Business Activity and Influences on Business Flashcards
(95 cards)
1
Q
What are premises in a business context?
A
Buildings and land used by a shop or business.
2
Q
Define needs.
A
Basic requirements for human survival.
3
Q
Define wants.
A
People’s desires for goods and services.
4
Q
What is a business?
A
An organization that produces goods and services.
5
Q
What are goods?
A
Physical products such as mobile phones or a pair of shoes.
6
Q
What are services?
A
Non-physical products such as banking and car washing.
7
Q
What are consumer goods?
A
Goods sold to ordinary people rather than businesses.
8
Q
What are producer goods?
A
Goods produced by one business for another.
9
Q
List examples of goods.
A
- Smartphones
- Magazines
- Crisps
- Vehicles
10
Q
List examples of services.
A
- Health care
- Banking
- Education
- Garden design
11
Q
What is scarcity?
A
When there are not enough goods to satisfy the wants for everybody.
12
Q
Define opportunity cost.
A
The next best alternative given up by choosing another item.
13
Q
What is private enterprise?
A
Owned by individuals or groups of individuals and aims to make profit.
14
Q
What is public enterprise?
A
Owned by the government.
15
Q
What is social enterprise?
A
Non-profit making businesses like charities.
16
Q
Define stakeholder.
A
An individual or group with an interest in the operation of a business.
17
Q
Define shareholder.
A
People who invest money in shares of the business.
18
Q
Why is business activity needed?
A
- Provides goods and services from limited resources to satisfy unlimited wants
- Scarcity results from limited resources and unlimited wants
- Choice is necessary for scarce resources, leading to opportunity costs
- Specialization is required to maximize resource use
19
Q
What are business objectives?
A
Goals set by a business.
20
Q
What does it mean to diversify in business?
A
To increase the range of goods or services produced.
21
Q
What is revenue?
A
Money from the sale of goods and services.
22
Q
List the importance of clear objectives in a business.
A
- Employees need something to work towards
- Objectives motivate people
- Helps decide direction and necessary steps for the business
- Easier to assess business performance
23
Q
What are financial objectives?
A
- Survival of a business
- Making profit
- Increasing sales
- Increasing market share
- Financial security
24
Q
What are non-financial / social objectives?
A
- Increasing rates of recycling
- Improving quality of education
- Providing employment for local people
- Personal satisfaction
- Challenge
- Independence and control
25
Why might objectives change as businesses evolve?
* Market conditions
* Technology
* Performance
* Legislation
* Internal reasons such as change in ownership or management
26
Define sole trader.
A business owned and operated by just one person.
27
List advantages of being a sole trader.
* Keeps all the profit
* Complete control
* Simple to set up
* Flexibility
* Can offer personal service
* May qualify for government help
28
List disadvantages of being a sole trader.
* Unlimited liability
* Difficulty in raising finance
* Responsibility may be overwhelming
* Long hours and hard work
* Usually too small to exploit economies of scale
* No continuity after owner's death
29
What is a partnership?
A business owned by between 2 and 20 people.
30
What is a deed of partnership?
A legal document that states the formal rights of partners.
31
List advantages of a partnership.
* Easy to set up and run
* Specialization in areas of expertise
* Shared responsibilities
* More capital raised with more owners
* Financial information is not public
32
List disadvantages of a partnership.
* Unlimited liability
* Profit sharing
* Potential for disagreements
* Partners' decisions are legally binding
* Tend to be small
33
Define limited partnership.
Some partners contribute capital and share profits but do not participate in running the business.
34
What are social enterprises?
Businesses with important objectives other than making profit.
35
What are cooperatives?
Groups of people who work together and pool their money.
36
List types of cooperatives.
* Consumer or retail cooperatives
* Worker cooperatives
37
What are charities?
Organizations that provide help to people in need and rely on donations.
38
Define entrepreneurs.
Innovators, organizers, decision makers, and risk takers.
39
What is unlimited liability?
Owners can be held responsible for the debts of the business.
40
What is incorporated?
Has a separate identity from that of its owners.
41
Define franchise.
A structure where a franchisor allows another operator to trade under their name.
42
List advantages of being a franchisor.
* Fast growth
* Cheaper growth
* Franchisees take some risk
* Franchisees are motivated
43
List disadvantages of being a franchisor.
* Shared profit
* Poor franchisees can damage the brand
* Franchisees may source merchandise elsewhere
* High support costs
44
List advantages of being a franchisee.
* Less risk with a tested idea
* Backup support
* Predictable setup costs
* National marketing support
45
List disadvantages of being a franchisee.
* Shared profit with franchisor
* Strict contracts
* Lack of independence
* Expensive to start
46
What are limited companies?
Business organizations with a separate legal identity from their owners.
47
Define market share.
The percentage of total sales in an industry earned by a particular company.
48
What is a dividend?
A share of profit.
49
What are the advantages of private limited companies (Ltd)?
* Limited liability for shareholders
* More capital can be raised
* Control not lost to outsiders
* Business continues if a shareholder dies
* More status than sole traders
50
List the features of limited companies.
* Owners have limited liability
* Raises capital by selling shares
* Shareholders elect directors
* Pay corporation tax on profits
51
What are disadvantages of limited companies?
* Financial information is public
* Costly and time-consuming to set up
* Profits shared among more members
* Time-consuming share transfer
* Cannot raise vast amounts of money like PLCs
52
What are the advantages of public limited companies (PLC)?
* Large capital raising potential
* Limited liability for shareholders
* Can exploit economies of scale
* Easy buying/selling of shares
* High media profile
53
List disadvantages of public limited companies (PLC).
* High setup costs
* Outsiders can gain control by buying shares
* More financial information is public
* More remote from customers
* More regulatory control
54
Define multinational.
A large business with significant operations in at least two different countries.
55
What are public corporations?
Businesses owned by the government and run by government-appointed directors.
56
List advantages of public corporations.
* Avoid wasteful duplication
* Maintain control of strategic industries
* Potential decrease in unemployment
* Serve unprofitable regions
57
List disadvantages of public corporations.
* Cost to government
* Inefficiency
* Political interference
* Difficult to control due to size
58
What is privatization?
Transfer of public sector resources to the private sector.
59
List factors affecting the appropriateness of different forms of ownership.
* Liability
* Size and scale
* Capital requirements
* Control and decision-making
60
List factors influencing business location.
* Closeness to the market
* Closeness to labor
* Closeness to materials
* Closeness to competitors
* History and tradition
* Cost of premises
61
What are trade barriers?
Controls on the level of imports into a country, such as tariffs.
62
What are the advantages of a good location?
* Cost efficiency
* Enhanced market access
* Efficient infrastructure support
* Favorable regulatory environment
* Competitive advantage
63
What are the disadvantages of a poor location?
* Increased costs
* Limited market access
* Infrastructure challenges
* Regulatory issues
* Competitive disadvantage
64
What is the chain of production?
Interdependence among businesses in each of the three sectors.
65
What is globalisation?
The growing integration of world’s economies
## Footnote
Globalisation involves the interdependence of national economies through trade, investment, and capital flows.
66
List three features of globalisation.
* No government laws to prevent firms from selling goods in overseas markets
* Capital can flow freely between countries
* Increased trade across national boundaries
67
How did globalisation grow rapidly?
* Development in technology
* Improved international transport networks
* Deregulation
* Increase in tourism
* Saturated domestic markets
68
Name two ways governments can limit globalisation.
* Close international borders
* Put up trade barriers
69
What are the advantages of globalisation?
* Access to larger markets
* Lower costs
* Access to labour
* Reduced taxation
70
What are some disadvantages of globalisation?
* Increased competition
* International takeovers
* Increased risk of external shocks
71
Define urbanisation.
Constructing more buildings on rural land
## Footnote
Urbanisation often leads to increased labour supply and additional markets for businesses.
72
What are the features of multinational companies?
* Large assets
* Well trained and experienced workforce
* Persuasive advertising
* Using technology
* Perfect political and economical environment
73
How can businesses become multinational?
* Produce goods in countries with low costs
* Extract raw materials
* Produce goods nearer the market
* Avoid trade barriers
* Expand into different markets
74
List two advantages of becoming a multinational business.
* Larger customer base
* Lower costs
75
What are the advantages of multinational companies to the economy?
* Increase in employment
* Injection to the local economy
* Training and education for employees
* MNEs pay taxes in the country
76
What are some disadvantages of multinational companies?
* Environmental damage
* Exploitation of less developed countries
* Repatriation of profits
77
Define international trade.
Allows countries to obtain goods that cannot be produced domestically or are cheaper when bought from overseas
78
What is the difference between visible trade and invisible trade?
* Visible trade: trading in physical goods
* Invisible trade: trading in services
79
What is the balance of trade?
Difference between visible exports and visible imports
80
What does appreciation mean in terms of exchange rates?
When the exchange rate is worth more against other currencies
81
What is fiscal policy?
Using changes in taxation and government expenditure to manage the economy
82
Name two types of taxes.
* Direct taxes
* Indirect taxes
83
What is protectionism?
The use of trade barriers to protect domestic producers
84
List three trade barriers that governments can use.
* Tariffs
* Quotas
* Subsidies
85
What are social factors that affect business activity?
* Increased consumer awareness
* Changing demand patterns
* Increased numbers of women at work
86
How can technological factors affect businesses?
* Improve efficiency and productivity
* Require constant adaptation
* Involve high initial costs
87
What is sustainable development?
Using resources in a way that meets current needs without compromising future generations
88
What are some advantages of a stable political environment for businesses?
* Fosters business growth
* Creates a conducive business environment
89
List two ways to measure success in business.
* Revenue
* Market share
90
What is a common reason for business failure?
Cash flow problems
91
What does overtrading refer to?
Expanding operations too rapidly without sufficient financial resources
92
What is repatriation of profits?
Profits sent back to a multinational’s home country and not kept in the country where they are earned
93
Name two external factors that can lead to business failure.
* Lack of finance
* New entrants in the market
94
What does ineffective marketing refer to?
When a company's marketing activities fail to achieve their intended objectives
95
What is the role of government in relation to businesses?
To provide a range of services and establish a legal framework that businesses must follow
