1.4 - Making the Business Effective Flashcards
(35 cards)
What is the easiest business to start?
Sole trader.
What are the advantages of a sole trader?
- easy to set up
- be your own boss
- you decided what happens to the profits
What is a sole trader business?
A business which has just one owner.
What are the disadvantages of being a sole trader?
- might have long hours and fewer holidays
- unlimited liability
- hard to raise finance
What is a partnership business?
A business that generally has between 2 and 20 partners. Each partner has an equal say in making decisions and an equal share of the profits - unless there’s a deed of partnership that says otherwise.
What are the advantages of a partnership?
- more ideas, skills and expertise
- share the work
- more capital can be put into the business by the owners (personal savings)
What are the disadvantages of a partnership?
- legally responsible for each other
- unlimited liability
- disagreements
- shared profits
Who own limited companies?
Shareholders.
What does incorporated mean?
The business has a different legal identity to the owners.
Are limited companies incorporated or unincorporated?
Incorporated.
What’s the abbreviation for a private limited company?
Ltd.
What are private limited companies?
Where ownership is restricted.
- shares can only be sold if all the shareholders agree
- shareholders are often all members of the same family
What are the advantages of private limited companies?
- limited liability
- easier to gain finance
What are the disadvantages of private limited companies?
- more expensive to set up
- legally obliged to publish its accounts
What is a franchise?
Where they sell the products or use the trademarks of another firm. They then give the firm they’re franchising from a fee or a percentage of their profits.
What are the advantages of franchising?
- customers will already recognise the franchisor’s brand so are more likely to buy
- franchisor might provide training
- less risky that starting from scratch, easier to get a bank loan
What are the disadvantages of franchising?
- limited freedom
- pay the franchisor a lot
What factors affect where a business might set up?
- location of raw materials
- labour supply
- competition
- location of the market
- using the internet
How does the location of raw materials affect where a business would set up?
If raw materials are located nearby - this will lower transport costs.
How does the labour supply affect where a business would set up?
Levels of employment / unemployment will affect the wages aswell (low or high). And it will affect the selection to choose from.
How does the competitions location affect where a business would set up?
Being near competitors can be an advantage, it should be easy to find skilled labour, there are already local suppliers, and local customers.
However, some business might want to be away from competitors.
How does the location of the market affect where a business might set up?
Transport cost to the customers.
Being nearer the business could bring awareness to their product.
Easier for customers to get to.
Passing trade. (people who walk past)
How does the use of the internet affect where a business might set up?
- The internet makes the firms location more flexible.
- They can locate further away from their market but closer to raw materials because of e-commerce.
- Or e-commerce could mean that business don’t need a fixed premises to sell from.
- Employees could work from home and could be from anywhere in the world.
What is the marketing mix?
The four P’s.
Price
Product
Promotion
Place
