UNIT 1 Flashcards
why do businesses exist
•profit
• to sell their products
• providing services
• provide jobs
what does a mission statement communicate?
• what does your company do
• why does ur company do this
• how does your company do this
advantages of business setting objectives
• increases motivation
• organisation
• measuring success
why is the acronym SMART used
SMART is used as a way to set goals within a business
how do i increase profit?
increase revenue or decrease costs
to decrease costs
• move to a cheaper premises
• use less electricity
•find a cheaper supplier
to increase revenue
• increase/ decrease prices
• advertise
advantages and disadvantages of a sole trader
advantages
• keep all profit
• easy to set up
• owner has all control
disadvantes
• longer hours
• unlimited liability
• people reluctant to give you money
advantages and disadvantages of a private limited company
advantages
• limited liability
• keep control over business when selling shares
• can sell shares
disadvantages
• takes time
• profit is shared with shareholders
• higher costs
adv and disadv of a public limited company
advantages
• limited liability
• more reliable to lender
• public awareness
disadvantages
• risk of being taken over
• shareholders have more control
• finance published
4 influences of share price
- less employees
- taken over
- cost of living
- announced profit
whats a public limited company?
a company registered under the companies house
minimum capital requirements
shares offered to the public
whats a private limited company
a type of organisation you can set up to run your business. Company ownership is split into shares owned by shareholders.
whats a private sector
a part of the national economy that isnt under control of the government
whats a sole trader
own and run by 1 person
whats a partnership
working with another company, 2-20 people can be involved
primary sector
extracting raw materials
secondary sector
manufacturing; making things with materials
tertiary
services such as police
quaternary
office jobs/ ICT
tangible products
products we can physically touch
intangible products
something you cannot physically hold eg: services
difference between fixed costs and variable costs
variable costs changes with output eg: wages, raw materials. fixed cost doesnt change: rent, utilities
whats a business
a business is an organisation that transforms inputs into outputs to be purchased by customers. they can have a profit or a non profit drive
whats a corporate objective
an objective set by the higher power
whats a functional objective
an objective set to reach the overall objective
how to calculate revenue
price X quantity sold
whats the golden formula
(price x quantity)- ( fixed cost + variable costs)
whats flotation
private to public
order of flotation
• advertise with prospectus
• review with lawyer
• 50,000 up front
how is the wealth of an economy measured
GDP- value of all goods in country
whats a good
a tangible item
name an intangible object
services
what does gdp stand for
gross domestic product
why are markets dynamic
things change and new trends come in
whats a mission statement
a statement that communicates the purpose and existence of your business
whats an objective
medium to long term plan which aims to co ordinate the business, acting as a target
5 main functionable objectives
- survival
- growth
- profit
- cash flow
- ethical
how to calculate contribution per unit
selling price - variable costs
whats cumulative profit
recurring profit per month
whats an aim
used to achieve businesses mission statement
why is profit important x4
more likely to gain investment
suppliers increase credit time
motivation for employees☝️
fund expansions
name 4 fixed costs
- rent
- salaries
- tax
- utilities
4 variable costs
- wages
- deliveries
- raw materials
- packaging
liability definition
being legally responsible for something, such as business debt
define unlimited liability
owner and business are not seperate
4 economic factors on interest
cost of borrowing
reward for saving
interest increases
loan repayment increase
name 2 demographic factors
- population growing
- demand increasing
- people living longer
market capitalisation calculation
current share price X number of shares
