Unit 1 introduction to business Flashcards
what is meant by an entrepreneur?
someone who starts their own business
what is meant by enterprise?
1) another word for business
2) the actions of a risk taker starting their business
characteristics of an entrepreneur?
risk taker
shows initiative
innovative
not afraid of failure
what are the factors of production?
land (natural resources) e.g sunlight
labour e.g education/skills
enterprise e.g individuals who tasks risk
capital e.g machinery/ technology
what are the 3 sectors of the economy?
primary sector
secondary sector
tertiary
what is a primary sector?
activities undertaken by directly using natural resources e.g farming
(forms 1% of uk economy)
Benefits of adding value
Customer loyalty
Change higher in price, increase profit margin
More competitive
Point of difference from competitors
Good reputation
what is the secondary sector?
involves converting natural resources into finished goods e.g manufacturing
(19% of uk economy)
what is the tertiary sector?
provision of services
(19% of uk economy)
what’s a stakeholder?
an individual or organisational who have a vested interest within the activities and decision making
- shareholders/owners
- customers
-employees/employers
what is a private sector?
privately owned companies e.g sole traders
- run to generally make profit, help make community, act ethically.
what is a public sector?
ruined on behalf of public, government or by organisations that fund.
- not generally for profit
- for public but use public funds
what is a third sector?
voluntary groups, charities, social enterprise
- value driven, not necessarily motivated by profit but a desire to achieve social goals.
limited liability is?
only responsibly for debts to an extent. e.g can’t take personal belongings
what is unlimited liability?
has to repay debt off fully, this could lead to losing personal belongings
what does franchise mean?
business with well known brand name lets a person or group of people set up using that brand. e.g subway
- has no legal structure as liability depends on how business is established
what’s a franchisor?
the owner
what’s a franchisee?
individuals buy in the right to use the brand name
advantages of a franchiser?
- applicants ca be carefully selected for sustainability
- products necessary for franchise to operate are under the franchisers control.
- firm may not have to spend large amounts of money to expand.
disadvantages for the franchiser?
- control issues
- the cost of supporting the franchisees
- the possibility of conflict
advantages to the franchisee?
- lower risk (proven business concept)
- support advice & training
- marketing (national)
- maybe easier to obtain finance
disadvantage of the franchisee?
- profit shared
- franchise fee
- supplies have to be brought from franchiser
- lose control and independence
- business cannot be sold without permission
- franchise may be for fixed period
sole trader advantages
- your own boss
- keep all profits
- easy to set up
- open whenever
- less disagreements
- quick decisions
sole trader disadvantages
- unlimited liability
- workload
-sickness - limited skills and finance
- higher tax rate
- no continuity
partnership definition
owned by more than one person
- need legal partnership agreement (deed of a partnership)
partnership advantages
more skills/ideas
easier to raise finance
continuity
partnership disadvantages
unlimited liability
slower decision making
disagreements
Ways to add value
USP unique selling point
Updates
Quality
Collaboration with others
Branding
Improve image
Convenience
Adds to sale service/ customer service
Functionality
Warrantee
What’s a multinational company?
Companies that operate in a number of countries around the world
Reasons for diseconomies of scale
- poor communication (as business expands communication may become strained along the chain of command or different departments)
- lack of motivation (workers feel isolated, less appreciated leading to loyalty and motivation to diminish and a fall in that can increase labour costs
Co operatives?
Is owned and run by its member (employees and customers). Profits are shared between members rather than being distributed to share holders.
Advantages of cooperatives
- Legally straightforward to establish
- liability for members usually limited
- a higher quality of service is likely to be provided
- customers are usually loyal supportive
Disadvantages of cooperatives
- capital can be limited
- weak management
- slower decision making
- employees may want more
What types of businesses have limited liability
Private and public limited company
What types of businesses have limited liability
Private and public limited company
What type of businesses Have unlimited liability
Sole trader
Partnership
What are international markets
