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business gcse > Unit 1: Business in the Real World > Flashcards

Unit 1: Business in the Real World Flashcards

1
Q

what does CELL stand for?

A

the economic resources

  • Capital - tools, machinery, financial resources used in production
  • Land - natural recourses and the physical space
  • Labour - Human effort/skill applied to the production process
  • Entrepreneurship - encompasses the innovation, organisation and ‘risk taking’ that drives the production process.
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2
Q

Primary sector

A

extracting raw materials
e.g.
* fishing
* mining
* agriculture
1% of uk economy

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3
Q

secondary sector

A

converting raw materials into goods - finished or unfinished

  • car production
  • t shirt production
  • assembly plant - making components e.f steering wheel
    19% of uk economy
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4
Q

tertiary sector

A
  • providing the service
  • financial services - banks
  • leisure services - hotels
  • transport services - taxis
  • 80% of uk economy
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5
Q

business

A

Inputs - CELL
outputs - goods and services

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6
Q

percentage change

A

new number - old number / old number
= ANS x 100

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7
Q

what’s an Entrepreneur?

A

an individual who takes on Risk to hopefully gain a REWARD (mainly profit)

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8
Q

Reasons for Entrepreneurs starting a business?

A
  • more profit
  • wants independence - be your own boss
  • need a job
  • interest/passion
  • flexible hours
  • spotted a business opportunity
  • help others
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9
Q

opportunity cost

A

The sacrifice when an alternate is chosen

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10
Q

risks/ challenges of an entrepreneur

A
  • setting a new business
  • expanding a business
  • limited liability
  • competing with competitors
  • attracting/retaining customers
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11
Q

Profit distribution

  • sole trader -
  • partnership -
  • private limited -
  • public limited
A
  • sole trader - 100% profit is yours
  • partnership - shared to what deeds of partnership says. (60/40)
  • private limited and public limited
    = shareholders will reciever diverdends
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12
Q

Liability
- unlimited
- limited

  • sole trader -
  • partnership -
  • private limited -
  • public limited
A
  • sole trader - Unlimited liablities
  • partnership - Unlimited liablities
  • private limited and public limited liablities
    = shareholders personal possesstions not at risk
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13
Q

Management and control

  • sole trader -
  • partnership
  • private limited -
  • public limited
A
  • sole trader - have full control but not support
  • partnership - shared based on ‘deals of partnership’
  • private limited -
  • public limited -
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14
Q

Sources of finance available

partnership
private limited
public limited

  • sole trader -
  • partnership -
  • private limited -
  • public limited
A
  • sole trader -
  • partnership -
  • private limited -
  • public limited -
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15
Q

market size

A

the potential number of customers you could sell your products to

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16
Q

market share

A

The percentage of total sales in a market that is attributed to a specific business or product.

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17
Q

price skimming

why is it good or bad?

A

price penetration

why is it good or bad?

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18
Q

competitive pricing

why is it good or bad?

A

Good:

Attracts customers by matching or undercutting rivals.
Helps maintain market position in competitive industries.
Avoids overpricing or losing customers.

Bad:

Reduces profit margins if prices are too low.
Doesn’t highlight product quality or uniqueness.
Can trigger price wars with competitors

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19
Q

loss leader pricing

why is it good or bad?

A

Good:

Attracts customers to the business.
Encourages additional purchases of profitable items.
Increases market share and brand loyalty.

Bad:

Can lead to losses if customers only buy the discounted product.
May harm profitability if overused.
Risk of competitors matching prices, reducing effectiveness.

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20
Q

cost plus pricing

why is it good or bad?

A

A pricing strategy where a business sets the price by adding a fixed percentage (markup) to the total cost of producing a product.

Formula:
Selling Price = Cost of Production + Markup

Good:

Simple and easy to calculate.
Ensures costs are covered with a guaranteed profit.
Reduces pricing decision uncertainty.

Bad:

Ignores market demand and competition.
May result in overpriced or underpriced products.
Doesn’t consider customer value perception.

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21
Q

product life cycle in order

5

A
  1. research and development
  2. introduction
  3. growth
  4. maturity
  5. Decline
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22
Q

Benetfits of product differentiation

A

USP
- increases customer satisflication
- allows price skimming

  • however high cost of new product
  • will it be low in demand
23
Q

product portfolio

A

The range of products a business offers

24
Q

extension strategies

A
  • improve packaging
  • add new/more features
  • new target markets
  • advertising - billboard, ads, buy one get one free, magazines
  • reduce process - has to make more than than the reduction
25
Q

boston matrix

A

A tool to analyze a product portfolio based on market share and market growth. Categories:

  • Stars: High growth, high share.
  • Cash Cows: Low growth, high share.
  • Question Marks: High growth, low share.
  • Dogs: Low growth, low share.
26
Q

why do promotion

A
  • make customers aware of ur product
  • Remind them of ur product
  • Which will increase sale of product
  • change preception about products
  • therefore persude them to buy it
27
Q

5 ways of advertisment

A
  1. Billboards
  2. magazine
  3. internet
  4. newspaper
  5. TV

B-MINT

28
Q

types of sale promotion

A
  • Points of sales
  • Buy one get one free
  • Free gifts
  • Samples
  • Coupons
29
Q

types of promotion

A
  • advertisment
    *sale promotion
  • sponsorship
  • social media
  • PR - Public relations
30
Q

promotion depends on the…

A
  • money you haev
  • what your rivals doing
  • whats the nature of product
  • what makes sense for the target market
31
Q

e commerse defenition

A

Buying and selling goods or services online.

32
Q

m commerse defenition

A

Buying and selling goods or services through mobile devices.

33
Q

pros and cons of m commerce

A

M-commerce Pros:

Convenience and accessibility.
Faster transactions.
Location-based services.
M-commerce Cons:

Smaller screen size.
Dependence on internet and battery.
Security concerns

34
Q

pros and cons of e commerce

A

E-commerce Pros:

Wide customer reach.
24/7 availability.
Lower operating costs.
E-commerce Cons:

Delivery delays.
Security risks.
Intense competition.

35
Q

Net cash flow formula

A

Net Cash Flow = Total Cash Inflows - Total Cash Outflows

36
Q

fixed cost

FC

A

do not change with output

37
Q

Variable cost

VC

A

change with output

38
Q

Average rate of return formula

A

(Average Annual Profit ÷ Initial Investment) × 100

39
Q

variable cost

A

Costs that change with the level of output, e.g., raw materials.

40
Q

average annual profit formula

A

(Total Profit over the Period) ÷ (Number of Years)

41
Q

break even point

+ formula

A

The level of sales where total revenue equals total costs, resulting in no profit or loss.

Fixed Costs ÷ (Selling Price per Unit - Variable Cost per Unit)

42
Q

break even cons and pros

A

Break-even Pros:

Helps determine the minimum sales needed to avoid losses.
Assists in pricing strategies and cost control.
Simple and easy to understand.

Break-even Cons:

Assumes fixed costs and prices remain constant.
Doesn’t consider market changes or competition.
Doesn’t show profitability beyond the break-even point.

43
Q

what are the 3 financial statments

A
  • cash flow forcast - how much cash in bank acc
  • income statement - how much profit made
  • statment of financial position - net worth of business
44
Q

gross profit formula

A

Sales Revenue - Cost of Goods Sold (COGS)

45
Q

Gross Profit margin formular

A

(Gross Profit ÷ Sales Revenue) × 100

46
Q

Net Profit margin formular

A

(Net Profit ÷ Sales Revenue) × 100

47
Q

advantages of a business plan

A
  • Provides direction and focus.
  • Helps secure funding from investors or banks.
  • Identifies potential risks and opportunities.
  • Assists in setting realistic goals.
  • Aids in measuring business progress.
48
Q

pros and cons of sole trader

A

Pros of Sole Trader:

Full control and decision-making power.
Simple and low-cost setup.
Keep all profits.
Flexibility in business operations.

Cons of Sole Trader:

Unlimited liability.
Limited access to capital.
High workload and responsibility.
Limited expertise and resources.

49
Q

pros and cons of partnership

A

Pros of Partnership:

Shared responsibility and workload.
More capital and resources.
Diverse skills and expertise.
Shared risk and liability.

Cons of Partnership:

Unlimited liability for partners.
Potential for conflicts between partners.
Profit sharing.
Limited control for individual partners.

50
Q

pros and cons of Private Limited Companies

A

Pros of Private Limited Companies:

Limited liability for shareholders.
Easier to raise capital.
Continuity of the business.
More control and privacy than public companies.

Cons of Private Limited Companies:

Limited number of shareholders.
More legal and regulatory requirements.
Profits must be shared among shareholders.
Higher setup and operational costs.

51
Q

pros and cons of Public Limited Companies

A

Pros of Public Limited Companies:

Ability to raise capital by selling shares.
Limited liability for shareholders.
Enhanced public profile and credibility.
Easier to expand and grow.

Cons of Public Limited Companies:

High regulatory and reporting requirements.
Risk of loss of control due to shareholders.
Vulnerable to market fluctuations.
Expensive to set up and maintain.

52
Q

market growth formula

A

((New Market Size - Old Market Size) ÷ Old Market Size) × 100

53
Q

market share formula

A

(Company’s Sales ÷ Total Market Sales) × 100

54
Q

benefits of market segmentation

A
  • More targeted marketing strategies.
  • Better customer satisfaction by meeting specific needs.
  • Improved product development.
  • Enhanced competition and differentiation.
  • More efficient use of resources.

business gcse (9 decks)

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