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Business > Unit 1 Intro > Flashcards

Unit 1 Intro Flashcards

1
Q

What is a public limited business (PLC)?

A

A business that sells shares on the stock market to the public, the shareholders take limited liability for debt.

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2
Q

What is a private limited company (LTD)?

A

A business which have a max of 50 shares which can be sold by invite only

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3
Q

What is a sole trader?

A

someone who is responsible for owning and running the whole business, eg a freelancer or a small business.

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4
Q

What is a public sector organisation?

A

Organisations owned by the government using tax payers money, e.g. National rail

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5
Q

What is a non profit organisation?

A

Enterprises that aren’t driven by profit but the dedication to a cause, any profit made goes to fighting for said cause, e.g. the big issue magazine

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6
Q

What does the term survival mean?

A

When revenue=cost (breaking even) so no loss or profit is made

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7
Q

What is profit?

A

Revenue - costs (money after costs)

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8
Q

What is revenue?

A

Sale price x quantity sold

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9
Q

What is growth?

A

Market development, product development (planned expansion e.g. investment in machinery, technology, office space etc.) A business grows if it invests sales revenue, number of employees or capital stock.

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10
Q

What is cash flow?

A

The flow of cash into and out of your business

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11
Q

What are social and ethical objectives?

A

To behave morally or in the correct way e.g. treat workers fairly, environmental responsibility, fair trade etc.

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12
Q

What are fixed costs?

A

Costs that don’t vary with output (it doesn’t matter the revenue) e.g. rent, insurance, salary

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13
Q

What are variable costs?

A

Costs that vary with output e.g. raw materials, direct labour wages, electricity etc.

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14
Q

Total costs

A

Fixed+variable costs

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15
Q

Importance of profit

A

-a REWARD for an individual taking a calculated risk
-a measure of SUCCESS
-a motivator
-a source of finance for future growth and investment

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16
Q

Why are mission statements important?

A

They create enduring customer loyalty and demonstrate the brand values, enticing new customers

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17
Q

Criticisms about mission statements

A

-not always reflected
-too vague

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18
Q

Definition of a share holder

A

A part owner in the business

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19
Q

Definition of a stake holder

A

Somebody with an interest in the business

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20
Q

Examples of stakeholders

A

Customers, locals, employees, share holders etc.

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21
Q

What is an aim?

A

A long term plan from which a business objectives are derived

22
Q

Objectives

A
  • a target which must be achieved in order to realise the stated aim
  • a time assigned target derived from the goals set in advance of strategy
23
Q

What are the 5 things that help a business pick an objective?

A

Specific - state exactly what is achieved
Measurable - should be capable of measurement
Achievable - should be realistic
Relevant - relevant to the people response
Time bound - should be set in a timeframe (deadlines should be realistic)

24
Q

When choosing certain objectives what do you have to consider?

A

How ambitious the business owner is
How fast you want to achieve it
Objectives are aligned to aims and mission statements

25
Q

Why set objectives

A

-a clear statement of what needs to be achieved to fulfil the aims
-a focus and clarity for all activity
-targets for individual and group achievements
-source of motivation
-brings employees together with a common goal
-a means of measuring and evaluating performance

26
Q

What are corporate objectives?

A

For the whole company

27
Q

What are functional objectives?

A

For a particular department
-provides the focus for the setting more detailed objectives for the main functional activities of the business

28
Q

What are the functional departments in a business

A

Marketing, finance, HR and operations- day to day workings

29
Q

What is a share?

A

-an individual part of the issued share capital
- companies can raise the capital through issuing shares
-this share capital is an example of equity in the company

30
Q

What is capital

A

In financial terms capital refers to money that is available for the business to use

31
Q

What is price determined by?

A

Supply and demand

32
Q

Why do we buy shares?

A

-to make a profit on the share eg. Capital gain but the shares at a price and sell them at a higher price
-to receive a dividend, a percentage of profits (this would be considered a form of income)

33
Q

What is initial public offering

A

What they originally offered (IPO)

34
Q

What is initial public offering

A

What they originally offered (IPO)

35
Q

Ordinary share capital

A

If you buy an ‘ordinary’ share you get the opportunity to attend the AGM (annual general meeting) and vote

36
Q

Demand may be higher due to

A

-increased profitability
-booming economy
-state of the economy
-weaker performance of competitors
-customer tastes

37
Q

What is limited liability

A

-shareholders within plc and LTD companies have limited liability
-this mean if the company went bust the shareholder will only loose the value of their shares
-they will not have to sell personal belongings to settle debt
-lower risks for shareholders

38
Q

What is unlimited liability?

A

When a business is a sole trader
-the owner is liable for all debts the owner may have to sell personal belongings
-higher risk but higher reward
-operate where there is less capital outlay as there is less risk

39
Q

What are the external influence categories?

A

Political
Economic
Social
Technological
Legal
Ethical/environmental

PESTLE

40
Q

What is a booming economy?

A

Average income is rising and economic growth increasing

41
Q

What is recession

A

-negative economic growth for 2 consecutive quarters (6 months)
-average incomes fall
-fall in demand for normal goods
-demand for inferior goods rise

42
Q

What is the definition of an interest rate?

A

Reward for saving and cost for borrowing

43
Q

What happens to demand if interest rates increase?

A

They will decrease as it costs more to borrow for those expensive items

44
Q

Costs for business

A

-for business taking out loans eg to buy machinery
-higher interest rates will increase costs as loans are more expensive

45
Q

Exchange rates

A

-an exchange rate is the price of one currency expressed in terms of another
-value of £1=$1.31=€1.19
-stronger pound export prices are more expensive
-weaker pound export prices are cheaper
-value of pound falls price of export falls

46
Q

Real income

A

-real means adjusted for inflation
-inflation-sustained increase in the general price level

47
Q

GDP

A

Gross-total
Domestic-at home
Product-output

The total output produced within the (domestic) economy

48
Q

Factors affecting spending

A

-income is the flow of money
- wealth is the value of assets
- expectations of future prices (linked to confidence)

49
Q

What is a market?

A

Where buyers and sellers meet for the purpose of trade

50
Q

Competition

A
  • if a competitor sets up in the market customers could visit them instead of you so you may get a decrease in demand
    -equally a competitor may go bust
    -provides opportunities as well as threats
51
Q

Demographic factors

A

-relates to population eg ageing population
-more adults living alone
-high percentage of immigrants may influence fast food chains

52
Q

Fair trade

A

Products that have been traded fairly
-farmers, pickers, growers and producers have been paid a fair wage, the environment is also protected with sustainable farming practices also safeguarding

Business (3 decks)

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