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Economics theme 3 > 3.1.1 > Flashcards

3.1.1 Flashcards

1
Q

What is a non-profit organisation?

A

Businesses that are operated commercially but with social welfare and environmental aims in mind, Profits are usually re-invested.

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1
Q

What is a firm?

A

Business organisation such as a corporation that produces and sells goods and services in markets

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2
Q

What is a public sector organisation?

A

They are owned and controlled by the state

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3
Q

What is a private sector organsiation?

A

Organisations that are owned by private invetseros

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4
Q

What are different types of firms?

A

-Private limited companies
-Co-operative producers
-Social enterprise

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5
Q

What are private limited companies?

A

Companies whose share are not listed of a public exchange

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6
Q

What are co-operative producers?

A

Owned and run by their members such as john lewis/waitrose

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7
Q

What are social enterprises?

A

Profit is re-invested for social purposes rather than for gain of private investors.

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8
Q

Why do smaller firms survive and thrive?

A

-Act as a supplier/ sub-contractor to larger enterprises
-low PED and high price elasticity of income for products
-Internal diseconomies of scale.
-Innovative, flexible
-External economies of scale

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9
Q

What are smaller firms business objectives?

A

-Business survival
-Revenue maximisation
-Profit maximisation
-Cost efficiency and scale
-Customer service

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10
Q

What are the key reasons why some firms stay small?

A

-Product differentation and USP
-Flexibility in meeting customers needs
-Deliver high standard of customer service
-Exploit opportunities from e-commerce

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11
Q

What is a stake holder?

A

Any individual or organisation who has a vested interest in the activities and decision making of a business

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12
Q

What are shareholders?

A

Own the business and interest in profit growth and price growth

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13
Q

What is product differentiation and USP for smaller firms?

A

Being seen as ‘small’ can help differentiate against larger competitors
Perception of better product
-Adding value through provision of specialist expertise

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14
Q

What is flexibility in meeting customer needs for smaller firms?

A

-Talk to customers regularly
-Often communicate to customers’ language which give the impression that they are in tune with their need.
-Easy to get customer feedback

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15
Q

What is delivering higher standards of customer service for smaller firms?

A

Most ‘small’ business operate the service sector so it is a competitive advantage.
-Employees are likely to treat customer service as a priority

16
Q

What is exploiting opportunities from E-commerce for smaller firms?

A

-Reach broader customer base
-Easy for small firms to target niche segments domestically and overseas with e-commerce
-Can gain significant traction with customers using social media

17
Q

What are banks and other lenders main interest in a business?

A

Interest and principle to be repaid, maintain credit rating

18
Q

What are directors and managers main interest in a bsuienss?

A

Salary, share options, job satisafaction, status

19
Q

What are employees main interets in a business?

A

Salaries/wages, job security, job satisfaction and motivation

20
Q

What are suppliers main interests in a business?

A

Long term contracts, prompt payment, growth of purchasing

21
Q

What are customers main interest in a business?

A

Reliable quality, value for money, product avaliability, customer service

22
Q

What is a community’s main interest in a business?

A

Environment, local jobs, total impact

23
Q

What is the governments main interest in businesses?

A

Operate legally, tax recepits, jobs

24
Q

What are shareholders power and influence?

A

Election of directors

25
Q

What are banks and other lenders power and influence in a business?

A

Enforce loan coveants and withdraw banking facilities

26
Q

What are directors and managers power and influence in a business?

A

Make decisions and have detailed information

27
Q

What are employees power and influence in a business?

A

Staff turnover, industrial action, service quality

28
Q

What are customers power and influence in a business?

A

Revenue/ repeat business
word pf mouth reccommendation

29
Q

What is a community’s power and influence in a business?

A

Indirect via local planning and opinion leaders.

30
Q

What is a governments power and influence in a business?

A

Regulation, subsisdies, taxation, planning

31
Q

What are ways to overcome the principle-agent problem?

A

-Employee share ownership schemes
-Long-term employment contracts for senior management
-Long-term stock commitment

Economics theme 3 (13 decks)

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