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Business A-Level > Unit 1 > Flashcards

Unit 1 Flashcards

1
Q

Why do businesses exist?

A

to satisfy wants and needs

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2
Q

What is a business?

A

an organisation set up to provide goods and services to customers.

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3
Q

What is a good?

A

a physical product e.g. food

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4
Q

What is a service?

A

an intangible item e.g insurance

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5
Q

What are the 3 things a business can be split up into?

A

B2B - tata steel
B2C - sony
C2C - ebay

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6
Q

What are the 3 types of businesses?

A

primary
secondary
tertiary

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7
Q

What is the primary sector?

A

obtains the raw materials

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8
Q

What is the secondary sector?

A

uses the raw materials to produce something - also known as the manufacturing sector

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9
Q

What is the tertiary sector?

A

concerned with the supply of services

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10
Q

What is an aim?

A

a long term plan for the business which its corporate objectives are derived

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11
Q

What is an objective?

A

sets out what clearly needs to be achieved

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12
Q

What must a objective or aim be ?

A

SMART

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13
Q

List 3 common business objectives?

A
  • maximise profit
  • survival
  • growth
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14
Q

Why do businesses set objectives?

A
  • gives workers a goal to work towards
  • can provide employees with motivation
  • track progress
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15
Q

What is business cost ?

A

is the expenditure a firm makes as part of its trading e.g labour and raw materials

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16
Q

What are fixed costs?

A

costs which doesn’t change with output

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17
Q

What are variable costs?

A

costs which change with output

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18
Q

What are semi-variable costs?

A

costs which have characteristics which are both fixed and variable e.g. transport

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19
Q

What is the calculation for total costs?

A

fixed costs + variable costs

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20
Q

What is average cost?

A

is the cost of producing one unit

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21
Q

How does the business benefit from knowing costs?

A

helps set prices to maximise the most profit

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22
Q

What is revenue ?

A

the income the business receives over a long period of time.

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23
Q

What is the calculation for revenue?

A

quantity sold x average selling price

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24
Q

What is profit?

A

when a businesses revenue is higher than the costs

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25
Q

What is the calculation for profit?

A

total revenue - total costs

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26
Q

What does profit depend on?

A

profit margin

quantity of sales

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27
Q

What is profit margin?

A

the amount or percentage of the final selling price that is profit

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28
Q

Why are profits important ?

A

Attracts customers - lead customers to believe that the product is desirable
Persuade individuals and banks to invest in them
Larger businesses may buy

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29
Q

What is the public sector?

A

is owned and ran by the government

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30
Q

What is the private sector?

A

is owned and ran by private people

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31
Q

What are the 3 organisations owned by the government?

A

public corporation
public services
municipal services

32
Q

What are public corporations?

A

are enterprises owned by the state but offer products to both public and private sectors e.g. channel 4

33
Q

What are public services?

A

provides a service to the nation e.g. NHS

34
Q

What are municipal services ?

A

are offered by the local governments and councils e.g leisure

35
Q

What is privatisation?

A

when the state (government) sells businesses they owned and sell it to the private sector.

36
Q

What are 2 reasons why the government privatise?

A
  • raises finances for the government

- privately run businesses are more efficient

37
Q

What is a sole trader?

A

business that is owned and managed by one person but may employ other people

38
Q

What are 2 advantages of a sole trader?

A
  • keep all profits

- easy and cheap to set up

39
Q

What are 2 disadvantages of a sole trader?

A
  • unlimited liability

- long hours

40
Q

What is a partnership?

A

two or more people

41
Q

What are 2 advantages of a partnership?

A
  • specialist skills

- more ideas

42
Q

What are 2 disadvantages of a partnership?

A
  • split profit

- more conflict

43
Q

What are the 3 legal documents a business has to do before setting up?

A

memorandum of association
articles of association
register with company house

44
Q

What is a company ?

A

a business organisation that has its own legal identity and has limited liability

45
Q

What is a incorporation ?

A

is the process of establishing a business as a separate legal identity which allows it to benefit from limited liability

46
Q

What is a shareholder?

A

is an investor in and one of the owners of the business

47
Q

What are dividends ?

A

are a share in the profits of a company that are distributed to the holders of certain types of company shares.

48
Q

What is unlimited liability ?

A

means that there is no distinction between the business and the individual. So if the business was declared bankrupt personal belongings can be taken to pay off any debts.

49
Q

How do we get rid of unlimited liability?

A

by becoming a company, through the incorporation process

50
Q

What is limited liability?

A

means there is a difference between the company and owner personal assets are not at risk just the investment.

51
Q

What are the 2 types of companies?

A

private limited companies (Ltd)

public limited companies (PLC)

52
Q

How can you measure the size of a PLC?

A

market capitalisation

53
Q

What is market capitalisation?

A

the total value of the issued shares of a PLC

54
Q

What is the calculation for market capitalisation?

A

share price x number of shares

55
Q

What is another name for a not-for-profit business?

A

social enterprise

56
Q

What are the risks of buying shares?

A

share prices can fall dramatically no matter how well a business is ran
low profits = low dividends

57
Q

What can influence share prices?

A

company’s performance and business environment

58
Q

What are the assumptions of increased share prices?

A

well managed

easier to raise capital

59
Q

Disadvantages of decreased share prices

A

poor management
difficult to raise capital
vulnerable to takeover

60
Q

What is the external environment?

A

external forces that can influence a business activities but the business have no control over

61
Q

What are 2 positive factors of the external environment?

A
  • products becoming fashionable, raising demand
  • major competitor leaves the market
  • number of consumers in a country increases
62
Q

What are negative factors of the external environment?

A
  • consumers demand environmentally friendly products, increasing costs
  • new businesses entering the market increasing competition
  • market oversupplied with products, depressing prices
63
Q

What are market conditions ?

A

features of a market e.g levels of sales

64
Q

How is income determined?

A

GDP

65
Q

What does GDP measure?

A

the value of a country’s total output of goods and services over a time period

66
Q

What are real incomes?

A

incomes that are adjusted for the rate of inflation to show changes to purchasing power

67
Q

What are nominal incomes?

A

unadjusted wage e.g without inflation

68
Q

Out of the 3 types of goods which are elastic and inelastic?

A

normal elastic

luxury and inferior inelastic

69
Q

What are interest rates?

A

price of borrowed money

70
Q

What happens if interest rates increase?

A

people save more spend less

71
Q

What happens if interest rates decrease?

A

people spend more and save less

72
Q

What is inflation ?

A

the changes of a price

73
Q

What does high inflation mean/ cause?

A

high interest rates
the £ appreciates
exports more expensive
imports cheaper

74
Q

What does low inflation mean/ cause?

A

low interest rates
the £ depreciates
imports are more expensive
exports cheaper

75
Q

What does appreciation and depreciation do to the pound?

A

appreciation - makes the pound stronger

depreciation - makes the pound weaker

76
Q

How do businesses pollute?

A

emission of gas in the production process
pollution when transporting goods, congestion and noise
dumping
destroying natural environments

77
Q

What is fair trade?

A

where a fair price is given for a good/ service

Business A-Level (11 decks)

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