Unit 1 Understanding Business Flashcards
What is the secondary sector?
-sectors of the industry
Manufacturing and assembly process.
E.G making plastics from oil
It also involves assembling the product
E.G building houses, bridges and roads
What is the Tertiary sector?
-sectors of he industry
Commercial services that support the production and distribution process
E.G insurance, transport, advertising, warehousing and other services such as teaching as health care
What is the Quaternary sector?
-Sectors of the industry
This constitutes of those industries providing information services
E.G Computing, ICT consultancy and R&D
This sector sometimes included with the tertiary sector. They both provide services
What is the private the sector of the economy?
This consists of businesses that aim primarily to maximise profits and it includes all profit making businesses from the John bells to Apple
What is the public sector of the economy?
This consists of the government-owned organisation and agencies which aim to provide services for society.
NHS, education and the police
What is a primary sector?
-sectors of industry
Raw materials.
E.G metals and coals have to be mined, oil drilled from the ground and rubber tapped from tress.
This is sometimes known as extractive production.
What is the third sector of the economy?
This consists of organisations that have been set up to provide goods or services to benefit others. This sector includes charities, voluntary groups, social enterprises and co-operatives.
What are private limited companies
LTD
They must have a minimum of 2 shareholders
Managed by a board of directors
Now allowed to sell shares to the public
Who are private limited companies financed by
Issuing shares
Borrowing loans
Applying for government grants
Using retains profits from previous years
Name two advantages of operating a private limited company
They can only lose money they’ve invested - limited liability
More finance can be raised from shareholders
Name two disadvantages of operating a private limited company
Profits are shared among shareholders - dividend
More complicated to setup than a sole trader as it involves a legal process
What is the public limited companies
-PLC
Large companies - must have a minimum of 50,000 pounds
shares can be bought or should on the stock exchange
managed by a board of directors
Who are public limited companies financed by?
Selling shares on the stock market
borrowing loans
applying for government grants
Name two advantages of operating public limited company
Raise large amounts of capital by selling shares on the stock market
shares can be given to employees to dominate the market
Name two disadvantages of operating public limited company
the firm can be taken over if a rival is able to acquire enough shares
not all decisions are made by the owners.
What are franchises?
A business run by one firm (franchisee) under the name of another. (franchiser)
Name two advantages to the franchiser
It is a quick way for the franchiser to increase market share
The franchiser will earn a percentage of the franchisee’s profits every year.
Name two disadvantages of being a franchiser
The reputation of the hole franchise is dependant upon the success of the individual franchisees
The share of the profit earned could be less than if it were run directly
Name two advantages of being a franchisee
The franchisee can set up a business using n established name, reducing risk
Likely to benefit from national marketing campaigns (TV ads)
What is a tall structure?
It positions within the organisation, the different levels of authority and responsibility.
Least at the bottom and most at the top.
Name two advantages of a tall structure ?
Each member of staff knows their role and who to report to
Narrow span on control
-managers have more time for planning, supervision and decision making
Name two disadvantages of a tall structure
Communications takes time to flow through the levels, which slows down decision making
the organisation can be slow to react to changes in the market
What is a flat structure?
Similar to a tall structure. However, a flat structure has fewer layers of managements and a shorter chain of command.
It has a wide span of control
Name two advantages of a flat structure
Information can be communicated quickly between levels
The organisation can react quickly to external factors (PESTEC), they are more dynamic.
Name two disadvantages of a flat structure
Fewer levels mean fewer opportunities for promotion so quality staff may leave to progress their career somewhere else
What is delayering?
Removing one or more levels of management to move from a tall to a flatter structure.
Name two advantages of delayering
Money is saved on paying out the salaries of the management levels that were removed.
The organisation can be more responsive to changes in the market as there are fewer levels.
Name two disadvantages of delayering
There are fewer promotion opportunities for staff
redundancy payments could be costly in the short term
What is centralised management
Decision making and control is kept at the top level of a centralised organisation
All decisions are make by senior management /owners in head office.
Name two advantages of centralised management
There is a low risk of important information leaking from branches or department.
A high degree of corporate indentitiy and strategy exists as decisions are made for the whole organisation.
Name two disadvantages of centralised management
less responisbilty is given to subordinates which can result in demotivated staff
decisions will not reflect the needs of local markets
What is de-centralised management?
Decisions making and control is delegated to the individual branches.
Best retail chains where there is an understanding of local market.
Name two advantages of de-centralised management?
The business reacts quickly to external factors (PESTEC)
Decisions are made quickly as local management don’t need to consult head office before implementing decisions.
Name two disadvantages o de-centralised management?
The organisations can lose an overall corporate image if each department/ branch is operating differntly
Local branches could start to compete with each other i they are allowed to make key decisions which could be bad for business.
What is a matrix structure?
It involves being arranged into temporary project teams to carry out a particular task. The teas are made uo on employees from various department bringing their expertise.
Name two advantages of matrix structure
Each team has a specialised staff from each of the functional areas.
complex problems can be solved.
Name two disadvantages of matrix structure
Many managers across all projects will mean high wage costs.
Duplication of resources across administration and equipment.
What is a entrepreneurial structure?
This is used primarily by smaller organisations.
usually there is one key decision maker, the owner.
Name two advantages of entrepreneurial structure
Decisions are made quickly as there is little consultation.
Staff know who they need to report to.
Name two disadvantages of entrepreneurial structure
This structure creates a heavy workload for the main decision maker.
if the owner is unavailable, key decisions will not be made.
