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Business A Level > 3.1 > Flashcards

3.1 Flashcards

(70 cards)

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1
Q

What are private sector organisations?

A

Includes all businesses set up by individuals or groups, can be incorporated or unincorporated

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2
Q

What is incorporation?

A

The legal process where a business and its owners become a separate legal identity, when a company is created

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3
Q

What are unincorporated businesses?

A

Businesses where there are no legal separations between the owners and the business, owners have unlimited liability

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4
Q

What is an incorporated business?

A

Businesses with a separate legal identity from the owners, owners have limited liability

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5
Q

What is limited liability?

A

Owners can only lose what they invest in the company, personal assets are not at risk

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6
Q

What is unlimited liability?

A

Owners are personally responsible for all the businesses actions, can lose personal assets if in debt

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7
Q

What are sole traders?

A

The simplest form of a private sector business, owned by one person, unlimited liability, owner keeps all profits

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8
Q

What is a partnership?

A

Business owned by one or more person, partners share responsibility and profits, unlimited liability

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9
Q

What are limited companies?

A

Businesses that have gone through incorporation, have a separate legal identity to their owners, owners liability is limited to their investment

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10
Q

What is market capitalisation?

A

Market capitalisation represents the total market value of the issued share capital of a company

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11
Q

What are public limited companies?

A

PLCs trade their shares on the stock market and can raise large sums of money from the public. They must abide by various company acts

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12
Q

What are private limited companies?

A

Private limited companies have limited liability, shares can only be transferred privately, and profits have to be shared with shareholders

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13
Q

What are not-for-profit organisations?

A

Organisations focused on social or ethical objectives rather than profit maximisation, including charities and social enterprises

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14
Q

What are charities?

A

Established to collect money for specific causes, run according to business principles, and aim to maximise costs while raising for good causes

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15
Q

What is a social enterprise?

A

Businesses with a social or environmental purpose that can sell products or services, reinvesting profits to make a social impact

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16
Q

What are shareholders?

A

Invest in companies for potential returns on investment, dividends, capital gains and decision making power in the company

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17
Q

What has influences on share price?

A

Factors such as type of business, mission, objectives, decisions and performance that affect the value of a company’s shares

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18
Q

What is a sole trader?

A

A business owned and operated by one individual, centred around personal goals and potentially rapid responsiveness

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19
Q

What are the advantages of a partnership?

A

Two or more owners,
More capital available,
Relatively easy to start,
Income taxed once as it’s personal income

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20
Q

What are the disadvantages of partnerships?

A

Unlimited liability,
General partnership,
Limited partnership,
Partnership dissolves when one partner dies or wishes to sell,
Difficult to transfer partnership

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21
Q

What are the advantages of sole traders?

A

Owner keeps all profits,
Owner can make decisions quickly,
No boss so arguments do not occur

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22
Q

What are the disadvantages of sole traders?

A

Unlimited liability,
Difficult to take holidays,
High risk so hard to borrow from banks

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23
Q

What are the advantages to LTDs?

A

Limited liability,
Can maintain control of the firm,
Profit figures can be kept secret

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24
Q

What are disadvantages to LTDs?

A

Not as much finance can be raised,
It is time consuming and costly to set up,
Legal documents must be prepared

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25
What are advantages to PLCs
Shareholders have limited liability, Large amounts of capital can be raised as able to sell on stock market, Can borrow finance more easily as trusted by banks due to size Due to size can benefit from economies of scale which allows PLCs to dominate a market
26
What are the disadvantages of PLCs
Control over the business is lost if others buy over 50% of shares Profit figures must be made public Must print prospectus for potential shareholders Must pay stock market for listing and banks to sell shares
27
What is social enterprise?
A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to its owners
28
What is the external environment?
Elements outside a businesses control, including PESTEL factors: political, economic, social, technological, environmental and legal
29
What is PESTEL?
Political, economic, social, technological, environmental and legal
30
What are political factors?
Government policies, regulations and stability affecting businesses
31
What are economic factors?
GDP trends, inflation rates, and interest rates shaping customer behaviour
32
What are technological factors?
Advancements driving innovation and operational efficiencies in industries
33
What are environmental factors?
Sustainability practices and regulatory requirements impacting operations
34
What are legal factors?
Laws and regulations governing business operations, employment and consumer protection
35
What are market conditions?
Attractiveness of the market affecting all businesses in an industry
36
What is consumer demand?
Customers desire and ability to purchase products or services
37
What is economic growth?
Measure of the value of output in the economy
38
What is demand?
Consumer desire and ability to pay for goods or services
39
What is GDP growth?
Varies based on economic cycle and influence demand
40
What is a competitive environment?
Factors influencing market completion and profitability
41
What is price inflation?
Reduces consumer disposable income
42
What is an impact of wage growth?
Increases consumer spending power
43
What is an impact of an increased employment level?
Impact disposable income and consumer spending
44
What does the Bank of England base rate influence?
Overall interest rates in the economy
45
What are demographic factors?
Population size and composition impacting business demand
46
What are environmental changes?
Business concerns about resources, energy use, waste and pollution
47
What is government legislation and environment?
Acts protecting the environment and regulating pollution control
48
What is fair trade?
Movement ensuring fair prices and conditions for producers in developing countries
49
What is the external environment of a business?
External factors influencing business operations and decisions
50
What are interest rates?
The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding
51
What is a business?
An organisation that exists to provide goods and services on a commercial basis to customers
52
What are goods?
Physical products such as consumer electronics, industrial components and cars
53
What are services?
Intangible products such as insurance, dental services and cleaning
54
What is a mission statement?
A statement that determines the companies direction, focuses on the companies future, aligns objectives, makes decision making easier and motivates staff
55
What is an effective mission statement?
One that differentiates the business, defines markets, involves stakeholders, excites, motivates and guides employees
56
What are the problems with mission statements?
Criticism includes lack of support by business actions, vagueness, being viewed as a PR exercise and cynicism by employees and senior management
57
What are objectives?
Set by businesses to ensure everyone works towards the same goal, motivates employees and measures business success
58
What are SMART objectives?
Specific, measurable, achievable, realistic, time-bound
59
What is profit?
The surplus of total revenue over total costs for a business over a period of time
60
What is growth?
Exploiting market position to earn higher profits when a firm grows
61
What is survival?
Aim for a business to continue trading over time
62
What is cash flow?
The movement of cash into and out of the business
63
What is social responsibility?
A businesses duty to make ethical decisions that positively impact society
64
What is total revenue?
The money received from selling products, calculated as selling price multiplied by quantity sold
65
What are fixed costs?
Costs that do not vary with output, such as rent, machine hire and marketing
66
What are variable costs?
Costs that vary directly with output, such as raw materials
67
What are total fixed costs?
The sum of all fixed costs for a business over a period
68
What is average cost?
The total cost divided by the quality produced
69
What is profit calculation?
Profit is calculated as total revenue minus total variable costs and total fixed costs
70
Why is profit important?
Can motivate people Good source of finance Can be used to attract investors

Business A Level (4 decks)

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