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Business > Unit 1 > Flashcards

Unit 1 Flashcards

1
Q

What is a good

A

Tangible products

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2
Q

What is a service

A

Intangible products

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3
Q

Examples of goods

A

Phone, toothpaste, food, chocolate,water, car etc

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4
Q

Examples of services

A

Window cleaner, dentist, plumber, haircut etc

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5
Q

Transformation process

A

Input - transformation process - output

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6
Q

Transformation process definition

A

What happens inside the business where value is added to inputs to create outputs

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7
Q

Primary sector

A

Businesses that make direct use of natural resources

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8
Q

Secondary sector

A

Manufacturing products using raw materials

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9
Q

Tertiary sector

A

Businesses that provides a service to customers

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10
Q

Mission

A

A qualitative statement of the business’s aims - the reason the business exists

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11
Q

Aims

A

A long term plan from which business objectives are derived

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12
Q

Objectives (2)

A

A target which must be achieved in order to realise the stated aim.
A time assigned target derived from the goals and set in advance of strategy

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13
Q

Main business objectives (7)

A

Profit
Growth
Survival
Cash flow
Shareholder value
Social/ ethical objectives
Diversification

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14
Q

The value of revenue

A

Achieved in a given period is a function of the number of product sold multiplied by the price that customers paid

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15
Q

How do business increase revenues? (6)

A

Reduce costs
Increase selling price
Have fewer employees
Increase number of sales
Reduce waste
Online presence

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16
Q

Variable cost

A

Costs that changes with output

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17
Q

Fixed costs

A

Costs that don’t change as output changes

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18
Q

Semi fixed costs

A

Fixed costs in the short term, but then changes once a certain level of output is achieved. Eg. Salaries

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19
Q

Total costs equation

A

Fixed costs + variable costs

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20
Q

Profit

A

The reward or return for taking risks and making investments

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21
Q

Profit equation

A

Revenue - total costs

22
Q

Why is profit important to a business? (5)

A

A return on investment
A reward for taking risks
A key source of finance
A measure of business success
A motivation factor and incentive

23
Q

Contribution per unit equation

A

Selling price - variable costs

24
Q

Unincorporated businesses

A

A business that doesn’t possess a separate legal identity from its owner e.g a window cleaner

25
Q

Incorporated businesses

A

A business that has its own separate legal identity separate from the owners e.g M&S

26
Q

Private limited company (ltd)

A

Incorporated
Registered with government
Owned by shareholders

27
Q

Ltd Advantages

A

Profits only shared between shareholders
Able to raise money by borrowing and through the share issue of ordinary shares
If the company failed, investors are protected by the rules of limited liability

28
Q

Ltd disadvantages

A

Must be registered by government
Legal set ups are expensive
Hard to control and motivate workers as profit only goes to shareholders

29
Q

Public corporation

A

Incorporated
State owned enterprises

30
Q

Public corporations advantages

A

Easy planning and coordination
Raising funds through private sources
Protection of public interest

31
Q

Public corporations disadvantages

A

Misuse of power
Consumer interest ignored
Financial burden
Often difficult to manage

32
Q

Public Limited Company (PLC)

A

Incorporated
Legallly allowed to offer its shares for sale to to the public
Needs two shareholders, two directors and company secretary

33
Q

PLC advantages

A

Visible on stock market
Can offer investors liquidity in that investors can sell quickly

34
Q

PLC disadvantages

A

Less flexibility
Financial position disclosed to public

35
Q

Sole trader

A

Unincorporated
Self employed

36
Q

Sole trader advantages

A

Flexible
Independent
Financially rewarding if is a success
Doing what you like

37
Q

Sole trader disadvantages

A

Financial risk if not successful
Uncertainty
Stress

38
Q

Charity

A

Incorporated
Non profit organisation

39
Q

Charity advantages

A

Exempt from tax
Increase public trust
Locked assets- no private benefit

40
Q

Charity disadvantages

A

Can’t make profit
Trade can be limited

41
Q

Partnership

A

Two or more owners that set up a business

42
Q

Partnership advantages

A

Spreads risk
Helps decision making
More skills and ideas
Increased credibility

43
Q

Partnership disadvantages

A

Share profit between them
Less control
Problem when partners disagree

44
Q

Stakeholder

A

An individual or group that has vested interest in the business. They can affect the business and/or be affected by it

45
Q

Shareholders

A

Owners of a company

46
Q

Dividends

A

Payments made to the shareholders by the company from earned profits

47
Q

Capital growth

A

Arises from an increase in the value of the business

48
Q

Share

A

An individual part of the issued share capital of a company

49
Q

Share price

A

Determined by the interaction of supply and demand

50
Q

What is liquidity?

A

Business liquidity is your ability to cover any short-term liabilities such as loans, staff wages, bills and taxes. Strong liquidity means there’s enough cash to pay off any debts that may arise.

51
Q

What is limited liability

A

Limited Liability is a legal structure whereby shareholders or directors are legally responsible for their company’s debts only up to the value of their share. The owner and the business have separate legal identities e.g. PLC or LTD

52
Q

What is unlimited liability?

A

each business owner is equally responsible for whatever debt accrued within a business if the company is unable to repay or defaults on its debt. An owner’s personal wealth can be seized to cover the balance owed.

Business (9 decks)

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