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business nat 5 > unit 1 revision > Flashcards

unit 1 revision Flashcards

1
Q

what is a good

A

goods are tangible items that can be used and stored. businesses make goods and sell them to customers. e.g clothes

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2
Q

what is a service

A

services are intangible actions. Often the business does something for you in return for a fee paid. e.g hairdressing

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3
Q

what are durable goods

A

something that lasts a long time and can be used more than once e.g car

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4
Q

what is a non-durable good

A

something that lasts a short period of time and can only be used once e.g a cinema ticket

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5
Q

factors of production - capital

A

capital means the man-made resources that the business use - such as buildings, machinery and tools. reward is interest

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6
Q

what is land

A

land means the natural resources that the business use - for example, a plot of land, coal, forests, water. reward is rent.

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7
Q

what is labour

A

labour means the workforce of a business - for example managers, shop assistants, cleaners etc. reward for labour is wages

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8
Q

what is enterprise

A

enterprise means the business ideas that entrepreneurs or owners have about how to use land, labour or capital to make a profit

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9
Q

what is a need

A

needs are basic requirements for survival and must be satisfied. examples include water, food and shelter

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10
Q

what is a want

A

wants are not essential to survival. these are luxuries that make your life more comfortable. examples of wants include Wi-Fi, designer clothes and laptops

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11
Q

what is adding value

A

adding value is the difference between the selling price and the cost price of a good or service.

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12
Q

what is wealth creation

A

It is the additional wealth that is added at each stage of the production process.

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13
Q

primary

A

primary sectors involve extractive industries such as mining or forestry which gather or extract raw materials.

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14
Q

secondary

A

secondary sectors involve manufacturing such as carpenters or builders which transform the raw materials into products.

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15
Q

tertiary

A

tertiary sectors are concerned with providing a service. for example hairdressers, dog walking or window cleaning

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16
Q

private sector

A

Private sector organisations are owned and controlled by private individuals. Funded by owners capital. They aim to survive and make profit. e.g. local newsagent or large supermarket chains

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17
Q

public sector

A

public sector organisations are owned and controlled by the government. They aim to provide a service to the public and are funded by taxes. public sector organisations function in areas such as health, education, police.

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18
Q

third sector

A

third sector organisations are owned and controlled by trustees. They are funded by grants. Third sector organisations are set up to help a cause or provide a service to members. They aim to raise money and increase awareness for good causes.

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19
Q

What are the benefits of good customer service?

A
  1. Motivated and highly performing staff
  2. Customers return to the organisation
  3. Market share may increase
  4. Customers recommend the business to their friends
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20
Q

what are the costs of poor customer service?

A
  1. Decrease in profits
  2. Demotivated staff due to complaints
  3. customers don’t return
  4. customers won’t recommend the business and may sway other potential customers
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21
Q

ways in which the business can improve customer service

A

mystery shopper
market research
staff training
customer complaints procedure

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22
Q

mystery shoppers

A

they are employed by the business to act as customers in store. they will then report back on their experience. this feedback is then used to help improve the businesses service or product

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23
Q

market research

A

affective market research such as online surveys will allow a business to find out the needs and wants of its customers.

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24
Q

staff training

A

well trained staff will be knowledged about the business and will be able to deliver a higher standard of customer care

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25
Q

customer complaints procedure

A

this includes instructions on how employees should handle complaints such who should deal with a complaint and how it should be processed. if a complaint is handled well, the customer is more likely to return to the business.

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26
Q

why do people set up their own businesses?

A
  1. They want to be their own boss
  2. They may have been made redundant and are using their redundancy money to set up their own business
  3. They have an idea for a new Product or service
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27
Q

where do people get ideas for starting their own businesses?

A
  1. spotting a gap in the market

2. improving on an existing product

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28
Q

what is an Entrepreneur?

A

an entrepreneur is a person who sets up a business, taking on financial risks in the hope of profit

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29
Q

what is the role of an entrepreneur?

A

to develop an business idea
take risks
combine the factors of production

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30
Q

what skills and qualities make an entrepreneur successful?

A 
Communicate well with people
Make good decisions
Problem solving
Determination
Leadership
Creative
Risk Taker
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31
Q

what is a sole trader?

A

a sole trader is a business owned and controlled by one person. financed by their own savings - examples would be hairdressers, butchers, and electricians

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32
Q

advantages and disadvantages of a sole trader

A 
Advantages	
- Easy to set up	
- Sole trader retains all profits for him/herself	
- sole trader makes all the decisions	
disadvantages 
- can be difficult to raise finance 
- unlimited liability 
- heavy workload
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33
Q

what is a partnership?

A

a business owned by 2-20 people. They share the responsibilities of running and owning the business

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34
Q

what is the deed of partnership

A

the written agreement which outlines rules for example it states how much money each partner invested will receive

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35
Q

advantages and disadvantages of a partnership

A

Advantages
- More equity available to finance the business compared to a sole trader
- Different partners can bring different skills
- workload is shared
Disadvantages
- unlimited liability
- Profit is shared between the partners
- Partners may not always agree on decisions for the business

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36
Q

what is a private limited company?

A

a business owned by shareholders with limited liability but whose shares cannot be bought by or sold to the general public

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37
Q

advantages and disadvantages of a private limited company

A

Advantages
- Owner can retain control
- More able to raise money
- Limited liability
Disadvantages
- must be registered with the register of companies
- high set-up costs (legal and administrative)
- hard to motivate and control workers who don’t hold a share

38
Q

what is the third sector?

A

the third sector is not about making profit but rather about making a difference to society.

39
Q

charity

A

an organization set up to provide help and raise money for those in need.
It is owned by private individuals and is run by a board of trustees.
They are funded by money raised through sales in charity shops and public donations.
e.g. cancer research UK

40
Q

advantages and disadvantages of a charity

A

Advantages
- raise awareness and funds for a particular cause
- generally don’t have to pay income/ tax
Disadvantages
- depend heavily on unpaid volunteers and workers
- depend heavily on the generosity of the community for finance

41
Q

voluntary organisations

A

it is a non-profit organisation run by individuals who help to provide a service to people. Examples would include clubs and sporting activities in the local area

42
Q

advantages and disadvantages of a voluntary organisations

A

Advantages
- provide opportunities
Disadvantages
- depend heavily on unpaid volunteers and workers
- depend heavily on the generosity of the community for finance

43
Q

social enterprise

A

a social enterprise is an organisation that exists with a clear goal to help the community but runs like a business. social enterprises can be sole traders or partnerships. funded by grants and investments. profits are reinvested back into the organisation.

44
Q

advantages and disadvantages of a social enterprise

A

Advantages
- provide an opportunity for local people to gain employment
- bring positive change to people and communities
Disadvantages
- they face the same challenges and risks common to all businesses

45
Q

objectives - survival

A

Every business must make enough of a profit to keep operating or else it will fold. Some small businesses will continue to have this objective as they struggle against economic recession or face fierce competition.

46
Q

growth

A

the business aims to expand and increase its market share eg they may choose to open more stores or hire more staff

47
Q

profit maximisation

A

most private sector firms aim to make as much profit as possible. this can be done by selling in volume at low prices to encourage lots of customers to buy.

48
Q

innovation

A

the business aims to gain a competitive advantage eg by developing products which are unique or using creative marketing

49
Q

sales maximisation

A

the business aims to achieve as much sales revenue as possible. staff may receive bonuses or rewards according to targets met.

50
Q

provide the best customer service

A

a firm will aim to ensure customers receive the best service or experience when in store or online. for example the business could train staff to know how to provide a high standard of customer service.

51
Q

social responsibility

A

the business is concerned with its activities not causing damage to the environment or people. For example, some businesses use biodegradable packaging to reduce the harm it does to wildlife or the atmosphere.

52
Q

internal factors

A 
finance 
staff 
management
information 
technology
53
Q

human resources

A

expert and capable staff will be more productive in their work and will help the business to achieve more

54
Q

finance

A

finance is crucial. a lack of money could mean the business has to consider cost cutting measures such as staff redundancies or closing branches of the business.
changes in costs, such as wage rises or increases in the cost of stock, could mean that the business has to take cut in profits.

55
Q

technology

A

the use of ICT and robots means that goods or services can be produced more efficiently and more cost effectively.

56
Q

management

A

a strong and capable management team will make good decisions - and this, in return will lead the business to success

57
Q

political

A

factors controlled by the government e.g. legislation, taxation charges and the public budgets

58
Q

impact on the business

A

government could introduce laws, the business must comply with laws or face a heavy fine
government could introduce a minimum wage which employers must pay this will affect their costs and profits.

59
Q

economic

A

factors controlled by trade e.g. recession or changes in lifestyle

60
Q

impact on the business

A

If there is a recession and unemployment is high, consumers will have less income, which will result in a loss of sales for the business.
The business might also have to cut down prices on products to encourage customers to keep buying from them. this will mean a cut in profits.

61
Q

social

A

factors controlled by the population e.g. fashion trends

62
Q

impact on the business

A

The business must take notes of changes in the economy such as trends are going out of fashion and changing, healthy eating is being encouraged more. This means the business must adapt by - lowering prices on products, market research, new products are launched

63
Q

technological

A

factors controlled by advances in new tech e.g. developments in IT, more internet coverage globally

64
Q

impact on the business

A

the business must keep up with changes in technology otherwise it could lead to a fall in sales and profits for example

  • the business must become involved in e-commerce, buying and selling goods using the internet
  • They must adopt technology for production - investing in robotics or automation to produce goods - failure to invest could result in reduced output quality and products
65
Q

environmental

A

factors such as weather, climate, natural disasters

also concerned with sustainability and being ethical e.g. pressure to use recyclable packaging

66
Q

impact on the business

A

there is now an increasing pressure for businesses to be environmentally friendly. for example many firms have introduced carrier bags to encourage people to stop using plastic bags.
Businesses can also be disrupted by extreme weather conditions like storms, floods and snow - this could slow down delivery

67
Q

competitive

A

factors caused by the actions of a rival business (competitor)

68
Q

impact on the business

A

all businesses face competition from other firms for example - if rival firms lowers selling price, this means sales drop as customers switch to rival frim to save money. The business might have have to lower prices, change the way they advertise.

69
Q

what is a stakeholder

A

a stakeholder is a person or a group of people who have interest in a business or organisation and in the way which it is managed and run

70
Q

employees

A

employees want job security, to be paid a fair wage and to be part of a successful, thriving business

71
Q

influence of employees

A

employees can take industrial action, for example, strike, if they are unhappy with working condition - this could lead to a halt in production therefore the business cant make sales or profits

72
Q

managers interests

A

managers are employed by the business and will sometimes have a special arrangement in place that will entitle them to additional pay.

73
Q

influence of managers

A

they can decide on staffing levels and what new products the business will introduce

74
Q

impact of managers

A

poor decision making can damage reputation of the firm e.g. not employing or training enough staff

75
Q

owners interests

A

the owners have invested their own money, time and effort into the business. They want it to thrive and grow and make a profit

76
Q

influences

A

the owner can decide to sell their shares.

they can also increase their drawings (withdrawing cash from the business).

77
Q

impacts

A
  1. selling market shares can increase supply lowering share value
  2. drawing too much can result in liquidity problems (ability to pay short term debts/bills)
78
Q

customers interests

A

the customer of a business want the business to provide them with a quality product or service at an affordable and reasonable price.

79
Q

influences

A

if customers are not happy with the service offered by the business, they can go elsewhere, for example, to a rival business. - this can result in sales dropping
they can also complaint which can lead to high costs for the business to deal with the complaint.

80
Q

local community interests

A

the local community wants the business to do well, so it can provide employment in the area, and support local projects. the community also wants to ensure that the business doesn’t create negative effects such as pollution or traffic.

81
Q

influences

A

can protest and raise awareness if a business is polluting or damaging the environment. - this can result in fines and poor image/ reputation

82
Q

banks interests

A

banks want to make sure that if they provide an organisation with a loan, the organisation will be able to pay it back with the terms and conditions of the loan agreement.

83
Q

influences

A

The bank can make and change decisions such as withhold loans or not, change repayment periods shorter or longer and change interests rates

84
Q

impacts

A

the bank can refuse a loan which could prevent growth for the business. They could also extend a repayment period this can aid cashflow for the business.
If the bank increases interests rates, a firms expenses with also increase.

85
Q

suppliers interests

A

suppliers need to be guaranteed that if they supply the goods on credit to the business, then the company has the ability to pay them back.

86
Q

influences

A

suppliers can change prices, credit arrangements and discount rates at short notice

87
Q

impacts

A
  1. higher prices or revoked discount will increase the cost of sales.
  2. longer lead times may result in delays in production
88
Q

government interests

A

the government needs to know how successful the business is to ensure that they collect and receive the correct amount of tax, that they can provide employment and if they are taking ethical actions

89
Q

influences

A
  1. can issue grants
  2. legislation changes
  3. lower taxation
90
Q

impacts

A
  1. a grant can allow a firm to grow and expand
  2. law changes may result in expensive equipment or training needed
  3. lower tax means firms can retain more profit

business nat 5 (1 decks)

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