Unit 1, Business studies, 10 Flashcards
Enterprise
Enterprise - spotting an opportunity to provide a product or service that people are willing to buy.
Entrepreneur
Entrepreneur - an individual who has the skills and knowledge to set up and run their own business, and it is willing to take risk.
Initiative
Initiative - the ability to use your judgment to make decisions and do things without needing to be told what to do
Risks of starting your own business (3)
- Financial
- Straight relationship.
- Health
Business aims
Business aims are the overall goals of the business.
Business plan
Business plan - the business plan sets out how the owners /managers of a business intened to achieve its objectives. Without such a plan, a business is likely to drift.
Business plan include
- the business idea.
- the people running the business.
- market research.
- finance.
- the objective of the business.
- the target market.
- competitor.
Sole trader
Sole trader- a sole trader describes any business that is owned and controlled by one person.
(Коли працюєш сам на себе)
Disadvantages of sole trader
- Shortage of capital, some sole traders may find it difficult to operate or grow because they do not have enough capital. They may also find it difficult to get a bank loan.
- Illness, if the owner of the business is ill, there may not be anybody else who can run the business.
- Hours of work.
- Continuity.
- Shortage of skills.
- Unlimited liability.
Sleeping/ Limited Partner
They invest money into the business but do not take part in the day to day running of the business or any decisions making.
Partnership
Partnership - is a business which is owned and controlled by a minimum of 2 partners.
Limited Liability Partnerships:
+advantages and disadvantages
- A LLP’s have at least 2 members.
- An advantage of becoming a LLP is that liability is limited.
- A disadvantage is that a LLP has to be registered with companies house which costs money and is time consuming.
Shareholders
The owners of private and public limited companies.
Shares
Shares - a unit of ownership in a limited company.
Limited liability
This is when the responsibility for the depts of the company is limited to the amount that the shareholders has put in.
Disadvantage of Private Limited Company
- Shareholders have to agree about how dividends are distributed.
- finance limited to ‘ friends and family’.
Advantages of Private Limited Company
- easier to raise finance as can sell shares.
- original owners are likely to retain control.
Disadvantages of Public Limited Company
- greater costs to set up and operate then a LTG.
- public can see company information and accounts.
- risk of company being taken oven.
Advantages of Public Limited Company
- can raise large sums of finance via the stock exchange
- borrowing money from a bank will be easier because they will be seen as less of risk.
Business goals
- Profit.
- Increase market share.
- Growth.
- Service
Stakeholders
Is any individual or organisation who has a vested interest in the activities and decisions making of a business.
Business growth
The process of a firm getting bigger
Organic / internal growth
Is when the business grows naturally by selling more.
Takeover
This is when one business buy another business. In case of a limited company, this means buying more that 50% of shares.
External growth
This is growth of a business by take over or manager ( when business buy another business).
Advantages of External growth
- costs saving ( i. e. through redundancies).
- gain new costumers and sales.
- eliminate competition.
- more ideas through combining teams.
- spread the risk / reduce reliance on exiting business market.
Disadvantages of External growth
- slower decision marketing.
- employees may become demotivated.
- increased costs.
Types of External Growth
1.Horizontal.
2. Backwards vertical.
3. Forwards vertical
4. Diversification
Types of External Growth, horizontal
Horizontal - a business joins with a business at the same stage of the production process.
Types of External Growth,
Backwards vertical
Backwards vertical - a business joins with its suppliers / the previous stage of production.
Types of External Growth,
Forwards vertical
Forwards vertical - a business joins with its distributors / the next stage of production.
Types of External Growth,
Diversification
Diversification - a business joins with a business in a different market.
