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Business Studies > Unit 2 > Flashcards

Unit 2 Flashcards

1
Q

What is a horizontal merger?

A

When two similar businesses at the same stage of production in the same industry merge

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2
Q

What is a lateral merger?

A

When two businesses that are related merge (e.g. A brush shop and a comb shop)

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3
Q

What is a vertical merger?

A

When two businesses at different stages of production merge

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4
Q

Advantages of a sole trader 3

A

Easy to set up
Relatively cheap
Owner can make decisions quickly

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5
Q

Disadvantages of a sole trader 3

A

No one to share responsibility with
Long hours
Unlimited liability

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6
Q

What is a Deed of Partnership?

A

A legal document stating the responsibilities of the partners, e.g. How profits and losses are to be shared

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7
Q

Advantages of a partnership

A

More partners = more capital invested

Someone go consult about business decisions

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8
Q

Disadvantages of a partnership

A

Disputes

Unlimited liability

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9
Q

What is:
A franchise?
A franchisee?
A franchisor?

A

A franchise is when someone buys into an existing business and get the right to use their ideas
A franchisee is the person who buys the right to copy a business format
A franchisor sells the right to use a business idea

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10
Q

Advantages of a franchise 2

A

The franchisee is adopting a proven business model and selling a well known product
Continued support

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11
Q

Disadvantages of a franchise 2

A

Less control

Have to pay profits to franchisor as a royalty payment

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12
Q

What is a cooperative?

A

A business owned and controlled equally by owners and customers

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13
Q

Advantages of a cooperative 2

A

Everyone has an equal day; it is democratic

Limited liability

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14
Q

Disadvantages of cooperatives 2

A

Inefficient management as the owners don’t have any special skills
Lack of secrecy

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15
Q

What is a public sector business?

A

A business owned and run by the government

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16
Q

What is a multinational company?

A

Companies that operate in several countries

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17
Q

Advantages of multinationals

A

Cheap raw materials

Cheap labour

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18
Q

Advantages of Limited companies

A

They are incorporated (they have their own legal identity)

Limited liability

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19
Q

Disadvantages of limited companies

A

Financial information must be publicised

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20
Q

What is an LTD?

A

A private limited company: a small business that can only sell shares to family and friends

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21
Q

What is a PLC?

A

A public limited company: usually a larger, well known business. Can sell shares over the stock market to anyone

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22
Q

What is privatisation?

A

The transfer of a business, industry of service from the public to private sector

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23
Q

What is an objective?

A

A short term objective the company much achieve in order to meet their aims

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24
Q

Possible objectives of a business:

A

Survival (when a business just starts up)
Profit maximising (maximum profit)
Profit satisfying (enough profit to keep owners comfortable)
Sales growth (sell as much as possible)
Provide a service
Ethical objectives

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25
Q

Why might a business change its objectives?

A

May have achieved an objective
The competition might change
Technology advances

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26
Q

Primary sector and its decline

A

Produces raw materials, involves some sort of extraction

We are running out of natural resources
Cheaper foreign labour
More leisure time for tertiary jobs

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27
Q

Secondary sector and its decline

A

Manufacturing sector

We can’t compete against foreign goods
Advance of robots
Deindustrialisation

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28
Q

Tertiary sector and its rise

A

Retail and service businesses

We have a higher standard of living
More money
Less time

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29
Q

A service

A

Something you can’t touch

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30
Q

What is a business aim?

A

The long term, overall thing a business is set up to achieve

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31
Q

Factors to consider when choosing a location

A 
Customers (convenient for them?)
Staff (do locals have right skills?)
Support services (any nearby?)
Cost
Infrastructure (can people get there easily, are there corrects services?)
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32
Q

Problems with moving overseas

A

Culture and language barriers

Legal issues with variations in law

Exchange rates

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33
Q

What is a stakeholder?

A

Anyone with an interest in a business (e.g. Employees, suppliers)

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34
Q 
What are the interests of the following?: 
Government 
Owners
Workers
Customers
A

Government: taxes and employment
Owners: profits
Workers: incomes, benefits
Customers: good value and quality products

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35
Q

What are economies of scale

A

Reduction in unit/ average cost due to an increase in production

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36
Q

Why would a business choose to grow?

A

Increased market share
Economies of scale
Rule out competitors

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37
Q

What does the term ‘recruitment’ mean?

A

Attracting people to apply for a job

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38
Q

What does internal recruitment mean?

A

Recruiting known staff

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39
Q

Job description

A

Explain the work to be done and basic information

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40
Q

Person specification

A

List desirable qualities of candidate

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41
Q

Methods of advertising

A

Local newspapers
National newspapers
Job centres
Internet

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42
Q

Selection

A

Selecting the most appropriate candidate for the job

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43
Q

Why is training important? 3

A

Improves efficiency
Avoids accidents
Retrain workers so they understand new technology

44
Q

What is induction training?

A

The initial, first training an employee gets. Includes things such as:
Health and safety
Meeting co workers
Lunch and breaks

45
Q

On the job training

A

Takes place in the work place, whilst employee is carrying our job. It is cheap and specific to the ways of the company

46
Q

Off the job training

A

Takes place away from work place. It is good because it is provided by experts and there are no distractions. However, it can be very expensive

47
Q

Why should employees be motivated?

A

Increased output
Improved quality
Higher staff retention

48
Q

Monetary methods of motivation

A

Profit share

Pay rise

49
Q

Non montage methods of motivation

A

Improves working conditions
Appraisals
Job rotation

50
Q

Autocratic leadership

A

Senior managers make all important decisions

51
Q

Democratic leadership

A

Workers allowed to make own decisions

52
Q

What is communication?

A

Passing messages between people or organisations

53
Q

Channel of communication

A

Path takes by a message

54
Q

Horizontal communications

A

Messages sent between staff on same level of hierarchy

55
Q

Vertical communications

A

Messages sent between staff on different levels of hierarchy

56
Q

Verbal communications

A

Sending messages face to face or over phone

57
Q

Written communication

A

Messages sent using words

58
Q

Why is communication important?

A

Customers enjoy a good relationship with the business (complaints are dealt with )

Staff understand responsibilities

Staff are more motivated when listened to

59
Q

Barriers to communication

A

Timing, clarity and the wrong method may be used

60
Q

How can ICT help a business?

A 
Decision making (knowledge is power)
Helps staff (quickly access data)
Maintains records
Communications (email etc)
61
Q

What is an organisation chart and why is it needed?

A

It is a diagram that shows the structure of a business. It is easy to identify roles and responsibilities of staff and how different roles are related

62
Q

What is the hierarchy?

A

The management levels in an organisation

63
Q

What is a person’s span of control?

A

The number of subordinates directly reporting to that person

64
Q

What is the chain of command?

A

The path of authority along which instructions travel

65
Q

What are lines of communication?

A

Routes messages travel along

66
Q

Tall organisations

A

Many levels of hierarchy with narrow span of control

67
Q

What is a flat organisation?

A

Few levels of hierarchy, wide span of control and short lines of communication

68
Q

What is a trade union?

A

A group of workers who join together to protect their own interests

69
Q

Aims of a trade union

A

To improve pay and working conditions
To support training and development of members
To ensure members are looked after by employers

70
Q

Types of industrial action

A

Non cooperation
Work to rule (working to a minimum)
Strikes

71
Q

What is the chain of production?

A

The stages involved in making a product

72
Q

What is Specialisation?

A

When a business or employee is good and focussed on one specific thing

73
Q

How does a business add value?

A

When the selling price of an item is higher than the production costs (e.g. Convenient)

74
Q

What is a social enterprise?

A

A business that reinvests in the community. Makes money in a socially responsible way

75
Q

Characteristics of a social enterprise

A

Directly involved in producing goods
Social aims and ethical values
Self sustaining (don’t rely on donations)

76
Q

Why might a business fail?

A 
Lack of planning 
Not focussed 
Poor cash flow 
No monitoring of performance 
Not making a profit 
Small number of customers
77
Q

How might a business succeed?

A

Unique selling point
Clear vision
Attracting wide customer base
Making profit

78
Q

Name the 6 legislations

A 
Minimum wage act
Race relations act
Sex discrimination act
Health and safety in the workplace
Equal pay
Disability discrimination
79
Q

Why might a business fail?

A

Wrong staff
Not focussed
Underestimating money and time

80
Q

Why might a business succeed?

A 
Clear vision 
Efficient staff 
Location 
Timing 
Leadership
81
Q

Advantages to internal recruitment

A

Motivation

Cheaper

82
Q

Disadvantages to internal recruitment

A

Limited choice

Favouritism

83
Q

Disadvantages of external recruitment

A

Employees may be annoyed
Retrain
Cost and time

84
Q

Advantages of external recruitment

A

Wider choice

Fresh outlook

85
Q

Advantages of a tall chain of command/disadvantages of a short chain of command

A

More opportunity for promotion
Easier to supervise staff
Clearly defined roles
Smaller, manageable workload for employees

86
Q

Disadvantages of a tall chain of command/advantages of a short chain of command

A

High wages cost
Indecisive
Employees have little responsibility - demoralised

87
Q

Advantages to a wide span of control 3

A

Wages saved
Quick decision making
Faster communication

88
Q

Disadvantages to a wide span of control 3

A

The managers have a larger workload
Fewer promotion opportunities
The employees must multitask which results in more training being required

89
Q

Advantages to a narrow span of control 3

A

Better communication between employees
Better quality of decision making
Those in command can closely monitor the work of their subordinates

90
Q

Disadvantages to a narrow span of control 3

A

Increase in wages
Numerous smaller departments can result in ineffective communication
Remoteness and demoralisation

91
Q

What is commission?

A

Sum of money paid after selling a certain amount

92
Q

What is democratic leadership

A

Employees have a say

93
Q

What is autocratic leadership?

A

Managers make all decisions without consulting others

94
Q

What is laissez faire leadership?

A

Leaders make no decisions

95
Q

Disadvantages to ICT

A 
Unreliable 
Security breaches
Job elimination 
Training
Cost 
Time
96
Q

What does ACAS do?

A

It is invlved in disputes between employees and their employers

97
Q

What are the three ways of reaching an agreement in a dispute in the workplace?

A

Negotiation
Consultation
Arbitration

98
Q

What is negotiation?

A

When employees and employers discuss their problems and issues together and try to reach a solution or compromise that is mutually acceptable

99
Q

What is consultation?

A

Employers consult employees about their views on the issue but they would also involve other stakeholders in this process.

100
Q

What is arbitration?

A

When a dispute cannot be resolved. When this happens, a third party is called in who will make a judgement or ruling on the matter e.g. ACAS

101
Q

What is a merger?

A

When two companies decide to join together

102
Q

What is a takeover?

A

When a company buys out a rival

103
Q

What is a dividend?

A

A regular payment made from the business to its shareholders from its profit

104
Q

What is a needs analysis?

A

A process focusing on how the product meets the needs of the consumer

105
Q

What is continuity?

A

Continuing the business after the owner has died

106
Q

What is bankruptcy?

A

A person or an organisation

which cannot repay the debts owed to creditors, therefore, it ceases to trade

107
Q

What does insolvent mean?

A

When the business goes bankrupt and can’t repay their debts

Business Studies (6 decks)

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