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MR SCOTT-WALKER business > What is a business? > Flashcards

What is a business? Flashcards

1
Q

What is a business?

A
  • any organisation that makes/ sells goods or provides services
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2
Q

What are business start-ups?

A
  • new firm operating in a market for the first time
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3
Q

What is market capitalisation?

A
  • total value of all ordinary shares issued by a company
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4
Q

How do you calculate market capitalisation?

A

number of issues shared x current share price

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5
Q

What is a market?

A
  • any place where buyers and sellers meet to trade products
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6
Q

What is adding value?

A
  • process of making a product more valuable to the purchaser
  • at each stage of production process more value s added to the product
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7
Q

What are ways of adding value?

A
  • convenience
  • USP
  • branding
  • quality/ design
  • speed/ excellent service
  • product features and benefits
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8
Q

What is a businesses typical structure of aims/ objectives?

A
  1. mission statement and corporate aims
  2. corporate objectives
  3. functional objectives
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9
Q

What is a mission statement?

A
  • overall purpose
  • clues on firms beliefs/ attitudes
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10
Q

What are corporate objectives?

A
  • AKA strategic objectives
  • goals of the business as a whole
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11
Q

What are functional objectives?

A
  • AKA departmental objectives
  • objectives for each department
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12
Q

What does the acronym SMART stand for?

A

Specific
Measurable
Achievable
Realistic
Time specific

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13
Q

What are the main types of objectives?

A
  • profit
  • growth
  • survival
  • cash flow
  • social and ethical
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14
Q

What is profit?

A
  • financial gain a business makes from providing goods or services
  • when the revenue of a business is greater that the costs it incurs
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15
Q

How do you calculate profit?

A

total revenue - total costs

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16
Q

How do product costs help make business decisions?

A
  • identify suppliers to change from
  • set discounts
  • potentially needing to make staff cuts
  • profit margins
  • set objectives
  • set aims
  • set salaries
  • supports budgets
  • helps to charge products correctly
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17
Q

Why is profit important?

A
  • motivation
  • growth
  • survival
  • increase promotion/ advertising
  • helps achieve objectives
  • donate to charities
  • measures success
  • returns from taking risks
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18
Q

How can profit be used?

A
  • retained in business
  • taken by owners for own benefit
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19
Q

What is a public sector?

A
  • owned and run by government
  • aims to provide for public, rather than make a profit
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20
Q

What is a private sector?

A
  • owned by private individuals
  • also includes non-profit organisations such as charities
21
Q

What is limited liability?

A
  • only lose money put into business
  • limited risk
  • separate legal identity
22
Q

What is unlimited liability?

A
  • no set amount they can lose
  • can lose personal assets
  • legally responsible for all debts of business
23
Q

What are the structures of businesses?

A
  • sole traders
  • partnerships
  • PLC (public)
  • LTD (private)
  • social enterprise
24
Q

What is a sole trader?

A
  • individual owns business
  • unlimited liability
  • more common
25
Q

What are the pros of being a sole trader?

A
  • quick and easy to set up
  • simple to run
  • easy to close
  • entitled to all profits
26
Q

What are the cons of being a sole trader?

A
  • unlimited liability
  • harder to raise finance
  • business suffers if owner is ill
  • long hours
  • limited expertise
27
Q

What are the pros of being a partnership?

A
  • easier to raise finance
  • more expertise
  • less pressure
28
Q

What are the cons of being a partnership?

A
  • share profits
  • unlimited liability
  • conflict over decisions
  • long hours
  • complicated to sell
29
Q

What is a partnership?

A
  • owned by 2 or more people
  • legal partnership agreement
  • unlimited liability
30
Q

What are the pros of being an Ltd?

A
  • limited liability
  • hire staff
  • higher prestige
  • raise large amounts of finance
31
Q

What are the cons of being an Ltd?

A
  • can’t sell shares to public
  • shared profit
  • not on stock exchange
  • publish financial documents
  • harder to make decisions
32
Q

What is an Ltd (private limited company)?

A
  • can’t sell shares to public
  • often family businesses
  • limited liability
33
Q

What are the pros of being a PLC?

A
  • limited liability
  • easier to raise finance
  • less tax
34
Q

What are the cons of being a PLC?

A
  • admin costs higher
  • disclose company information publically
  • must give away a % of the business
35
Q

What is a PLC (private limited company)?

A
  • sells shares to the public
  • need over £50000 of share capital
  • 25% shares must be available if listed on stock market
36
Q

What is a non-profit organisation?

A
  • benefit community
  • social aims
  • charities, community development trusts, housing associations, etc.
37
Q

What are shareholders?

A
  • owner of the company (have at least one share)
38
Q

What are stocks?

A
  • type of security that represents ownership in a corporation
  • sold on stock exchange
39
Q

Why would shareholders invest?

A
  • make money
  • capital gain
  • side hustle
  • support other businesses
  • dividend payments
  • interest
  • portfolio of business
  • support ethical views
  • ability to vote for decisions
  • leave a legacy
  • retire early
  • tax purposes
  • stay ahead of inflation
40
Q

Whatis the main role of shareholders?

A
  • provide funds
  • more shares = more power
41
Q

What are dividends?

A
  • payment from accumulated profits earned by a company to shareholders who qualify for such payments
42
Q

What could influence share prices?

A
  • scandal
  • ethics
  • demand
  • trends
  • value of a business
  • competitors
  • economy
  • lack of supplies
43
Q

What does PESTLE stand for?

A

Political
Economical
Social
Technological
Legislation
Environmental

44
Q

What is privatisation?

A
  • government sells off some of what it owns to private investors
  • i.e. Royal Mail
45
Q

What is the voluntary sector?

A
  • includes charities and societies to help people
  • less than 1% of the economy
46
Q

What is business environment?

A
  • incorporates all of the internal and external factors that affect how company functions
  • including: employees, customers, management, supply and demand, business regulations
47
Q

What are some external influences on a businesses environment?

A
  • competition
  • market conditions
  • incomes
  • interest rates
  • demographics
  • fair trade
48
Q

What are ethics?

A
  • moral principles/ standards that guide the behaviour of a person/ business
  • act in a way that is morally correct
49
Q

What makes a business ethical?

A
  • fair trade labels
  • reducing packaging
  • living wage
  • no child labour
  • minimising impact on environment

MR SCOTT-WALKER business (2 decks)

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