B1 - Business In The Real World Flashcards
(40 cards)
What is the first objective of a new business
To survive beyond their launch
What is the next objective of a new business after survival
To make profit
What is the definition of Factors of Production?
The Inputs used in the production process to create Output
What are the 4 Business Areas
- Finance
- Human Resources
- Marketing
- Operations
What are the 4 factors of production
- Land ( where business is based and land of natural resources )
- Labour ( people working in the business including managers )
- Capital ( buildings and machinery needed in the business )
- Enterprise ( entrepreneurs who set up the business )
What is a sole trader?
A business that’s owned by one individual that retain all profits genernated by the business
- unlimited liability ( responsibly )
- cheap and quick to do
What is a partnership?
Formed where a business is started and owned by more than one person
The Partners own the business and have unlimited liability ( responsibility )
What is a private limited company (ltd)
Formed when a business sets up to have a separate legal identity from its owners
( Iceland, Virgin and John Lewis ) .
They have limited liability ( responsibility )
What are the owners of a private limited company known as?
Shareholders - they receive a share of the profits ( dividends ) as a reward for being a shareholder.
Who run a private limited company
A board of directors appointed by the shareholders.
What factors influence the type of structure chosen by a business
- Size of business
- Type of business
- Lender Requirements
- Investment Protection
- Control
- Growth
What is a stakeholder
A stakeholder is someone who has an interest in the activities and decision making of a business.
What are examples of stakeholders
- Shareholders or business owners
- Managers and employees
- Suppliers
- Banks
- Customers
What factors influence Business Location
( RECIPE )
- Raw materials (primary or secondary sector )
- Employment ( high skilled or cheap labour )
- Competitors ( near or far from them )
- Infrastructure ( transport - road rail sea - technology - wifi speeds )
- Proximity To Market ( Offline & Online )
- Finance ( new or established business )
What do the influences of Business location affect?
- Sales
- Image
- Costs
Why business plan?
- Raising Finance to present to financers
- Setting Objectives that are measurable targets
- Business Organisation , the need to plan how functions will be organised
What are advantages of Business plans
- allow for setting targets
- can be used to measure performance
What are disadvantages of Business Plans
- change means plans must be flexible
- can be costly and time consuming
What are the main parts of a Business Plan
- Executive Summary
- Mission Statement
- Products or Services
- Market Analysis
- Organisation and management team
- Production Details
- Finance
What are the 2 methods of Business Expansion
- Internal Growth ( Organic )
- External Growth ( Integration )
For expanding a business what are examples of Internal Growth?
- Franchising
- Opening New Stores
- E - Commerce
- Out sourcing
For expanding a business what are examples of External Growth?
- Mergers
- Acquisition/takeover
What are the advantages of Organic Growth
- Less risky than taking over other businesses
- Builds on strengths of the business , e,g. brands, customers
- Outsourcing means growth can be achieved without costly new investment
What are the disadvantages of Organic Growth
- Growth achieved may be dependant on growth of market
- Harder to build market share if the business is already a leader
- Slow growth , shareholders may prefer more rapid growth
