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biz! > Unit 1- what is a biz > Flashcards

Unit 1- what is a biz Flashcards

1
Q

what are some primary sector business examples?

A

agriculture, forestry, fishing, mining and quarrying, oil and gas

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2
Q

what are some secondary sector business examples?

A

manufacturing, construction, the supply of electricity, gas and water

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3
Q

what are some tertiary sector business examples?

A

the supply of services, eg: hotels, catering, transport, education and health

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4
Q

what are some objectives a business might have?

A

-profit and profit maximisation: maximised when difference between sales and total costs is at its greatest
-growth: earn higher profits (higher dividends), expand
-survival: continue to trade, essential when periods of recession or intense comp, times of crisis: hostile takeover
-cash flow: movement of cash in and out of the business
-social and ethical objectives: employment, protecting the environment, make the business more attractive

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5
Q

profit formula

A

total revenue/ total costs

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6
Q

what is diversification?

A

increased range of unrelated goods and services

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7
Q

what are fixed costs?

A

costs that do not change, they don’t alter when the business alters its level of output. eg: rent, salaries.

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8
Q

what are variable costs

A

costs that change, they alter when the business alters its level of output. eg: raw materials, fuel costs

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9
Q

total costs formula

A

fixed costs + variable costs

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10
Q

avg. costs formula

A

total costs of production / the level of production or output to give the costs of producing a single unit of output

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11
Q

revenue formula

A

quantity sold x avg selling price

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11
Q

what is profit margin?

A

the amount or % of the final selling price that is profit

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12
Q

who owns private sector businesses?

A

-owned by shareholders or private individuals not owned by the government

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13
Q

what is a sole trader?

A

-a singular person who owns a business

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14
Q

adv of being a sole trader

A

-be your own boss
-all profits go to them
-easy to start up
-choose when they work
-no orders/ freedom
-declare profits HMRC

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15
Q

dis of being a sole trader

A

-unlimited liability
-hold all responsibilities
-demanding job
-1 set of skills and knowledge
-may not be able to go on holiday as they may risk loosing customers

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16
Q

what are companies?

A

-owned by shareholders, the more shares, the more the company belongs to them
-limited liability
-shareholders get paid in dividends

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17
Q

adv of private limited companies (ltd)

A

-cheap
-limited liability
-owned by shareholders
-many are owned by families: limits the sale of shares to family so no outsiders get involved

18
Q

why be an ltd and not a plc?

A

-desire to retain control of the business
-taking decisions in the company’s long-term interest
-enjoying the profits generated by the business

19
Q

what is a public limited company (plc)?

A

a business that anyone can buy shares into
-bigger than an ltd
-can measure the size using market capitalisation
-market capitalisation is the total value of the issued share of a plc

20
Q

market capitalisation formula

A

current share price x no. of shares outstanding

21
Q

adv of being a plc

A
  • access to capital
    -publicity
    -takeovers
22
Q

what are the reasons for changing business forms?

A

-growth
-privatisation: raising large sums of money for the gouvernment

23
Q

what are public sector businesses?

A

owned (and sometimes funded by) the national or local gouvernemt

24
Q

what re the 3 major elements of the public sector?

A

-public corporations: channel 4 TV, airport
-public services: NHS
-municipal services: libraries, leisure centres

25
Q

what are not-for-profit businesses

A

-when profit is not the main objective
-eg: charities, the eden project, the big issue

26
Q

who buys shares?

A

in the uk, financial institutions such as banks, pension funds and insurance companies own the most company shares

26
Q

why buy shares?

A

-mainly financial reasons
-may benefit from an increase in share price and from receiving a share of the profits in the forms of dividends

27
Q

what are the risks of buying shares?

A

-price of shares can easily fall
-can make lower profits than expected= lower dividends
-reduction of share prices in the short-term

28
Q

what is the role of shareholders?

A

-can influence decision making
-voting rights: 1 share= 1 vote
-all shareholders receive a copy of ‘the annual report’
-shareholders are invited to AMGs (annual general meetings)

29
Q

what are some influences on share price?

A

-company’s performance
-environment in which the business trades
-business doing well= share price should benefit
-economic conditions are good= investors feel confident
-demand for shares increases
-troubled economic conditions=worried investors= demand for shares decreases

30
Q

what external factors might affect demand?

A

-market conditions and competition
-incomes
-interest rates
-demographic factors
-environmental issues and fair trade
-inc in interest rates= pay moron loans= less income available for spending

31
Q

positive factors on demand

A

-rising demand-> product popularity
-major competitor leaves
-no. of customers increases

32
Q

negative factors on demand

A

-customers demand environmentally friendly products -> increasing the business’s costs
-new entrant to the market: more competition
-market being over supplied with products- depressive prices

33
Q

what are the benefits of rising share prices?

A

-reflects well on the management team
-may receive bonuses
-easier to raise capital
-more attractive shares
-banks may be more willing to offer loans

33
Q

what are the effects of a falling share price?

A

-might be difficult to raise capital
-vulnerable to take over
-cost of buying a controlling interest in the business reduces
-might be a response to a short term factor such as profits being bellow expectations - not long-term

33
Q

what are the effects of ownership on a business’s mission, objectives, decisions and performance?

A

-mission: impact on the business’s overall direction
-objectives: follows on from the mission
-decisions: impact on the complexity of decisions, affects the decisions of key stakeholders such as: employees, customers, shareholders, etc.
-performance: influenced by things such as the state of the economy, as well as the form of the business, may be able to produce lower costs-> tech, potential to increase profits

34
Q

what suffers from a strong influence in demand based on incomes?

A

-jewellery
-luxury electrical items
-restaurant meals
-long haul holidays
-furniture

34
Q

what suffers from a weak influence in demand based on incomes?

A

-bread and milk + other basic foods
-cigarettes and tobacco
-petrol
-water
-lottery tickets

34
Q

what is the importance of interest rates?

A

-banks control this as well as the economy in the country
-higher interest rates=lower demand
-supermarkets such as lidl might benefit from this- cheaper
-businesses with a high gearing might be impacted by this
-rise in interest rates will increase the cost of production

35
Q

what are demographic factors?

A

factors relating to the population
-age, gender, health, immigration, death/ birth rates

36
Q

what is the importance of environmental factors and fair trade?

A

businesses should not ignore environmental issues and this often determines customer’s decisions
-global warming- carbon emissions
-fair trade for farmers and workers in less developed countries
-more costs but enhanced reputation and increase in demand

36
Q

what is PESTLE?

A

-P olitical
-E conomic
-S ocial
-T echnological
-L egal
-E nvironmental

biz! (10 decks)

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