Unit 1 - Businesses Flashcards
What are the main financial aims of a business?
- Survival
- Profit
- Sales
- Market Share
- Financial Security
What are some non-financial business aims?
- Social Objectives
- Personal Satisfaction
- Challenge
- Independence
- Control
Why do business objectives change over time?
- Due to Market Conditions
- Technology
- Performance
- Legislation
- Internal Reasons
What are the four main types of business ownership?
- Sole Trader
- Partnerships
- Private Limited Companies (Ltd)
- Public Limited Companies (Plc)
What are public corporations, and why do they exist?
Businesses owned by the government, often providing essential services
What are the advantages of being a sole trader?
Full control, keeps all profits, easy to set up
What are the disadvantages of being a sole trader?
- Unlimited Liability
- Limited Capital
- Full Responsibility
What are the characteristics of a Partnership?
- Shared Ownership
- Shared Profits
- Shared Liability (unless a limited partnership)
What are the differences between private and public limited companies?
- Private limited companies (Ltd) have restricted share sales, while public limited companies (Pls) can sell shares on the stock market.
What is the concept of limited liability
Owners are only responsible for business debts up to their investment, protecting personal assets.
What are franchises?
A business model where an individual (franchisee) buys the rights to operate under an established brand (franchisor)
What are social enterprises?
Businesses that aim to benefit society rather than maximize profit
What are multinationals?
Large businesses that operate in multiple countries
What are the 3 business sectors?
- Primary (extracting raw materials)
- Secondary (manufacturing goods)
- Tertiary (providing services)
Give an example of a business in each sector.
Primary - Farming, Mining
Secondary - Car manufacturing, textile production
Tertiary - Retail, Banking
What factors influence business location decisions?
- Proximity to market
- Proximity to labour
- Proximity to materials (supply)
- Proximity to competitors
- Nature of business
- Legal controls
- Trade blocs
- E-commerce
How has the internet affected business location decisions?
Many businesses can operate online, reducing the need for physical premises.
What is globalisation?
The process by which businesses operate and compete on a global scale
What are the benefits of globalisation for businesses?
- Larger markets
- Economies of scale
- Access to cheaper labour and resources
What are the threats of globalisation?
- Increased competition
- Reliance on international supply chains
- Ethical concerns
What are the benefits of multinationals to host countries?
- Job creation
- Investment
- Technology Transfer
What are the drawbacks of multinationals to host countries?
- Exploitation of workers
- Environmental impact
- Profit Repatriation
How do you calculate an exchange rate conversion?
Multiply by the exchange rate when converting to foreign currency
Divide when converting back
How do exchange rate changes affect businesses?
- A strong currency makes exports expensive but imports cheaper
- A weak currency makes exports cheaper but imports expensive
Why do governments spend money?
To provide public services such as healthcare, education and infrastructure
How do governments raise money?
Taxation (income tax, VAT, corporation tax)
How can government policies affect businesses?
- Through infrastructure investment
- Legislation
- Trade policies (tariffs, trade blocs)
How do interest rates affect businesses
- High interest rates increase borrowing costs and reduce consumer spending
- Low interest rates encourage borrowing and spending
What are the external factors affecting business decisions?
- Social
- Technological
- Environmental
- Political Factors
Give an example on how technological factors can affect a business.
Automation can reduce costs but may lead to job losses.
How do environmental factors impact business?
- Sustainability pressures
- Carbon footprint concerns
- Regulations
How can business success be measured?
- Revenue
- Market Share
- Customer Satisfaction
- Profit
- Growth
- Employee Satisfaction
What are common reasons for business failure?
- Cash flow problems
- Lack of competitiveness
- Failure to adapt to market changes
