1.4 Making the Business Effective Flashcards
(30 cards)
limited liability is
Business owners are only responsible for the debts of the business up to what they invest in the business. Their personal assets are protected.
unlimited liability
The owner is personally responsible for all the business debts, no matter how large they become
3 types of busines ownership for start-ups
Sole trader
Partnership
Ltd
Sole trader is
A business that is onwed and run by only one person
Sole trader advantages
Quick and easy to set up
Makes own decisions
Keeps profits
Sole trader disadvantages
Usually unlimited liability
Long hours
High responsibility
Partnership is
A business that has 2 or more owners that run the business
Partenrship advantages
Quick and easy
Shared decision making
Shared responsibility for debts
Partnerships disadvantages
Can involve long work hours
Conflict may occur
Unlimited liability
Private limited company(Ltd) is
A small or large business with limited liability owned privately by shareholders
Ltd advantages
Limited liability
People can be their own boss
Protected from outside influence
Shares can be sold to raise money
Ltd disadvanatges
More paperwork
Financial info open to public
Time consuming to set up
May need outside support for finances
Franchise is
A business that gives the right to other individuals to sell products under their name
Franchise advantages
Free training and marketing for franchisee
Part of an established business
Easier to make money
Lower risk than starting new
Franchise disadvantages
Has to pay royalties(percent of profit)
Expensive to set up
Decisions need to be asked to the franchisor
Franchises causing competition with themselves
4 types of proximity in business location
Prox to Market
Prox to Labour
Prox to Materials
Prox to competitors
Business location is also affected by
The nature of the business eg Service, Retail, manufacturing
E-commerce and M-Commerce advantages compared to fixed premises
Lower costs
Flexible working hours
Access to larger market
Ability to open 24 hours a day
Low-price marketing and promotion
The marketing mix
4 p’s
Price
Product
promotion
place
Product importance
Need to stand out from competitors to attract customers
Price importance
Customers want value for money, and may pay different prices based on different factors
Factors affecting price
Competition
Customer opinions
Brand image
Availibility
Place referrs to
Where the customer can purchase the product or service. Or the channel of distribution form manufacturer to customer.
Promotion is
The methods a business uses to create interest in its products among its customers and potential customers
