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Edexcel GCSE Business > Making A Business Effective > Flashcards

Making A Business Effective Flashcards

1
Q

Limited liability

A

The level of risk is limited to the amount of money that has been invested in the business or promised as an investment

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2
Q

Assets

A

Property, such as a house or car

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3
Q

Incorporated

A

A business that is registered as a company so the business and the owners are separate in the eyes if the law

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4
Q

Unlimited liability

A

The level of risk goes beyond the amount invested, so the personal assets of the business owner can be used to pay off the business’s debts

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5
Q

Unincorporated

A

A business that is not registered as a company so the owners and the business are the same body in the eyes of the law

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6
Q

Sole trader

A

A type of unincorporated business that is owned by just one person

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7
Q

Partnership

A

A business that is owned by a group of two or more people who share the financial risk, decision - making and the profits

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8
Q

Deed of partenership

A

A legal document that defines the terms of a partnership

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9
Q

Shareholders

A

Investors who are part owners of a company. They invest in the business in return for a share of the profits and voting rights at the AGM

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10
Q

Advantages of Sole Trader

A
  • makes all the decisions by themselves, which is quick and doesn’t lead to disagreements
  • quick and easy to set up
  • sole trader keeps all the profits
  • financial information is kept private
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11
Q

Disadvantages of Sole Trader

A
  • unlimited liability
  • difficult to raise enough money to establish or grow the business
  • puts a lot of pressure on just one person
  • can be difficult to run if owner is unavailable
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12
Q

Advantages of Partnership

A
  • business owners have wider expertise and can share ideas and decision-making
  • risk is shared
  • can be easier to raise finance
  • financial information kept private
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13
Q

Disadvantages of Partnership

A
  • decision made by one partner can affect all partners
  • if a partner leaves the business no longer exists
  • profits are shared
  • there may be disagreements between partners
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14
Q

Advantages of Private Limited Company

A
  • owners have limited liability
  • the term LTD may make it appear to be a bigger or more long-established business
  • can be easier to raise finance
  • business can continue to trade even if shareholders change
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15
Q

Disadvantages of PLC

A
  • more complex set-up
  • may be disagreements between shareholders
  • financial information is published
  • more requirements to report information to organisations such as HMRC and Companies HOuse
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16
Q

Franchise

A

When one business gives another business permission to trade using its name and products in return for a fee and share of its profits

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17
Q

Franchisor

A

An established business that gives permission to an entrepreneur to trade using its name and products

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18
Q

Franchisee

A

An entrepreneur who pays a fee to trade using the name and products of an established business

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19
Q

Advantages of Franchising

A
  • lower risk than setting up independently, as the business model is already successful
  • support and training provided by franchisor
  • franchisees benefit from national marketing campaigns
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20
Q

Disadvantages of franchising

A
  • franchisees have to pay an initial fee as well as ongoing fees and/or share of their profits
  • franchisees cannot make independent decisions
  • brand reputation can be damaged by other franchisees if they do not maintain standards
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21
Q

Proximity to key factors

A

Nearness to Market, Labour, Materials, Competitiors

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22
Q

Proximity to market

A

How close a business is to its customers
Business may look at the footfall of the location or research the demographics of the area to see if it matches with customers

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23
Q

Labour

A

Workers or the workforce

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24
Q

Footfall

A

The number of people passing a particular location within a given time period

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25
Q

Demographics

A

The characteristics of the population such as gender, age, religion and wealth

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26
Q

Proximity to labour

A

May locate where there is plenty of labour
If they need a highly skilled workers they may locate near London but if they need unskilled workers they may locate where there is high unemployment

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27
Q

National Living Wage

A

The minimum amount that a business is legally allowed to pay its employees

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28
Q

Proximity to materials

A

May locate itself as close as possible to the raw materials that it uses to produce its finished products

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29
Q

Bulk-gaining product

A

An end product that is bigger than the raw materials used to make it such as a bicycle

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30
Q

Bulk-reducing product

A

A product that is smaller than the raw materials it uses, such as paper

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31
Q

Proximity to competitors

A

Some business choose to locate themselves away from their competitors if selling a convenience good
However they may want to be close if the business sells what is known as a shopping goods

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32
Q

Convenience good

A

A product that a customer buys frequently or routinely

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33
Q

Shopping good

A

A product that a customer takes time to consider before purchasing, by looking at and weighing up a number of options before choosing one

34
Q

Topography

A

The physical characteristics of a landscape such as being flat or hilly

35
Q

Inertia

A

When a business is located in a certain area because that is where it was first set up. The business stays in that location because it is easier.

36
Q

E-commerce

A

Using the internet to carry out business transactions

37
Q

M-commerce

A

Using mobile technologies such as smartphones and tablets to carry out business transactions

38
Q

Multi-channel

A

Using a number of methods to reach the customer including physical stores and e-commerce

39
Q

Benefits of e-commerce

A

Lower operating costs
Ability to reach a wider audience
Ability to trade 24 hours a day, 7 days a week
Ability to respond to changing consumer buying habits

40
Q

multi-channel

A

Using a number of methods to reach the customer, including physical stores and e-commerce

41
Q

Marketing Mix

A

Combination of the four ‘P’s of marketing: price, product, promotion and place

42
Q

Price

A

Amount of money that a customer will need to pay to receive the product

43
Q

Factors influencing price

A

The amount of competition from other businesses
Customers’ opinions about the product’s value

44
Q

Product

A

The actual good or service that the business is offering for sale

45
Q

A Good & Example

A

A product that can be touched, such as a smartphone or a scooter

46
Q

Service & Example

A

A product that cannot be touched, such as a taxi ride or buying car insurance

47
Q

Promotion

A

The range of activities undertaken by a business to make customers aware of its products and to encourage customers to by them

48
Q

Examples of Promotion

A

Offering discounts
Television or billboard advertising
Using social media
Sponsoring people or organisations

49
Q

Place

A

Where the customer can purchase the product
Route that a product takes to get from the manufacturer to the end customer

50
Q

Place marketing mix examples

A

Online
Through a retailer
Direct from the manufacturer

51
Q

Competitive environment

A

Refers to the number and relative power of businesses competing in one market

52
Q

Examples of how a business may respond to its competitors

A

-Changing a product’s price to match or undercut its competitors, though businesses have to be careful that this strategy does not result in a price war
-altering aspects of an existing product or bringing out a new product with a unique feature to achieve product differentiation
-undertaking promotional activities to boost brand awareness in order to encourage more brand loyalty
-changing the place or increasing places where products are available to the customer in order to maintain or increase market share

53
Q

Undercut

A

Sell the same product for a lower price than competitors

54
Q

Price war

A

When competing business try to undercyt each other by lowering prices. This leads to an ongoing battle where only the customer benefits

55
Q

Product differentiation

A

Designing a product with some unique features that distinguish it from similar products sold by competitiors

56
Q

Brand loyalty

A

A customer’s willingness to buy a product from a particular business rather than from its competitors

57
Q

Market share

A

The proportion of sales in a market that are take by one business

58
Q

Examples of changing consumer needs on the marketing mix

A

-Launching new products to responf to consumer trends
-Changing prices in response to economic conditions
-Opening more small local stores to male products more easily accessible to consumers who do not own cars

59
Q

Recession

A

A period of economic decline characterised by the fact that the economy has failed to grow 6 consecutive months

60
Q

Promotional mix

A

The combination of promotional activities that a business uses to make customers aware of a product with the aim of increasing sales

61
Q

Example of a business changing its promotional mix to use increasing popular uses of technology

A

Introducing e-commerce or m- commerce to meet customer needs
using more digital communication to promote products and keep customers interested in the brand
changing aspects of product design by incorporating new technologies into the product

62
Q

Business plan

A

A document that outlines how an entrepreneur is going to set up a new business

63
Q

SMART objectives

A

Objectives that are Specific, Measurable, Achievable, Realistic and Time-bound

64
Q

Market research

A

The process of gathering information about the market and customers’ needs and wants in order to help inform business decisions, including product design and marketing

65
Q

Target market

A

The group of people that a business has identified as potential customers

66
Q

Revenue

A

The money that will come into a business from sales

67
Q

Profit

A

The amount of revenue left over once costs have been deducted

68
Q

Cash flow

A

The amount of money coming in and going out of the business and the timing of its movement

69
Q

How can be risk reduced?

A

-Detailed planning
-setting cclear objectves and aims
-conducting market research
-making financial forecasts
-using a cash flow forecast

70
Q

Budgets

A

Pre-set financial targets for a business to achieve, like a sales budget, or abide by, such as an expenditure budget, in a given period of time

71
Q

Negative cash balance

A

Occurs if the business’s opening balance results in a negative amount at the end of the period, leading to a cash shortage

72
Q

Overdraft

A

A facility provided by a bank allowing a current account holder to withdraw more money than there is in the account

73
Q

Bank loan

A

A fixed sum of money lent by a bank to an individual or a business for a specific purpose, which must be repaid with interest in set payments over an agreed period of time

74
Q

Private limited company

A

An incorporated business that is owned by shareholders who invest in the business in return for a share of the profits and voting rights at the annual general meeting

75
Q

Public limited company

A

An incorporated business that can sell shares to the public

76
Q

Trade credit

A

A credit arrangement that is offered only to businesses by suppliers

77
Q

Venture capital

A

Money to invest in a business is sourced from individuals,or groups of people, who wish to invest their own money into new businesses

78
Q

Retained profit

A

Money that a business keeps, rather than paying out its shareholders

79
Q

Crowdfunding

A

A business obtains funding from a large number of people who each pay a small amount of money

80
Q

Advantage to a business of locating close to the market

A

More likely to be considered by people making a purchase

81
Q

Advantage to a business of locating in an area of high unemployment

A

They will have more people to choose from if they need more staff. Businesses looking to recruit people may also be able to offer lower pay and still attract new staff, although they cannot offer less than the National minimum wage

Edexcel GCSE Business (9 decks)

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