Business activity Flashcards
(25 cards)
What are the three purposes of business enterprise and entrepreneurship? 
Spotting an opportunity, developing an idea and satisfying customer needs
What are four characteristics of an entrepreneur?
Creativity, risk-taking, determination and confidence.
What are the financial risks and rewards of entrepreneurship?
A risk would be if the business does not succeed, the risk of losing savings to pay off debts.
The reward would be the potential to make a lot of money.
What are the non-financial risks and rewards of entrepreneurship?
A risk would be that the strain of running a business can cause mental and physical illness.
A reward would be independence - being in control of what you do; not being told what to do by others.
What are the five steps involved in developing a business idea?
The idea, the people, market research, finance and competitors
How does a good business plan make the objectives SMART?
Specific – clearly starting what is to be achieved.
Measurable – how to measure the success.
Achievable – targets are possible.
Realistic – targets are appropriate.
Timely – includes a deadline for achieving the targets.
What are all the objectives a good business plan will cover?
Identifying the market
Identifying the resources
Identify the finance needed to start up or grow the business
Achieve the business, aims and objectives
Why does a business plan its activities?
Reduce the risk of failure.
Be as successful as possible.
What are two advantages of being a sole trader?
Few forms to complete
The owner makes all the decisions
What are two advantages of being a partnership?
Only needs a written agreement between partners
No information about profits must be published
What are two advantages of being a (Ltd) private limited company?
Shareholders can restrict who can buy shares
The business continues even if shareholders sell their shares or die
What are two advantages of being a PLC?
New shareholders can invest and banks are willing to lend
The business continues even if shareholders sell their shares or die
What are two disadvantages of being a sole trade?
The business stops when the owner dies
Owner has unlimited liability
What are two disadvantages of partnerships?
Partners may disagree which would lead to problems making decisions
The profits will have to be shared
What are two disadvantages of LTD?
Requires legal documents, which take time to produce
The public can see information about the business
What are two disadvantages of PLC?
Requires legal documents, which takes time to produce
The public can see information about the business
What is unlimited liability?
If a business goes bankrupt, the owners must sell any assets the business has
What is limited liability?
If the company fails the shareholders don’t have to use their own possessions to pay off the debts
What are the 4 ways of organic growth?
Increasing output
Gaining new customers
Developing new products
Increasing market share
What is external growth?
The growth of a business by takeover or merger
What is diversification?
When a business merges with or takes over another business with which it has no connection
What is backward vertical growth?
When a business merges or takes over a business that supplies it with goods or services
What is organic growth?
Concerned with the internal growth of a business, for example by increasing its sales
What is forward vertical growth?
When a business merges with or takes over another business that it supplies goods or services to
