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Business > Unit 1: What is business? > Flashcards

Unit 1: What is business? Flashcards

1
Q

What is business?

A

Business provides goods and services on a commercial basis to customers for financial gain.

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2
Q

Are goods or services tangible?

A

Goods

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3
Q

What are the benefits of business to society?

A
  • Providing goods and services
  • Taxes for government
  • Innovation and invention
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4
Q

What sector do ‘B2B’ business falls in to?

A

Primary and secondary

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5
Q

What are the differences between ‘B2B’ and ‘B2C’ businesses?

A

‘B2B’ is more complex and they have a longer buying process, with them usually being based on relationships and often having a small and focused market.

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6
Q

What happens in the transformation process?

A

Inputs have value added to make outputs where profit can be made.

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7
Q

What is a mission statement?

A

Overall purpose and vision for the business

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8
Q

What is an aim?

A

Long term plan for the business

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9
Q

What is an objective?

A

Medium to long term goals, that are quantifiable targets

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10
Q

What do good mission statements have?

A
  • Clear sense of business purpose
  • Excites, inspires and motivates
  • Differentiates businesses from competitors
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11
Q

What are the two types of objectives?

A

Strategic and tactical

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12
Q

What are benefits to being a sole trader?

A
  • Quick to set up
  • Minimal paperwork
  • Keep all profits
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13
Q

What are drawbacks to being a sole trader?

A
  • Unlimited liability
  • Harder to raise finance
  • Long hours
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14
Q

What are benefits to being a private limited company?

A
  • Limited liability
  • Easier to raise finance
  • Can employ specialists
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15
Q

What are drawbacks to being a private limited company?

A
  • Greater admin costs
  • Public disclosure of company information
  • Lost control
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16
Q

What are benefits to being a public limited company?

A
  • Better access to capital
  • Greater public scrutiny
  • Have to pay dividends
17
Q

What are the three not-for-profit businesses?

A
  • Social enterprise (businesses with primarily social objectives)
  • Charities (ensures that proceeds earned are spent in accordance with their aims)
  • Mutual (run by the members for the benefit of the members)
18
Q

What are the three businesses in the public sector?

A
  • Public corporations (e.g. BBC)
  • Public services (e.g. NHS)
  • Municipal services (e.g. play parks)
19
Q

What is privatisation?

A

The transfer of a business from public to private sector.

20
Q

What is ordinary share capital?

A

The shares issued by a business

21
Q

What are dividends?

A

A proportion of the profits paid to shareholders

22
Q

What is market capitalisation?

A

The total value of the shares issued

23
Q

How is market capitalisation calculated?

A

No. of shares issued x Current share value

24
Q

Why do shareholders invest into companies?

A
  • To get money
  • They believe in the interest of the business
  • To be involved in running the business
25
Q

What are venture capitalists?

A

People that invest into the business for financial gain, that may come with a risk but a possible large financial gain.

26
Q

Why would demand for shares increase?

A
  • Low share price
  • Good performance
  • Strong economy
27
Q

What is the acronym for the features of the external environment and what do they stand for?

A 
P- political
E- environmental
S- social
T- technological
L- legal
E- economic
28
Q

What are the factors that affect demand?

A
  • Incomes
  • Employment
  • Interest rates
29
Q

What does degree of competition impact?

A
  • Demand
  • Sales revenue
  • Costs of the business
30
Q

What do good market conditions result in?

A
  • Increase in demand
  • Increase in prices
  • Less threatening competition
31
Q

What factors affect income?

A
  • Inflation
  • Interest rates
  • Employment levels
32
Q

What is the UK’s inflation target?

A

2%

33
Q

Who decides what the interest base rate should be and what is it currently?

A

Monetary Policy Committee in the Bank of England, 0.75%

34
Q

What are the effects of higher interest rates on businesses?

A
  • Reduced or cancelled planned investments
  • Reduced production
  • Less consumer spending
35
Q

What is demography?

A

The size and composition of a population

36
Q

What are benefits to a business being environmentally friendly?

A
  • USP
  • Longer life of assets
  • Improved image
37
Q

What is fairtrade?

A

A social movement that exists to promote improved trading terms and living conditions for workers or producers in less developed countries.

Business (7 decks)

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