1.1 Business In The Real World Flashcards
(27 cards)
Define entrepreneur.
A person who starts up their own business, and usually has these qualities: risk-taker, innovative, and organised.
What do businesses serve?
Customer need or wants.
Define distributor.
A company which buys products from manufactures and sells them on to businesses or consumers.
Name three reasons why businesses are set up:
- To sell goods or services for a profit.
- To benefit society.
- To distribute goods.
What are the three sectors in the economy? Define each.
- Primary - Obtaining raw materials.
- Secondary - Manufacturing.
- Tertiary - Selling the goods or service to customers.
What are the two definitions of enterprise:
- Qualities of an entrepreneur.
- Business.
What are the two most significant qualities of an entrepreneur?
- Risk Taking
- Identifies business opportunities.
What are the four external factors that affect the operation of a business?
- The economy
- Legislation
- The physical environment
- Advancements in technology
What are the four factors of production?
- Land
- Labour
- Capital
- Enterprise
Define opportunity cost.
Whenever a business spends time or money doing something, they could have spent this time or money doing something else.
What are the four key functions of a business?
- HR (Human Resources)
- Finance
- Production
- Marketing
Why do people set up their own business?
- To be their own boss
- To do/work for something they are interested in
- To benefit others
- Flexibility (in terms of when you can work)
What is a sole trader?
A single person who is the only owner of the business. They are the only person who can control the profits.
Identify 4 Advantages of Sole Traders.
- The easiest to set up.
- You get to be your own boss!
- You control all the profits!
- It is easy to change the ‘legal structure’ of the business. E.G, into a Ltd.
Identify 4 Disadvantages of being a sole trader.
- Unlimited liability means that you are responsible for all of the debt, and your personal assets are at risk.
- It can be hard to ask banks for money.
- You are responsible for all the decisions, which can be stressful.
- Employees might not like it if you get to keep all the profits.
What is a partnership?
A business that is owned by 2 or more owners. Each partner has an equal share of profits, and equal say when making decisions.
Identify 2 Advantages of Partnerships.
- More ideas, and experience.
- Better at raising finance than sole traders.
Identify 4 Disadvantages of a Partnership
- You have to share the profits. May end up with lower profit to yourself than if you were a sole trader.
- Unlimited Liability.
- Disagreements are possible.
- All partners are liable for each other’s actions.
What is a Private Limited Company?
It is a company where ownership of shares within the business is restricted.
Identify 3 Advantages of a Private Limited Company.
- Limited Liability.
- The shareholders have a lot of control over how the business is managed.
- It is easier for a limited company to get a loan.
Identify 2 Disadvantages of a Private Limited Company.
- There is an upfront cost.
- The company is legally obliged to publish their accounts each year.
What is a Public Limited Company?
A Limited Company which can sell shares on the stock exchange.
Identify 3 Advantages of a Public Limited Company.
- Easier to raise finance through selling shares!
- Easier to raise finance from banks.
- Limited Liability!
Identify 3 Disadvantages of a Public Limited Company.
- Owners have little say over how the business is run.
- Anyone can take over the company, if they are the majority shareholder.
- The company’s accounts must be made public.
