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Business > Unit 1 > Flashcards

Unit 1 Flashcards

1
Q

Why do businesses exist

A

To provide products/ services to satisfy customer needs & wants

To fill the gap in the market

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2
Q

Give 2 mission statements of successful businesses

A

google - to organise the world’s information and make it universally accessible and useful

amazon - to be earth’s most customer-centric company

coca-cola - to refresh the world and make a difference

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3
Q

what does SMART stand for

A

Specific, measurable, achievable, relevant, time-based

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4
Q

What two reasons do businesses set objectives for

A
  • to coordinate business activity and give a sense of direction
  • to give a common purpose to workforce so they have a more motivated and productive staff
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5
Q

What are the 4 common business objectives

A

Profit
Growth
Survival
Cash flow

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6
Q

Give 3 external influences on corporate objectives and decisions

A

Competition
Pressure from SH
Changes in consumer taste
Economic situation
Political and legal environment

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7
Q

What is the main objective for non-profit organisations

A

Focus on generating sufficient profit to reinvest into the business

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8
Q

What is the main objective of public sector organisations

A

Meeting social needs and providing essential services

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9
Q

What is the main objective of private sector organisations

A

Maximising profit for owners

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10
Q

What is the relationship between costs and price

A

An increase in costs means higher prices for consumers (this can lead to a fall in demand)

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11
Q

Give one reason why profit is important

A

-It’s a reward in exchange for the risk taken by entrepreneurs
-It’s a motivator
-it’s a measure of success

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12
Q

What are two ways to improve profits

A

-Increase sales revenue
-Decrease costs

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13
Q

Do unincorporated or incorporated businesses have limited liability

A

Incorporated

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14
Q

What type of businesses are unincorporated

A

Sole traders
Partnerships

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15
Q

What type of businesses are incorporated

A

LTD
plc

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16
Q

What are 3 advantages of sole trader companies

A
  • less paperwork
  • control of business decisions
  • more earning potential
  • easy/ cheap to set up
  • privacy
17
Q

What are 3 disadvantages of sole trader companies

A
  • unlimited liability
  • less customer trust
  • limited skills
  • limited capital for investment
  • limited collateral for loans
18
Q

What are 3 advantages of private limited companies (LTD)

A
  • reduced risk of personal liability
  • more tax efficient
  • easier to access growth funds
  • more flexible than plc
  • higher business profile
19
Q

What are 3 disadvantages of private limited companies (LTD)

A
  • shares are less attractive
  • have to share ownership
  • higher setting up costs
  • more legal formalities
  • finance for expansion harder to raise than plc
20
Q

What are 3 advantages of public limited companies (plc)

A
  • limited liability
  • easier to raise finance due to stock exchange
  • greater scope for investment
  • suppliers more willing to offer credit
  • expansion opportunities
21
Q

What are 2 disadvantages of public limited companies (plc)

A
  • greater scrutiny
  • founders may lose control is shareholding is less than 51%
  • more regulations and compliances
22
Q

What are 3 advantages of partnerships
NOT AQA

A
  • different partners = different skills
  • shared workload/ responsibilities
  • banks more likely to lend money to an org w/ many partners than a sole trader
23
Q

What are 3 disadvantages of partnerships
NOT AQA

A
  • unlimited liability
  • profit shared
  • May not always agree on decisions
24
Q

What is an advantage of franchising

A
  • franchisee benefits from economies of scale
  • franchisee gets a proven business system and training from franchiser
25
Q

What is a disadvantage of franchising

A
  • franchisee has to pay initial fee and ongoing royalties to franchiser
  • franchisee may feel restricted by limitation placed by franchiser who monitors performance
26
Q

What are 2 advantages of non-profit organisations (charities)

A
  • limited liability
  • tax exempt/ tax relief
27
Q

What’s a disadvantage of non-profit organisations (charities)

A
  • limited funding
28
Q

Give 3 factors that affect the choice of business form

A
  • the need for finance in order to expand
  • the size of business and level of investment needed
  • degree of control wanted by owners
  • business objectives
  • level of risk involved
29
Q

Give 3 reasons shareholders invest

A
  • to provide financial support
  • to be involved in running of a business
  • to gain control
  • for dividends
  • to make capital gain
30
Q

Give 2 roles of shareholders

A
  • to provide finance for a business
  • to influence how a business operates
  • to influence decisions taken by management
31
Q

Name 3 factors that influence the supply and demand

A
  • state of economy
  • performance of company
  • competition in market
  • proposed takeover
  • investors expectations & their response to rumours
32
Q

What does PESTLE stand for

A

Political factors
Economic factors
Social factors
Technological factors
Legal factors
Environmental factors

33
Q

Give 3 external factors influence cost and demand

A
  • market conditions
  • incomes
  • interest rates
  • demographic factors
  • environmental issues and fair trade
34
Q

Give 4 factors that influence demand

A
  • price
  • tastes and fashion
  • competition
  • substitutes
  • seasonal factors
  • marketing and advertising
  • gov action
  • complements
35
Q

What are 2 disadvantages of competition

A
  • when competition is based on price, quality is sacrificed in pursuit of low costs
  • intense competition can lead to a business being forced out the market
36
Q

What is fair trade

A

A certification system that aims to ensure standards are met in producing and supplying products, materials and ingredients

37
Q

What are 3 advantages of fair trade

A
  • a good wage system
  • gives voice to small producers who previously had little bargaining power
  • fair trade initiatives can protect vulnerable segments of the population
38
Q

What are 3 disadvantages of fair trade

A

-expensive - may be out of reach for local entrepreneurs

-product choice reduced for consumers

-difficult to make sure abusive labour practices aren’t reintroduced after certification expired/ abandoned

-some reports show working conditions in fairtrade certified cooperatives is worse than non-certified

Business (9 decks)

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