business- activity

Question 1

what’s a business?

Answer 1

organisation that produces goods/ supplies service and sells it for a profit

Question 2

what’s a dividend?

Answer 2

payment of limited companies sharing their profits with shareholders

Question 3

what’s a sole trader?

Answer 3

business owned by 1 person
they keep all the profits
e.g hairdresser

Question 4

what’s a shareholder?

Answer 4

investor in a company that gets dividend

Question 5

what’s a partnership?

Answer 5

business owned by 2-20 people
all the profits and debts are shared
e.g gray partners

Question 6

what does the term float on the stock market mean?

Answer 6

selling shares on the stock market

Question 7

what are costs?

Answer 7

money paid out of the business

Question 8

what is a business plan?

Answer 8

document outlining what a business is about with sections like marketing and finance

Question 9

what is a silent partner?

Answer 9

person that buys a share or invests in a company but doesn’t have a say in the decisions

Question 10

what is a public limited company?

Answer 10

company owned by shareholders
shares are openly traded on the stock exchange and can be bought by the public

Question 11

what is capital?

Answer 11

money that is invested in the business

Question 12

what is revenue?

Answer 12

income of the business

quantity X price

Question 13

what is limited liability?

Answer 13

when the company is bankrupt but the shareholders possessions are not at risk for the outstanding debt

Question 14

what is unlimited liability?

Answer 14

when the business is bankrupt and the owners possessions are at risk for outstanding debt

Question 15

what does the term entrepreneur mean?

Answer 15

someone who takes a calculated risk with their time and money

Question 16

what is an aim?

Answer 16

states overall purpose for the business and the long term goal

Question 17

what is an objective?

Answer 17

specific and measurable targets to meet the aim of the business

Question 18

what is a good and service?

Answer 18

goods- actual objects

service- activities

Question 19

what are needs and wants

Answer 19

needs- goods and services we need to consume to live

wants- goods and services we don’t have to consume to survive

Question 20

2 reasons for starting a business

Answer 20

Making a profit

Being your own boss

Question 21

3 characteristics

Answer 21

Confident, Risk-taker, Passion

Question 22

What’s the point of a business plan?

Answer 22

helps test financial viability idea and if it has a level of profitability and doesn’t run out of cash

Question 23

+ and - of a business plan

Answer 23

+ clarifies vision and decide whether or not to go on with the idea
+estimate start up costs and how much is needed to invest in finance

-time consuming = not guaranteed
-if competitor opens up things change and sales go down

Question 24

why is business ownership important?

Answer 24

Shows who keeps all the profits

Helps decision making + nulls arguements

Question 25

+ and - of sole trader

Answer 25

+ easy to run and set up
+get all profits
+decisions made quickly as you are the owner
+loyal customers

-unlimited liability
-heavy workload= time consuming working long hours
-difficult to raise finance

Question 26

Why become a partnership?

Answer 26

covers more customer base
more finance
more set of skills

Question 27

+ and - of a partnership

Answer 27

+ jobs can be shared= like marketing and finance so less stress
+simple to form a business= quick to move forwards
+ more skills and knowledge= solve problems faster=growth of business

• unlimited liability= less risk taken= won’t invest in new products
  -decisions take longer= arguments
  -profits shared

Question 28

What’s the purpose of the deed of partnership?

Answer 28

legal document stating how profits and losses are shared and the rules to the partnership

• costs time and money to create
  + less arguments as they can refer back to the deed of partnership

Question 29

+ and - of LTDs

Answer 29

+ limited liability
+easier to sell shares
+ stable form of structure= company still exists even if the shareholders change

-shareholders have to agree on how the profits are shared
- more administrative costs than setting up as a
sole trader/partnership
-less privacy = not as much as plc

Question 30

+ and - of PLCs

Answer 30

+limited liability
+increased capital as public can buy shares
+operating in a large scale means lower costs per unit and larger profit margin

-many laws and regulations slowing down decision making
-accounts are made public so bad reputation=decrease in sales
-original owner may loose control

Question 31

what is an aim and objective?

Answer 31

aim= overall purpose for the business and the long term goal
objective= specific and measurable targets to help meet the aim

Question 32

State 3 objectives

Answer 32

survival
growth
profit maximisation

Question 33

what is the purpose for setting objectives?

Answer 33

focus= for employees to increase efficiency

direction= to decide what the business should do like, if they should expanding or not

Question 34

What is the role of objectives in running a business?

Answer 34

Level of competition
Size of business

Question 35

state why business objectives change

Answer 35

internal reasons = business achieved one so needs to set another one
external reasons= a new competitor joined the market

Question 36

What is purchasing economies of scale?

Answer 36

when large amounts of material is bought in large amounts so the unit cost goes down as a result

Question 37

What is risk bearing economies of scale?

Answer 37

larger portfolio of products so they can invest and also develop more products

Question 38

Internal/ Organic growth ?

Answer 38

expands premises
takes on new workers
makes and sells products
(and never take over other companies)

Question 39

Merger + and -

Answer 39

+ less competition= they merged with the competition= more sales and more market share
+benefit from purchasing economies of scale they buy in large amounts= unit cost goes down= customers get it for cheaper

-culture clash= businesses will be used to doing things differently= slows down decision making
-redundancies occur= motivation of employees decrease

Question 40

Horizontal Integration + and -

Answer 40

+ less competition= they merged with the competition= more sales and more market share
+benefit from purchasing economies of scale they buy in large amounts= unit cost goes down= customers get it for cheaper

-culture clash= businesses will be used to doing things differently= slows down decision making
-redundancies occur= motivation of employees decrease
-expensive(buying another competitor)

Question 41

Vertical integration + and -

Answer 41

+ cheaper costs as the company is their own supplier
+more control on supply

-culture clash= businesses will be used to doing things differently= slows down decision making
-expensive(buying another competitor)
-lack of experience

Question 42

What is backwards and forwards Vertical Integration

Answer 42

Backwards- firm buys a business further back of the chain of production

Forwards- firm buys a business further forward of the chain of production

Question 43

Conglomerate Integration?

Answer 43

firm takes over an unrelated business

Question 44

Conglomerate Integration + and -

Answer 44

+ benefit from risk bearing economies of scale= if one product makes a loss there are others making profits
+bigger reputation as the business is in multiple markets

-culture clash= businesses will be used to doing things differently= slows down decision making
-expensive(buying another company)
-lack of experience

Question 45

2 factors that affect business growth

Answer 45

Size of business

Financial position of the business