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Business GCSE > unit 1- business in the real world > Flashcards

unit 1- business in the real world Flashcards

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1
Q

Why do people start businesses?

A

-to make profit
-to benefit others

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2
Q

What is a good?

A

-actual objects. They are tangible

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3
Q

What does tangible mean?

A

they can be touched

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4
Q

What is a service?

A

-activities provided for you by another people or businesses.

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5
Q

What does intangible mean?

A

you cannot touch them

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6
Q

What are 6 examples of a good?

A

-food
-phones
-pens
-books
-clothes
-jewlery

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7
Q

What are 6 examples of a service?

A

-school
-restaurant
-Nail tech
-Hairdresser
-bus driver
-holiday/travel

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8
Q

What is a need?

A

goods and services that we have to consume to survive

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9
Q

What is an example of a need?

A

food,shelter,warmth

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10
Q

What is a want?

A

goods and services that we would like, but do not have to consume to survive

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11
Q

What is an example of a want?

A

holidays,phones

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12
Q

What is an opportunity cost?

A

-the cost of the next best alternative
-losing out on one of the options

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13
Q

What is an entrepenur?

A

someone who takes a calculated risk through starting a business

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14
Q

What does enterprise mean?

A

-another name for a business
-describes the actions of someone who takes a risk by setting up, investing in and running a business

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15
Q

What are the 8 characteristics of entrepenurs?

A

-innovative
-Risk taker
-hard working
-organised
-determined
-persuasive
-leadership
-lucky

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16
Q

Why would someone choose to start their own business?

A

-make a profit
-investing money
-turn a hobby into a business
-to be your own boss
-to make a difference

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17
Q

What are the 4 factors of production?

A

-land
-capital
-labour
-enterprise

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18
Q

What is land (factors of production)?

A

the natural resources used to provide a good or service

such as water, a plot of land. fields, fish or coal

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19
Q

What is labour (factors of production)?

A

the workforce used to produce a product or provide a service

such as builders, teachers or plumbers

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20
Q

What is capital (factors of production)?

A

Money, but ALSO the man-made resources used to produce a product or provide a service

such as machinery, tools, money or delivery truck

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21
Q

What is enterprise (factors of production)?

A

The ideas and organisation behind the other factors

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22
Q

What are the three types of activities (secors)?

A

-primary
-secondary
-tertiary

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23
Q

What is the primary sector?

A

extracting or harvesting raw materials

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24
Q

What is the secondary sector?

A

manufacturing

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25
Q

What is the tertiary sector?

A

services

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26
Q

What are the three characteristics of a sole trader?

A

-one trader=one owner
-this does not mean there is only one person in the business
-to set up-register with tax authorities as self-employed
-pay income tax on profits

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27
Q

What does unlimited liability mean?

A

-the owners of a business are responsible for all of the debts of a business

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28
Q

What are the characteristics of unlimited liability?

A

-personal belongings can be taken to pay off debts
-Business and owner=ONE ENTITY

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29
Q

What does limited liability?

A

-the shareholders of a business are not responsible for thee debts of a business

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30
Q

What are the characteristics of limited liability?

A

-personal belongings will not need to be given up to pay the debt
-the owners will lose the money they invested in the business if it fails

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31
Q

What is sole traders suitable for?

A

-start ups
-working alongside their normal jobs
-people with little personal wealth

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32
Q

Advantages of Sole Traders(6)?

A

-easy/cheap to set up
-quick decisions/complete control
-less capital needed
-keep all profit
-flexible working hours
-dont need company information public

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33
Q

Disadvantages of Sole Traders (4)?

A

-Unlimited liability
-Difficult to raise money
-impact of illness/holidays -long hours
-no one to share ideas with

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34
Q

Characteristics of partnerships?

A

-JOINT ownership
-2-20 partners
-set up by-deed of partnership
-sets out who is going to do what and what share of profit each partner will get
-protects each partner of aa DISPUTE arise
-commonly used for, Doctors, Accountants, dentists, lawyers, vets

35
Q

Advantages of partnerships (5)?

A

-wider range of skills/expertise that ST
-greater access to finance/capital
-shared decision making
-pressure reduced due to shared roles
-shared responsibility for debt

36
Q

Disadvantages of partnerships (6)?

A

-capital can still be limited
-unlimited liability
-profits are shared
-if one partner dies-it dissolves
-can cause arguments
-need for a deed of partnership

37
Q

Characteristics of Private Limited Company?

A

-wrote ad LTD
-shares are sold to friends and family
-all shareholders have to agree before issuing more shares

38
Q

Characteristics of Public Limited Company?

A

-wrote as PLC
-Shares are sold to the public on the STOCK EXCHANGE
-Anyone can buy shares
-RISK OF TAKEOVER

39
Q

what are the advantages of a Private Limited company?

A

-limited liability
-shares can only be sold, if all the shareholders agree-no risk of takeover
-capital can be raised through selling shares
-other businesses and lenders are more likely to trade and invest
-the business continues if the owners dies.
-possible tax benefits for the owners

40
Q

What are the disadvantages of Private Limited companies?

A

-longer legal process to set up
-increased costs in setting up
-profits have to be shared with shareholders
-have to prepare annual accounts for all shareholders
-annual accounts are published to the general public.

41
Q

advantages of public limited companies?

A

-limited liability
-huge amounts of capital can be raised through selling shares to the public.
-it is easier to raise finance from banks and other lenders who are more willing to lend to PLCs.
-they are likely to have economies of scale
-shareholders can appoint specialist managers to run the company for them

42
Q

What does economies of scale mean?

A

buying in bulk (e.g Costco)

43
Q

Disadvantages of public limited companies?

A

-increased costs in setting up
-anyone can buy shares so risk of losing control
-increased legal requirements
-the company accounts are in the public domain
-divorce of ownership and control
-the increased size may result in inefficiencies

44
Q

What does the legal structure depend on?

A

-size of business
-type of business
-lender requirements
-investment protection
-control
-growth

45
Q

Characteristics of not-for-profit organisation?

A

-have an objective of something other than profit
-dedicated to a social cause
-they have limited liability

46
Q

Characteristics of charities

A

-make most of the money through donations
-all conduct business activities
-all proceeds need to be spent in accordance with charity aims

47
Q

Characteristics of enterprises?

A

-make money from business activities
-at least 50% of profit must be reinvested into their mission-not paid to shareholders

48
Q

Define aims?

A

long term plan of a business which direct its objectives

49
Q

Define objectives?

A

medium to long term goals of a business

50
Q

What are some objectives for a business?

A

-survival
-profit maximisation
-growth(domestic/international)
-sales maximisation/market share
-customer satisfaction/quality
-social and ethical objectives

51
Q

What are the roles of objectives?

Why do businesses set objectives?

A

-provide direction for businesses
-without clear objectives, a business may provide goods and services that are not appropriate to why the business was set up
-may result in it not being successful
-provides focus for employees
-allows planning
-provides a way of reassuring success

52
Q

What objectives differ between businesses?

A

-size of the business
-level of the competition faced
-type of business

53
Q

What external objectives may change as businesses evolve?

A

-larger more established businesses vs smaller start up businesses
-become the dominant business in the market
-ethical and environment considerations

54
Q

What internal objectives may change as businesses evlove

A

-international expansion
-increasing shareholder value

55
Q

What are other ways to measure a business other than profit?

A

-high quality service/products
-customer loyalty
-social cause

56
Q

Define shareholder?

A

owns shares in a business

57
Q

Define stakeholder?

A

someone with an interest in the business

58
Q

Give some examples of stakeholders?

A

-competitors
-supplies
-customers
-shareholders
-employees
-owners
-credit
-lenders (banks)

59
Q

define customer

A

someone who buys s product from a business

60
Q

define consumer

A

someone who uses goods and services produced by a business

61
Q

define social enerprise

A

a business that is set up to help society rather than to make profit

62
Q

define interest

A

the money paid by banks as a reward to attract people to save with them

63
Q

define interest rates

A

the cost of borrowing money or the reward for saving money, given as a %

64
Q

define inflation

A

the rate at which prices are increasing

65
Q

define stock exchange

A

a market for buying and selling shared of public limited companies.

66
Q

define a flotation

A

occurs when a private limited company becomes a public limited company and has its shared listed on the stock exchange

67
Q

how to calculate the sales per employee

A

sales / number of employees

68
Q

how to calculate market share

A

sales of product / total market sales x 100

69
Q

define dividends

A

the financial rewards paid out to shareholders each year

70
Q

define protectionist measures

A

policies that government use to protect their own businesses against foreign competition

71
Q

define a tariff

A

a tax on foreign goods imported into a country

72
Q

define imports

A

goods and services purchased from overseas by consumers of businesses

73
Q

define a quota

A

a limit on the number if foreign goods imported into a country

74
Q

what are the 5 factors that influence where a business is located?

A

-proximity to the market
-availability of the raw materials
-labour
-competition
-costs

75
Q

Proximity to Market: what are customers important for

A

-retail businesses
-convenience stores

76
Q

Proximity to Market: What are customers less important for

A

-businesses require larger physical space
-online businesses

77
Q

Availability of Raw Materials: Near suppliers if…

A

-products produced are larger or costly to transport
-they need to be close to natural resources

78
Q

Labour: Skills that businesses

A

-finance, London
-Silicon Valley, USA
-Aero technology, Coventry, Bristol

79
Q

Labour: Availability

A

-population
-job seekers

80
Q

Labour: cost

A

-salary expectations

81
Q

Competition

A

-some businesses locate near competitions (electrical stores in retail parks)
-some locate away from competitors (newsagents)

82
Q

Costs: Setting up a new businesses will incur a number of location costs include

A

-planning permission
-purchasing or rental
-refurbishment
-labour costs
-transport costs

83
Q

what are the main reasons why businesses fail?

A

-flawed business plans
-poor financial control
-lack of knowledge of market

Business GCSE (3 decks)

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