Y10- A292 Business and People Flashcards
Define Interdependence:
Each business is reliant on other businesses in other sectors for supplies or custom.
Define Specialisation:
When a business concentrates on one particular area/activity. This makes them become better at that activitiy and more efficient.
Define Added Value:
When a business increases the value of a product/material.
What is THE FIRST STAGE OF PRODUCTION?
Involves producing or extracting raw materials for other businesses to use.
What is THE SECOND STAGE OF PRODUCTION?
Involves using raw materials to make/manufacture products.
What is THE TERTIATY SECTOR OF PRODUCTION?
The third stage of business activity. Involves providing a service/goods for customers.
There has been a decline of importance in the PRIMARY SECTOR.Give 3 changes:
1) Raw materials are used up = closing coal mines.2) Machinery to replace jobs = workers are expenses for the business.3) Foreign competition = Things are cheaper in other countries.FEWER PEOPLE BEING EMPLOYED.
There has been a decline of importance in the SECONDARY SECTOR.Give 2 changes:
1) Foreign Competition = cheaper to manufacture things overseas.2) Machinery to replace jobs = less expenses, robots/compute controlled things for car assembling etc.
There has been a rise of importance in the TERTIARY SECTOR:Give 3 changes:
1) As the population rises, more teachers/nurses etc needed.2) Increase in wealth so more retail workers needed.3) Most businesses want customer service lines.
Define Stakeholders:
An individual or group of people who have an interest or concern in a business.
Give 2 examples of INTERNAL stakeholders:
- workers.- managers.
Give 2 examples of EXTERNAL stakeholders:
- competitors.- customers.
Why do conflicts often occur between stakeholders?
Because they all have different objectives.
What is an AIM?
A purpouse or intention - a long term goal.
Give 2 examples of a business’ aim:
- to make a profit.- be very competitive.
What are OBJECTIVES?
Short term targets that the business is trying to achieve in order to meet it’s overall aims.
Give 2 examples of business’ objectives:
- to produce a new product.- to improve the quality of the service.
Objectives/Aims vary depending on….
The type, size and situation of the business.
Give the main 4 things business’ aim to achieve:
- PROFIT.
- GROWTH.
- SURVIVAL.
- PROVIDING A SERVICE.
Objectives are often set as SMART targets.What is a SMART target?
Specific Measurable Achievable Realistic Time Specific
What are social enterprises?
They usually have aims and objectives targetted at helping people in society.e.g. a local football team.
Objectives can be in CONFLICT too.How would GROWTH vs PROFIT be a conflict?
Profits are reduced in short term to fund expansion.
Objectives can be in CONFLICT too.How would Growth vs SERVICE be a conflict?
Small businesses may know their customers well and respond to their needs. Growth could jepordise this.
Objectives can be in CONFLICT too?How would SURVIVAL vs PROFIT be a conflict?
When survival is the main objective a business is unlikely to have profit as an objective.
What is a SOLE TRADER/PROPERIETOR?
An UNINCORPORATED business owned and controlled by one person - the most simplest and common form of business.
Give 3 advantages of being a SOLE TRADER:
1) Easy to set up.2) Little start up capital needed.3) Owner gets to keep all the profits.
Give 3 disadvantages of being a SOLE TRADER:
1) Unlimited Liability.2) Long hours of work (paper work)3) Lack of continuity.
What is a Partnership?
A business that is owned by 2 or more people.
Give 3 advantages of being a PARTNERSHIP:
1) More people investing = more capital introduced.2) Easy and cheap to set up.3) More skills.
Give 3 disadvantages of being a PARTNERSHIP:
1) Unlimited Liabilty.2) Profit has to be shared.3) Partners may not always agree.
Define DEED OF PARTNERSHIP:
A legally binding agreement which states information on the way the business operates and how profits/losses will be shared. Details on how much capital each person has contributed.
How are Board of Directors elected?
At the companies’ annual general meetings.
What is the CHAIRMAN responsible for?
The way the directors operate.
What is the MANAGING DIRECTOR responsible for?
The overall running of the company.
Give 2 points about shares:
1) Anyone over 18 can buy shares.2) Shareholders are given a share of any company profits in the form of DIVIDENDS.
What is a PRIVATE LIMITED COMPANY (LTD)?
An incorporated business where shares have been sold privately to friends/family.
How is capital raised in a LTD and PLC?
Through shares that can be issued to investors in exchange for money.
Define Incorporation:
The process a business goes through to become a company - the business gains its own legal identity. CERTIFICATE OF INCORPORATION.
Give 3 advantages of being a PRIVATE LIMITED COMPANY (LTD)?
1) Limited Liability - can only lose what you invested.2) Continuity.3) Separate legal identity.
Give 3 disadvantages of being a PRIVATE LIMITED COMAPNY (LTD)?
1) Cannot sell shares freely on stock exchange to public.2) Shareholders will expect DIVIDENDS.3) Costly and time consuming to set up.
What is a PUBLIC LIMITED COMPANY (PLC)?
An incorporated business (company) that can sell and trade shares freely on the stock exchange.
How is a PLC set up?
It must have issued a share capital more than £50,000 & gone through the process of Incorporation.
Why does the share price in a PLC change?
Changes in supply and demand (more people want to buy shares)becauseProspects for the company look good/bad so there is a possibility of a take over bid.
Give 2 advantages of being a PUBLIC LIMITED COMPANY (PLC)?
1) Limited Liability.2) The ability to raise large sums of finance by offering shares for sale.
Give 2 disadvantages of being a PUBLIC LIMITED COMPANY (PLC)?
1) A complicated and expensive process to set up.2) The general public is allowed to request a copy of the company’s accounts
What is a Franchise?
When an already established business (the franchisor) offers for sale to other businesses or individuals (the franchisee) the right to use it’s products, services and logo.
Give 3 advantages of being a FRANCHISE:
1) Reduced risk of business failure.2) You get training and advice on how to run the business.3) Logos and products are already established.
Give 3 disadvantages of being a FRANCHISE:
1) A large amount of initial capital may be required.2) Losses have to be paid for by the franchise.3) Annual Royal payment based on profit or sales revenue may be required.
What is a Franchisee?
The person who buys the Franchise, once they have purchased the franchise they have to pay a proportion of their profits to one franchisor on a regular basis.
What is a FRANCHISOR?
This is the person selling the franchise. The name given to the person or business who offers to franchise to other businesses.
Define ROYALTY:
A payment made to the franchisor based on sales revenue of the franchise.
What is a MULTINATIONAL COMPANY?
A multinational is a business/company that has operations in many countries around the world.
Give 3 advantages of being a MULTINATIONAL COMPANY:
1) Can gain access to raw materials or cheap labour.2) Can avoid paying tax by employing expert accountants and shuffling money between countries.3) Can keep transport accounts to a minimum depending on the country.
Give 3 disadvantages of being a MULTINATIONAL COMPANY:
1) Communication problems caused by being located in different countries.2) Hard coping with the legal requirements of different countries.3) Annoying to fluctuating exchange rates for different currencies.
What are PUBLIC CORPORATIONS?
Businesses that provide a range of goods and services but are owned and controlled by the national or local government.
Give 2 examples of PUBLIC CORPORATIONS:
BBCBANKS
What are CO-OPERATIVES?
A business/trading organisations that are owned and operated by the people who are members in the business.
Give 2 advantages of workers running the business:
1) They will be more motivated to work hard.2) They already know all about the business so they can make good decisions.
Give 2 disadvantages of workers running the business:
1) Everyone has a say so decision making could take longer.2) They may not have experiences in running a business.
What are SOCIAL ENTERPRISES?
Businesses that has objectives to benefit people (not to make profit).
Give 2 examples of SOCIAL ENTERPRISES:
1) Voluntary groups. 2) Local football team.
Give 2 main aims of SOCIAL ENTERPRISES:
1) Helping people in society.2) Providing a service.
Why is choosing the location for a business so important?
It can make the difference between success and failure.
ExplainCost of the Location
It will have to be paid through the prices of the goods/services.
ExplainNearness to Market (customers)
Businesses need to be near customers because customers don’t want to travel.
Explain Access to and availability of raw materials
Businesses that depend on raw materials want to reduce transport costs.
ExplainAvailability of Labour (workers)
Level of unemployment can vary. Seasonal un-employment, holidays = shortage.
ExplainTransport and Infrastructure
The ease with access to transport will have an influence on where to locate the business.
ExplainClimate and Geography
Some areas may be more suited to a particular type of activity.
ExplainGovernment Help
The government can provide:1) Grants for small businesses2)Factories and Offices to be built.3) Paying for training.
What 7 factors affect business locations:
1) COST OF THE LOCATION.2) NEARNESS TO CUSTOMERS.3) ACCESS TO AND AVALIABILITY OF RAW MATERIALS.4) AVALIABILITY OF LABOUR.5) TRANSPORT AND INFRASTRUCTURE.6) CLIMATE AND GEOGRAPHY.7) GOVERNMENT HELP.
What does it mean if a business is “FOOTLOOSE”?
It does not matter where they locate because customers don’t physically visit the business.
Give 2 examples of footloose businesses:
1) CALL CENTRES.2) COMPUTER GAMES DESIGN BUSINESSES.
Give 3 main considerations of FOOTLOOSE businesses:
1) Access to skilled staff.2) Access to supplies.3) Access to transport links.
Name the 4 different types of integration that can occur between businesses:
1) Horizontal.2) Backwards vertical.3) Forwards vertical.4) Diversification.
What is Horizontal Integration?
It occurs between businesses in the same industry at the same stage of production.
Give an advantage of horizontal integration:
It allows economies of large-scale production to be achieved.
Give 2 disadvantages of Horizontal Integration:
1) Reduced choice.2) May lead to a monopoly. (the only firm avaliable for customers)
What is Backwards Vertical Integration?
When a business takes over or merges with the supplier.
Give an advantage of backward vertical integration:
There is the control of a supply of components or raw materials.
Give a disadvantage of backward vertical integration:
It may lead to a reduction in the variety of goods available for consumers or other businesses.
What is forwards vertical integration?
When a business takes over or merges with another business which provides an outlet for the goods and services produced.
Give two advantages of forwards vertical integration:
1) Control over sales.2) Possibly improve job security for workers.
Give a disadvantage of forwards vertical integration:
May lead to higher prices and/or reduced choices.
What is Diversification Integration?
The merge or takeover of another business involved in an unrelated business activity.
Give an advantage of Diversification Integration:
It reduces dependency on the product or service area.
Give a disadvantage of Diversification Integration:
No understanding of the new business activity.
