out the business idea, its goals and objectives and other details of how the business will operate

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9
Q

Elements of the Business Plan

A

Executive Summary - covers the main parts of the business plan

Marketing and Sales:

  • What product?
  • Why will customers buy the product
  • How the business will sell to them

Human Resources:

  • Details of the management team
  • Staff to be required
  • Operations Management
  • Location of shop/factory
  • IT systems, machinery, etc

Finance:

  • Where capital will come from
  • Projected profits and cash flow for 1+ years
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10
Q

Public Sector

A

Firms who are owned and controlled by the Government

  • Hospitals, police, public schools
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11
Q

Private Sector

A

Firms that are owned and controlled by the people

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12
Q

Sole Trader

A

When one person owns and control the business

  • Unincorporated and Unlimited liability
  • Gets to keep all profit
  • All the decision making
  • Have full control of the business
  • They may hire employees to help them run the business
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13
Q

Partnership

A

2 or more people combine to form a business enterprise. They may combine their finances, run the business together, share the risk and the profit

  • Share start up capital
  • Share responsibility
  • Share profit
  • They are unincorporated and have unlimited liability
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14
Q

Unincorporated

A

Owner is same legal entity as company

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15
Q

Incorporated

A

Company and owners are different legal entities

16
Q

Privately - held Company (Private Limited Company)

A
  • Incorporated
  • Limited liability
  • Owned by shareholders
  • Shares cannot be sold on the open market
  • Often has small amount of shareholders that holds high % of shares
  • Shares can only be sold with the agreement of other shareholders
17
Q

Publicly-held Company (Public Limited Company)

A
  • Incorporated
  • Limited liability
  • Owned by shareholders
  • To “go public” mean to go from private to public-held company
  • IPO - Initial Public Offering = Stock market flotation
  • Will sell a % of the company to raise finance
  • Shares can be bought freely on the stock market
18
Q

Social Enterprise

A

A business that makes revenue and profits but also has social and/or environmental objectives as part of its business model

Its objectives:

  • Makes some profit (so don’t go bankrupt)
  • Benefit society
19
Q

Private Sector For Profit Social Enterprise

A

Similar to other private sector businesses that make profit

Differences:

  • Some of the profit is used to benefit society rather than paid out to the owners
  • They try to run their business in socially responsible ways
20
Q

Public Sector for Profit Social Enterprises

A

Government owned and run businesses that are run similar to private sector business

They aim to:

  • Make profit (or avoid large losses)
  • Raise tax money through profits
  • Provide essential goods and services
21
Q

Cooperative

A
  • For profit social enterprises owned and controlled by its members and run for the common benefit of it members
  • Decisions can be voted by members democratically
22
Q

Non-profit Social Enterprise

A

Business that are run not for the purpose of making profit but to benefit society

23
Q

Non-Governmental Organisations (NGO)

A

Business with a social mission which operates out of the Government control

24
Q

Stakeholder

A

A person or organisation who is interested in or impacted by the decisions of a business

25
Q

Internal Stakeholders

A
  • Shareholders (investors)
  • Owners
  • Employees
26
Q

External Stakeholders

A
  • Bank
  • Pressure Groups
  • Customers
  • Government
  • Supplier
  • Competitors
27
Q

Types of conflicts

A
  • Managers vs consumers
  • Managers/employees vs shareholders
  • Shareholders vs pressure groups
28
Q

Managers vs consumers

A
  • Managers may want to raise the price of the product
  • Consumer would not want to price rise
29
Q

Managers/employees vs shareholders

A
  • Shareholders want high divident payouts
  • High dividend payout may lead to lower bonuses for managers/employees
30
Q

Shareholders vs pressure groups

A
  • Shareholders might not be worries about environmental harm if it means higher profits
  • Pressure groups would be concerned

Business (Tina) (8 decks)

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