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Business studies > Unit 3 > Flashcards

Unit 3 Flashcards

1
Q

Who start businesses?

A

Entrepreneurs.

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2
Q

What are the activities of entrepreneurs?

A

1) Have idea for new business.
2) Prepared to invest own savings.
3) Accept the risk of failure.
4) Want to make all the decisions about management of the business.

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3
Q

What kind of ideas lead to decisions of being an entrepreneur?

A

a. New idea for goods or services.
b. Offering a services in a better way, different than before.
c. Offering an existing good or services in a different location.

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4
Q

Contents of business plan?

A

1) The business
2) The business opportunity
3) Objectives of the business
4) The market
5) Financial forecast

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5
Q

Explain content of business plan: The business.

A

Includes details of the entrepreneur, the idea for the business and information about the skills and expertise of staff members.

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6
Q

Explain content of business plan: The business opportunity.

A

Information about the product and why the entrepreneur believes customers will buy it, market research is required.

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7
Q

Explain content of business plan: Objectives of business.

A

What the business hopes to achieve.

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8
Q

Explain content of business plan: The market.

A

Current size, potential for growth for the business.

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9
Q

Explain content of business plan: Financial forecast.

A

A cash flow forecast that projects the amount of sales revenue and profit for at least a year of trading.

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10
Q

Importance of business plan:

A

1) Used to persuade lenders and investors.
2) Gives a sense of purpose and direction.
3) Provides the business with targets to aim at and also enables the business to monitor its progress.

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11
Q

Limitations of measuring business size:

A

Using only one aspect of the business may cause a wrong conclusion thus it is important to measure all the aspects of a business properly.

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12
Q

What are the characteristics of a successful entrepreneur?

A

1) Innovative
2) Determined
3) Self-confident
4) Strong leadership qualities
5) Results driven
6) Have Initiative
7) Risk taker
8) Good at networking

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13
Q

Explain characteristic of successful entrepreneur: innovative.

A

They are good at thinking up ideas for goods and new businesses.

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14
Q

Explain characteristic of successful entrepreneur: Self-motivated and determined.

A

They have the drive to keep going, even when things get difficult.

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15
Q

Explain characteristic of successful entrepreneur: Self-confident.

A

They have a strong belief in their own ability and ideas.

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16
Q

Explain characteristic of successful entrepreneur: Strong leadership qualities.

A

They have good communication skills, the ability to motivate others and are good decision-makers.

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17
Q

Explain characteristic of successful entrepreneur: Results driven.

A

They are focused on achieving results and make profit.

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18
Q

Explain characteristic of successful entrepreneur: Initiative.

A

They not only have good ideas but are also able to develop a good plan for achieving the business’s objectives.

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19
Q

Explain characteristic of successful entrepreneur: Risk taker.

A

They are prepared to take risks knowing that failure is a possibility. They see failure as a positive experience to be learnt from.

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20
Q

Explain characteristic of successful entrepreneur: Good at networking.

A

They are prepared to learn from others.

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21
Q

Financial benefits provided to start-ups:

A

1) Interest free or low interest loans.
2) Lower taxation rates on profits.
3) Rent free Premises for some time.
4) Free or subsidized training schemes.
5) Information, advice and support from specialist agencies.

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22
Q

What are the benefits of government supporting business start-ups?

A

1) Job creation.
2) Better ideas.
3) More competition.
4) Provide for larger businesses.
5) Economy benefits in the future.
6) Lower costs.

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23
Q

Benefit of government supporting startups: Job creation.

A

Although small companies may not hire many workers, combined, they increase the employment in the country a lot.

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24
Q

Benefit of government supporting startups: Better ideas.

A

New entrepreneurs and businesses bring new ideas to the market this increases the varieties of products available.

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25
Q

Benefit of government supporting startups: More competition.

A

More competition usually encourages better quality of goods and services for lower prices.

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26
Q

Benefit of government supporting startups: Provide for larger businesses.

A

They produce products for the purchase of bigger companies.

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27
Q

Benefit of government supporting startups: Economy benefits in future.

A

The startup businesses will grow from the advantages given by the country and eventually they will add to the economy.

28
Q

Benefit of government supporting startups: Lower costs.

A

Some startup businesses often have much lower costs than large businesses.

29
Q

Methods of measuring business size.

A

1) Market share
2) Number of employees
3) Capital employed
4) Value of output

30
Q

Explain measuring business size by: Market share

A

The larger share of business has in the market the larger the business is.

31
Q

Explain measuring business size by: Number of employees.

A

Large number of employees produce a large number of products, Leading to a greater output.

32
Q

Explain measuring business size by: Capital employed.

A

Long term finance that has been invested into the business it is used to buy things that a business needs to produce goods and services

33
Q

Explain measuring business size by: Value of output.

A

The amount of business earns from selling their products.

34
Q

Causes of a failed business?

A

1) Poor planning and lack of objectives
2) Poor choice of location
3) Poor management
4) Poor marketing
5) Failure to invest in new technology
6) Lack of finance
7) Liquidity problems
8) Competition
9) Economic influence

35
Q

Explain business fail reason: Poor planning and lack of objectives

A

A business plan covers aspects such as costs, financing and marketing of business. An objective is also an important element for success, as objectives allow the business owner to focus and understand the direction of the business.

36
Q

Explain business fail reason: Poor choice of location.

A

Different businesses are more desired than different places picking the right place for opening a business is extremely important to getting customers .

37
Q

Explain business fail reason: Poor management.

A

Many owners of businesses have excellent ideas and products however due to poor management they cannot earn a profit.

38
Q

Explain business fail reason: Poor marketing.

A

Successful businesses are able to identify and meet the needs of their customers. therefore market research is important to identify different aspects and make sales.

39
Q

Explain business fail reason: Failure to invest in new technology.

A

A business that does not invest in new technologies will find it hard to compete with other businesses because of different prices, quality and design of service or product from other businesses.

40
Q

Explain business fail reason: Lack of finance.

A

New businesses often lack finance they need to take full advantage of opportunities available.

41
Q

Explain business fail reason: Liquidity problems.

A

Sometimes all those businesses make sales they might make sales on credit and if they cannot turn the credit into liquid cash, it may not be profitable for the business.

42
Q

Explain business fail reason: Competition.

A

In the global market it is extremely competitive because of which some businesses cannot earn profit and eventually fail.

43
Q

Explain business fail reason: Economic influence.

A

Unemployment, high interest rates and taxation made use the amount of money do you have to spend on goods because of this many businesses may make less sales and fail if the economic condition is difficult.

44
Q

What are the benefits of growing a buiness?

A

1) Increase in profit.
2) Economies of scale.
3) Greater power in market.
4) Increase in market value.
5) Protection from risk of takeover.

45
Q

Explain benefit of growing business: Increase in profit.

A

The profit of a business increases when the business grows. Growth results in an increase in output.

46
Q

Explain benefit of growing business: Economies of scale.

A

If a business can lower the costs of producing its product the profits will increase.

47
Q

Explain benefit of growing business: Greater power in market.

A

Larger businesses in an industry have greater power to control market activities.

48
Q

Explain benefit of growing business: Increase in market value.

A

An increase in market share results in a growth of business. This also benefits the business because the product and the brand is more widely known.

49
Q

Explain benefit of growing business: Protection from the risk of takeover.

A

Public limited companies can be taken over by buying 51% of a company’s shares.

50
Q

What are the problems due to business growth?

A

1) Internal growth may be slower than external growth, and other businesses may grow quickly.
2) If a business is too big, diseconomies of scale may occur, which will increase the cost of businesses.
3) When two separate business merge, and one is much larger than the other, this may mean managers or employees may lose their jobs.
4) Two different businesses may have two different ways of doing things and conducting business activities. This may create conflict among management.
5) The integration of two firms will change their control of business for the original owner this may cause the loss of control.

51
Q

Business growth types

A

1) Internal growth.
2) External growth.

52
Q

How does a business grow internally?

A

1) Increasing the number of goods it can produce (by buying more or better machinery)
2) Developing new products.
3) Finding new markets for its profits.

53
Q

How does a business grow externally?

A

1) Horizontal integration.
2) Forward vertical integration.
3) Backward vertical integration.
4) Conglomerate integration.

54
Q

Reasons for businesses to stay small:

A

1) Owner’s choice.
2) unavailability of capital.
3) Market size.
4) Market domination.

55
Q

What are the reasons for a business to stay small because of the owner’s choice?

A

○ If the owner does not want the responsibility or workload of managing a larger business .
○ The owner wants to keep total control of the business.
○ The owner wants to maintain a close relationships with the customers to provide personal service.
○ The owner does not want to take the risk of having growth as an objective.

56
Q

Explain reason for business to stay small: unavailability of capital.

A

Availability of capital is an important part of finance and growth plans.

57
Q

Explain reason for business to stay small: Market size

A

Some businesses have market sales as an objective and this influences their growth.

58
Q

Explain reason for business to stay small: Market domination

A

Some industries are dominated by very few but large companies that is why it is difficult for small businesses to compete.

59
Q

Define ‘Entrepreneur’

A

individual who has an idea for a new business.

60
Q

Define business plan

A

A detailed written document describing the purpose and objective of the business

61
Q

Define Revenue

A

The amount a business earns from sales.

62
Q

Define Business startup

A

A newly formed business, usually small.

63
Q

How does a business do external growth through horizontal integration?

A

Brings together two firms of the same industry that performs similar activities.

64
Q

How does a business do external growth through Backward vertical integration

A

Brings together two businesses where one business is the supplier of another business.

65
Q

How does a business do external growth through Forward vertical integration?

A

Brings together two businesses where one business is the customer of another business.

66
Q

How does a business do external growth through Conglomerate integration?

A

Bringing together two businesses in two different industries.

Business studies (25 decks)

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