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Business Nat 5 > Unit 1 - Understanding business > Flashcards

Unit 1 - Understanding business Flashcards

1
Q

What is a business?

A

A particular type of organization that provides goods and services to customers

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2
Q

Needs and wants

A

Need-
An item which is necesary for survival such as water, food or shelter

Want-
Something which is not required however it increases the quality of our lives such as cars, TVs or holidays

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3
Q

Goods and services

A

Goods-
Things that are tangible, you can see and hold such as a phone or clothes

Service-
Things that are done for you such as a haircut or window cleaning

Page 11

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4
Q

Reasons for buying a service

A
  1. You don’t have the time
  2. You’re too lazy to do it yourself
  3. You don’t have the correct equipment
  4. Its convenient
  5. Its messy or dangerous
  6. Status (Going to a fancy restaurant)
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5
Q

Durable and non-durable

A

Durable-
Long-lasting, could be something like a television which is likely to last several years

Non-durable-
Something which has a short life span such as movie tickets which may only last for a 2-3 hour long movie

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6
Q

Factors of production

A

Capital
Enterprise
Land
Labour

(Remember CELL)

page 13

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7
Q

Capital

A

The man-made tools, machinery, and equipment that a business uses to operate

e.g tractor, lorry, oven, building

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8
Q

Enterprise

A

This means the business ideas that the entrepreneur or owner has on how to best combine the other factors of production to make a profit and achieve their aims.

e.g the ingredients, ovens, tables, fridges, waiters, chefs are all utilised in a restaurant

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9
Q

Land

A

The natural resources that business use (raw materials)

e.g Plot of land, coal, forest, water

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10
Q

Labour

A

The workforce or the employees of a business

e.g joiner, farmer, shop assistant, teacher

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11
Q

Wealth creation

A

By adding value to a product as it goes through the production process

page 15

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12
Q

Sectors of industry

A
  1. Primary
  2. Secondary
  3. Tertiary

page 17

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13
Q

Primary sector

A

Uses the natural resources

E.g farming, oil drilling, mining, fishing

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14
Q

Secondary sector

A

Concerned with the making of products. Takes the raw materials from industries in the primary sector and converts them into products

e.g Kellogs cereal, fish fingers

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15
Q

Tertiary sector

A

Do not produce a product. They offer services.

e.g banking, tourism, hairdressers

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16
Q

What is an entrepreneur

A

Someone who has a good business idea and..

  1. Binds the factors of production
  2. Prepared to take risks with their money as to develop their business
  3. Invests their own money

Responsible for all aspects managing a business, employs workers + managers for help

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17
Q

Examples of entrepreneurs

A

Anita Roddick - Body shop (cosmetics)
Tom Farmer - Quick fit ( Car maintenance)
Duncan Bannatyne - Gyms and spas

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18
Q

Skills of an entrepreneur

A
  1. Time management
  2. Takes risks
  3. Good communication skills
  4. Doesn’t give up easily
  5. Good decision-making skills
  6. Good leadership skills
  7. Spots a gap in the market
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19
Q

Whats a gap in the market?

A

When no existing companies are selling that specific product or service

or

The product or service is not close or easy to get to
e.g American candy

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20
Q

Sources of help and fianance

A
  1. Bank - Financial advice, business plan, starting a business
  2. Enterprise agency - Advice, support, training courses
  3. Lawyer - What legal documents do you have to prepare
  4. other entrepreneurs - What mistakes to avoid, how to manage your business
  5. Princes trust - Practical and financial advice (18-30)
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21
Q

Cycle of business

A
  1. Business produces goods and services to meet customers’ wants
  2. Customers buy goods and services to satisfy their wants
  3. Wealth is created for businesses, employees and owners
  4. Customers have money to spend from their wages on other goods and services.

REPEAT

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22
Q

What is a business plan

A

A document that outlines the objectives of a business and how to achieve them.
Includes:
1. Costs of running the business
2. Estimates of potential income
3. Details of the products/services
4. If the business is worth setting up

Can influence people to invest in your business and give you guidance

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23
Q

Product life cycle

A

Four stages are-
1. Introduction (lots of advertising to encourage sales
2. Growth (Sales are growing because more customers know about it from the advertising)
3. Maturity (Sales are at their highest, most profitable stage)
4. Decline (sales fall, newer versions, getting older and customers no longer want it)

24
Q

Type of business organisations

A

Private
Sole traders
Partenerships
Private limited companies
Public
National government
Local government organisations
Third
Charities
Social enterprises

page 19

25
Q

Sole trader

A

Usually a small business, owned and ran by one person

26
Q

Pros of a sole trader

A
  • Easy to set up; do not need to do loads of legal documents
  • All the profits are kept by the owner
  • The owner can chose when to work without having to consult others
27
Q

Cons of a sole trader

A
  • Nobody to share workload or responibility with
  • Raising large amounts of capital can be hard
  • Unlimited liability
  • Difficult to aquire economy of scale e.g no discounts for bulk buyinh
28
Q

Partnership

A

Small to medium sized business, owned by 2-20 people, run and owned by the partners

29
Q

Pros of a partnership

A
  • Workload, responsibility and decision making is shared
  • Different partners bring different experiences and skills
  • Fianance can be raised more easily compared to a sole trader
  • Customers and suppliers see a partnership as less risky than a sole trader
30
Q

Cons of a partnership

A
  • Any profit has to be shared
  • Unlimited liability
  • Arguments may happen, slowing decision making
  • A legal document needs to be created (partnership agreement) whihc sets out how the profits will be split

Unlimited liability means that if debts or costs are not paid off, the owner will be directly reponsible and will have to pay it off with their assets

31
Q

Private limited company (Ltd)

A

A company owned by people who have been invited to buy shares. Owned by the share holders, ran by the board of directors

32
Q

Pros of a private limited company (Ltd)

A
  • Limited liability for share holders
  • Fianance can be raised by selling more shares to existing shareholders or inviting new people to buy
  • Shareholders and directors bring different experiences and skills

Limited liability means that the business will only lose money if unable to cover costs and will not have to give up their personal assets

33
Q

Cons of a private limited company (Ltd)

A
  • More compliacted to set up because of the legal processes
  • Rules are laid down by the law (The Companies Act)
  • financial position of the company has to be shown annually
  • high setup costs
34
Q

The public sector

A

Owned by the government on the behalf of the tax payer and provide a service to the general public.

35
Q

UK parliament

A

UK parliament have the overall responsibility, comprised of elected MPs

Funded through taxes e.g Income tax, road tax or council tax

36
Q

Scottish government

A

Scottish government deal with education, health and transport and is ran by the Scottish Parliament (MSPs) who are elected by the public

37
Q

Local government organisations

A

Local government organisations get funding from the scottish government and deal with a specific area of scotland. Running schools, providing leisure facilites and emptying bins

38
Q

Third sector

A

Non - profit making organisations
(charities and voluntary organisations)

Social enterprises

39
Q

Non-profit making organisations

A

Set up to support specific causes.
Charities regulated by government, income made is put to a specific cause

Volentary organisations such as community football clubs aim to provide a service to people (not profit making motive)

40
Q

Social enterprises

A

Have a main social or environmental aim. Run in a business-like way but at least half the profit goes to the cause they are supporting.
can make money through the sales of products and services

The main difference between a social enterprise and a charity is the legal structure and social enterprises are less regulated by the government

41
Q

Ways to achieve customer satisfaction

A
  • Providing the highest possible quality product
  • making sure employees are trained
  • Having a customer care stratagy
  • Having a customer complaints procedure
  • having an after-sales service

page 27

42
Q

Pros of having high customer satisfaction

A
  • Increased loyalty -
    Customers will return, taking profit from competitors and will give your business more profit in the long run
  • Good reputation-
    Helps to maximise sales and profit (can charge more for products and services
  • Helps increase the share of a market
    (the number of customers it has)
43
Q

Objectives

A

Something a business aims for - a target or a goal to be achieved

page 28

44
Q

Different kinds of objectives

A
  • Survival
  • profit maximisation
  • provision of a service
  • Customer satisfaction
  • Enterprise
  • Social responsibility
  • Market share
45
Q

External factor

A

Things outside a business that an impact how it operates

Page 32

PESTEC

46
Q

Internal factor

A

Things within a business that impact how it operates

47
Q

Pestec

external factors

A
  • Political
  • economical
  • social
  • technology
  • environmental
  • competition
48
Q

Political influences

A
  • New laws (new health and safety training ect) - UK parliament
  • Change the amount of tax people have to pay - Scottish government
  • Can refuse planning premission - Local government
49
Q

Economic influences

A
  • Levels of employment
  • Recession
  • Intrest rates
50
Q

Social influences

A

Those that are concerned with changing opinons, values and peoples beliefs

Could be a change in peoples taste in fashion, work/life balance ect

51
Q

Technological influences

A
  • Tablet computers
  • Wireless technology
  • Web 2.0
  • Cloud computing
52
Q

Environmental influences

A
  • Weather
  • A social demand to be sustainable
53
Q

Competitive influences

A
  • Can take away customers and profits
  • has benefits for customers
54
Q

Financial influences

A

The aim of growth cannot be acheived:
* Machinery cannot be bought
* No new employees
* Cannot carry out advertising
* Loans are needed
* Raw materials cannot be paid for

page 39

55
Q

Stakeholders

A

A person or group that has an intrest in the success of a business

56
Q

Different kinds of stakeholders

A
  • Owner
  • Shareholders
  • Employees
  • Banks
  • Customers
  • Suppliers
  • Local communityy

Business Nat 5 (3 decks)

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