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Business > What Is Business > Flashcards

What Is Business Flashcards

1
Q

What do business provide

A

Businesses provide goods and services for the market

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2
Q

Who do business provide for

A

Businesses supply goods and services to consumers and businesses

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3
Q

What are goods

A

Goods are tangible products which can be physically held

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4
Q

What are services

A

Services are intangible products

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5
Q

What impact do businesses have on countries residents

A

Businesses provide employment which allows individuals to earn an income and purchase goods and services

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6
Q

What is an example of a business having an impact on a countries residents

A

In 2019, Tesco employed around 300,000 staff

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7
Q

How can businesses enhance the life of consumers

A

Businesses create new goods and services which can enhance the lives of consumers

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8
Q

What is example of a business enhance the life of consumers

A

pharmaceutical businesses like Pfizer have developed new medicines that cure illnesses and improve people’s quality of life

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9
Q

What can businesses do for countries

A

Businesses can allow a country to improve and develop the country’s reputation

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10
Q

What is an example of a business improving a countries reputation

A

many financial service businesses in the UK provide their products to many countries around the world and this improves the UK’s reputation

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11
Q

What is the transformation process

A

Businesses convert inputs into outputs

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12
Q

Why is the transformation process called the transformation process

A

This is called the transformation process and businesses will add value to their goods and services throughout this process

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13
Q

What are b2c businesses

A

Some businesses sell their goods and services directly to consumers and these businesses are known as business to consumer (or B2C) organisations

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14
Q

What is an example of a b2c business

A

Spotify provides music streaming services and sells these to consumers. Spotify is, therefore, an example of a business to consumer organisation

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15
Q

What are b2b businesses

A

Other businesses sell their goods and services to other businesses and these are known as business to business (or B2B) organisations

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16
Q

What is an example of a b2b business

A

Hootsuite sells social media management services to other businesses such as Virgin. Hootsuite is, therefore, an example of a business to business organisation

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17
Q

What are the different types of sectors

A

Primary
Secondary
Tertiary

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18
Q

What do primary sector businesses do

A

Primary sector businesses extract or grow raw materials

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19
Q

What are examples of primary sector industries

A

fishing, mining, and forestry

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20
Q

What do secondary sector businesses do

A

Secondary businesses manufacture goods using raw materials

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21
Q

What is an example of a secondary sector industry

A

Mobile phones

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22
Q

What do tertiary businesses provide

A

Tertiary businesses provide services

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23
Q

What are examples of tertiary sector businesses

A

hotels and cinemas

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24
Q

What do businesses mission statements set out

A

Businesses have a mission statement which sets out the business’s beliefs and values

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25
Q

How will a businesses use its mission statement

A

A business will use its mission statement to create corporate aims

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26
Q

What are corporate aims

A

long-term goals of the entire business

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27
Q

What do corporate aim allow businesses to do

A

These corporate aims will allow the business to work towards its overall mission

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28
Q

What is the process for corporate aims

A

Corporate aims are stated. Then, corporate objectives that contain the specific tasks and activities a business must accomplish in order to satisfy its corporate aims are written down

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29
Q

What can corporate objectives be broken down into

A

Corporate objectives can be broken down further into functional, team and individual objectives

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30
Q

Why are business objectives needed

A

Business objectives are needed for a business to achieve its corporate aims and fulfil its mission

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31
Q

What does the SMART acronym stand for

A 
Specific
Measurable
Attainable
Realistic
Timely
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32
Q

Why must objectives be specific

A

Objectives must be Specific so that employees know exactly what they are working towards

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33
Q

Why must objectives be measurable

A

Objectives must bemeasurable so that employees can actually work out whether they have met their objective

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34
Q

Why must objectives be attainable

A

Objectives must be Attainable or achievable so that employees are committed to achieving them

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35
Q

Why must objectives be realistic

A

Objectives must be Realistic otherwise employees may feel demotivated and overwhelmed

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36
Q

Why must objectives be timely

A

Objectives must be Timely so that employees know when they must achieve them by

37
Q

What does the business objective profit maximisation require

A

Profit maximisation is a business objective that requires a business to achieve the highest amount of profit for shareholders

38
Q

How would you satisfice the business objective profit maximisation

A

Satisficing would mean making enough or some minimum required level of profits

39
Q

What does the businesses objective survival require

A

Survival is a business objective which requires a business to continue trading despite challenges in the external environment

40
Q

What does the businesses objective growth require

A

Growth is a business objective which requires the growth of stores or locations, sales value, sales volume or product range

41
Q

What does the social, ethical and environmental businesses objective require

A

Social, ethical and environmental objectives require a business to focus on supporting society through initiatives including sustainability and fair trade

42
Q

What are the benefits of setting objectives

A

Business objectives provide direction and can support planning and operations
Business objectives allow a business to co-ordinate resources and ensure that all employees are working towards the same overall aim

43
Q

What is revenue

A

Revenue is the income earned by a business from the sale of its goods and services

44
Q

What is the revenue calculation

A

Revenue = number of sales x sales price

45
Q

What are costs

A

Costs are all of the expenses that a business pays

46
Q

What is involved in costs

A

This involves everything from wages paid to employees to the electricity bills at the business’ premises

47
Q

How are total costs calculated

A

The total costs are calculated as the sum of the fixed costs and the variable costs

48
Q

What are examples of fixed costs

A

Examples include office rent, insurance, and fixed employee salaries

49
Q

When can Fixed costs increase

A

Fixed costs can increase as the business grows

50
Q

What are variable costs

A

Variable costs are the costs that change directly with output

51
Q

What are examples of variable costs

A

Examples include the wages paid for factory labour, raw materials and transport costs

52
Q

What is profit

A

Profit is the amount of money that the business makes when taking into account costs

53
Q

What is the Profit equation

A

Profit = total revenue – total costs

54
Q

When is a businesses making a profit

A

If revenue is greater than costs, a business will make a profit

55
Q

When will a business make a loss

A

If costs are greater than revenue, a business will make a loss

56
Q

What is the average unit cost calculation

A

Average unit cost = total cost ÷ output

57
Q

What is output

A

Total number of units produced

58
Q

What does average unit cost give businesses

A

Average unit cost gives a business an idea of what price they need to charge

59
Q

What do businesses need to do to make profit on each item

A

In order to make a profit on each item, they need to charge a price that is more than the average unit cost

60
Q

What is interest

A

Interest is the additional money you have to pay back on top of your original loan

61
Q

What is the interest equation

A

Interest = interest rate x the size of the loan

62
Q

What is a sole trader

A

A sole trader is a single person who is the exclusive owner of a business

63
Q

What are the advantages of being a sole trader

A

Advantages of sole traders:
They are the easiest type of business to set up
The sole trader gets to be their own boss
The sole trader decides what to do with the profit
It is easy to change the legal structure if circumstances change

64
Q

What are the disadvantages of being a sole trader

A 
Disadvantages of sole trader:
Unlimited Liability
It can be hard to raise finance
All the responsibility for making business decisions is yours
It can be harder to keep good employees
65
Q

What does unlimited liability mean

A

Unlimited Liability means that there is no legal distinction between the sole trader’s assets and the business’ assets

66
Q

Why can it be hard for a sole trader to raise finance

A

It can be hard to raise finance. Banks often see sole traders as riskier

67
Q

Why can it be harder to keep good employees at a sole trader

A

It can be harder to keep employees as they aren’t necessarily given a share of the profits

68
Q

Why is having all decision making power a bad thing

A

All the responsibility for making business decisions is yours. Having someone to share decision making with, can improve performance

69
Q

What are private limited companies

A

Private limited companies are companies where ownership of shares is restricted

70
Q

What needs to happen for a private limited company to sell shares

A

For the company to sell shares, all the current shareholders must agree to sell them

71
Q

What do private limited companies have after their name

A

These companies have Ltd. after their name

72
Q

What are the advantages of private limited companies

A

Advantages of Private limited companies are:
Limited liability
Owners keep a lot of control over how the business is managed
Easier for a limited company to get a loan`

73
Q

Why do Private Limited companies keep a lot of control over how the businesses is run

A

The fact that ownership is restricted means that all shareholders must agree to sell shares. This means that the own keep a lot of control over how the business is managed

74
Q

Why is it easy for a Private Limited company to get a loan

A

It is normally easier for a limited company to get a loan than it is for partnerships, as a company is normally seen as less risky

75
Q

What are the disadvantages of Private Limited Companies

A

Finance is needed to incorporate a business

The company is legally obliged to publish their accounts each year

76
Q

What costs are associated with becoming a Private Limited Companies

A

There is an upfront fee as well as costs associated with paperwork

77
Q

Why is it bad that a company to publish its accounts

A

The company is legally obliged to publish their accounts each year and competitors may use these to become more competitive

78
Q

Where do public limited companies sell shares

A

Public limited companies sell shares on the stock exchange

79
Q

Who can buy shares from a public limited company

A

Anybody over 18 can buy shares from a Public Limited Company

80
Q

When do firms often become Public Limited Companies

A

Firms often become public companies when they want to expand because selling shares on the stock exchange allows them to raise finance for investment

81
Q

What is an example of a businesses who became a Public Limited Comapny

A

In 2017, Snapchat went through this process

82
Q

What are the advantages of Public Limited Companies

A
  • Selling shares on a stock exchange allows companies to raise money for investment
  • It is much easier for companies to raise money from banks
  • Shareholders have limited liability
83
Q

What are the disadvantages of Public Limited Companies

A
  • Owners often have very little say over how the business is run
  • Anyone can take over the company if they are able to buy enough shares
  • The company’s accounts must be made public
84
Q

Why is it bad if the owner has little say over how the businesses is run

A

Owners often have very little say over how the business is run. This means that it can be hard to agree on how the business is run

85
Q

What do shareholders have if they have more than half of the shares

A

When shareholders own more than half the shares, then they will have control over the company

86
Q

Why is it bad that Public Limited Company’s accounts must be made public

A

The company’s accounts must be made Public. This means competitors can see how well the company is doing

87
Q

What happens to profit made by not-for-profit organisations

A

Any profit made by not-for-profit organisations is reinvested back in the business

88
Q

What can’t owners do with profit from not-for-profit organisations

A

Any profit from not-for-profit organisations cannot be kept by the owners

Business (10 decks)

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