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Buisness Studies > Business 1 > Flashcards

Business 1 Flashcards

1
Q

What is a sole trader?

A

Someone who owns and runs a Buisness alone. This person has unlimited liability and therefore is responsible for all the company’s debts

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2
Q

What is unlimited liability?

A

Something that a sole trader has. It means he is responsible for all the business’ debts, and has to pay out of his own pocket

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3
Q

What is the difference between a leader and a manger?

A

A leader is responsible for the overall ownership and control of the business, whereas a manager has less responsibility and controls the day to day running of a business

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4
Q

What is added value?

A

Something that a company/business does to a product to give it a greater cost to purchase.

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5
Q

Give 5 examples of added value

A

Branding (i.e logo), Advertising(i.e tv advert), Adding Features(i.e lighter) , Personal Service(i.e waiter), Location (i.e centre of London is generally more expensive)

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6
Q

What are the 3 sectors of business?

A

Primary, Secondary, Tertiary

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7
Q

What is the primary sector?

A

TAKE. Get raw materials from the land, possibly to sell on to the secondary sector.

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8
Q

What is the secondary sector?

A

MAKE. Use raw materials and add value by creating a finished product, which could then be sold to the tertiary sector.

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9
Q

What is the tertiary sector?

A

SELL. Selling on the finished product to consumers, where the location or a personal service could add value.

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10
Q

What are opportunity costs?

A

Decisions, often compromises a business may make for long term success, for example working longer hours for a bigger profit.

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11
Q

What are the needs of a business?

A

Something, physical or an objective, that a business must have in order to survive, such as an income.

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12
Q

What are the wants of a business?

A

Something a business would benefit from having, but could survive without. For example, several stores.

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13
Q

What is the difference between a good and a service?

A

A good is a physical object being sold, such as a tennis racket ,a service is work, or something not physical being sold, such as tennis coaching.

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14
Q

What is an entrepreneur?

A

A person who sets up his own business. This person takes risks in order to make a profit.

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15
Q

What is a partnership?

A

A business run by two or more people, usually between 2 and 20, who join together with a ‘deed of partnership’. These people have unlimited liability

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16
Q

Give 3 examples of a partnership

A

e.g a doctor, solicitor, dentist, lawyer firm. Any business with more than one person sharing ownership

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17
Q

What is a ‘deed of partnership’, and what are four things it could contain?

A

It is a contract signed before a business enters a partnership and could contain, percentage share of profits or losses, the amount of capital each member must provide, rules on adding new partners and how the business is brought to an end or how a partner leaves.

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18
Q

What is capital?

A

It is usually referred to as an amount of money to start a business, or company up

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19
Q

What is a sleeping partner?

A

A person in a partnership who invests in the company, but does not deal in the day to day running of the business (Think dragons den)

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20
Q

Name 3 advantages of entering a partnership

A

Easy to raise capital as it is shared, Each partner may specialise in a certain area and the business still functions if a member is away or ill. You could also say it is easy to legally set up.

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21
Q

Name 3 disadvantages of entering a partnership

A

The profits have to be shared, the business and partners have unlimited liability, and there is a risk of arguments or disagreements between the partners.

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22
Q

What is a gap in the market?

A

This is a unmet idea for consumers that a business will try to find via an innovative idea to place themselves ahead of competition and to earn more profit, (for example when innocent brought out fresh, organic smoothies before bigger brands came up with the idea)

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23
Q

What is limited liability?

A

Limited liability is a business set up as a company (for around £150 upfront costs) in which individuals in it are not liable for all the company’s debts. They are liable for amount they invested in the company, but after that, although the business may still suffer losses e.g stock, assets cannot be taken from the individual.

24
Q

Name 3 advantages of having a company with limited liability

A

Personal assets cannot be taken for individual owners/shareholders, individuals can be bolder about investing into the future of the business as they have financial security, the company has share capital which makes ownership easy to divide, and interest can easily be issued to investors.

25
Q

What is a private limited company?

A

A small, often family run, limited business. This business will still have all the advantages of a limited company, but may struggle finding funds for an accountant to draw up accounts information which is required yearly.

26
Q

What does it mean to be bankrupt?

A

This is when an individual cannot pay their own debts. This is after all their assets have been sold for cash, if they still cannot pay.

27
Q

What are the 3 disadvantages of a limited company?

A

The initial costs can put smaller businesses off (around £150) and businesses may struggle finding funds as an accountant may be required to draw up account information which is required by this type of company yearly. It’s privacy is also compromised as the public can view profits or losses of the previous year.

28
Q

What is a public limited company (PLC)?

A

A limited company that floats its shares on the stock market, to raise capital quickly.

29
Q

What is a ‘Divorce Of Control’?

A

It is when a public limited company has its shares bought by others so that the owner no longer holds majority control. This process is called a takeover.

30
Q

What is the difference between the private and public industry?

A

The public industry contains government owned businesses and provides a service not focusing on producing profit, and are more focused on providing good service. The Private industry contains businesses owned by the general public who are focused on making profit.

31
Q

What is a reagulator?

A

Someone who makes sure the business is still providing customer satisfaction after it is privatised. This means customer satisfaction levels will stay the same.

32
Q

What are 3 reasons for a business to move from the public to the private sector?

A

One reason is that the is that the government may need to raise capital from the business, And they do this by selling shares to the general public. Another reason is that some people believe that not just wealthy people should be able to become shareholders of a business, so by creating more publicly owned businesses, more of the general public can buy shares. One final reason is that some people believe a business will become more efficient when is privatised due to having more real competition, increasing customer satisfaction

33
Q

What is a franchise?

A

A business sold to someonegiving them the rights to use then name and branding.In return for capital they provide premises, training and support.

34
Q

What is a franchisor and a franchisee?

A

A franchisor is the owner of the company that is selling the franchise, whereas a franchisee is the person who buys the franchise.

35
Q

What are the two advantages each of starting a franchise?

A

For a franchiser they can expand quickly, and can gain profits from selling raw materials, the business plan and they receive royalties. For a franchisee there is less risk,ongoing support from the franchisor, national advertising and an established name and product.

36
Q

What are the three main disadvantages of starting a franchise?

A

The three main ones come from the franchisee, it is expensive to start usually, they must pay royalties to the franchisor, and they have to follow the franchises business plan so there is not much flexibility. it you could also say that the franchiser must trust the franchisee as it can give the business a bad name if they are not high-quality.

37
Q

What is the social enterprise?

A

A company whose main focus is for benefiting the community.

38
Q

What are dividends?

A

The way profits are shared out to shareholders, or members.

39
Q

Describe a cooperative business.

A

It is a business owned by its members, usually employees but sometimes customers, each member has a share of the company. A corporative business is less focused on satisfying shareholders, but still needs to make a strong profit.

40
Q

What is a worker cooperative?

A

A type of cooperative business owned by its workers, or producers.

41
Q

What are two advantages of a cooperative business?

A

A corporative business has limited liability and members have control of the business decisions.

42
Q

What are three disadvantages of other cooperative business?

A

Finance must be provided by the members, banks are reluctant to lend to cooperative businesses, members have an equal say regardless of their share. You could also say members have a chance of disagreement

43
Q

What is an aim?

A

A long term goal of a business.

44
Q

What is an objective?

A

A short term goals of the business. They can follow the SMART system.

45
Q

What is SMART and what does it stand for?

A

Specific, Measurable, Agreed, Realistic, Time constrained. It is a guideline for a business when setting itself objectives.

46
Q

What is a businesses mission statement?

A

It is a statement by the company about why it exist and its aims for the future.

47
Q

Give three reasons of making a business plan.

A

So the business can set objectives for itself, so the business can find out whether it is profitable or not, So the business can be controlled and managed to a greater extent. So banks and third parties can provide finance if needed. Banks REQUIRE a business plan.

48
Q

What are the negatives of a business plan?

A

Time is used up which could be used to develop ideas, and there is a chance of overoptimism.

49
Q

Describe for things needed in a business plan.

A

An executive summary, which is a 1-2 page summary outlining the main ideas of the business, and its unique selling point.A management section which states the owners credentials and the people they plan to recruit’s credentials.It will also have a marketing section stating why the product will be bought, and how it will be advertised. Finally it will also have a financial projection section, stating how the business thinks the finances will change over the next years stating any assumptions made and the risks and opportunities from that, such as what will happen if something goes wrong.

50
Q

What is the job description and what is usually in it?

A

It is an overview of a certain job telling an employee what the job will involve. It contains tasks or duties needed by the employee, responsibilities over people required by the employee, the details of the post and The purpose of the job.

51
Q

What is a person specification and what is usually in it?

A

It is something issued by the employer explaining what a person will need to do or have for the job or post shown. it could include needed qualifications,ideal personality, previous experience required, or skills needed such as a language

52
Q

What is a stakeholder of a business?

A

A group of people that are affected by and affect a businesses activity. there is internal and external’s stakeholders with the former being inside the business, owning it or directly working in it, and the latter being outside it, affecting it but not being very directly involved.

53
Q

You need to know what each stakeholder group wants.The hardest one is what a government group wants on a business, what is that?

A

It to pay its taxes.I to boost national economy.

54
Q

What is the basic layout of an evaluate question?

A

Point A: Advantages, DisadvantagesPoint B: “ “ConclusionI think that BECAUSE it would LEAD TO… THEREFORE… (BLT)

55
Q

3 ways you could use a break even

A

You can find out whether a business idea is feasible
What will happen if costs/price increase
To make business plan

56
Q

2 limitations of break even

A

Only estimates

Less useful for services with a range of products

Buisness Studies (6 decks)

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