BUSINESS ACTIVITY & INFLENCES ON BUSINESS Flashcards
(74 cards)
1
Q
What are premises in a business context?
A
Buildings and land used by a shop or business.
2
Q
Define needs in terms of human survival.
A
Basic requirements for human survival.
3
Q
What are wants?
A
People’s desires for goods and services.
4
Q
What is a business?
A
An organisation 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
What economic problem arises from limited resources?
A
Scarcity.
10
Q
Define scarcity.
A
When there are not enough goods to satisfy the wants for everybody.
11
Q
What is opportunity cost?
A
The next best alternative given up by choosing another item.
12
Q
What is a private enterprise?
A
Owned by individuals or groups of individuals and aims to make profit.
13
Q
What is a public enterprise?
A
Owned by the government.
14
Q
What is a social enterprise?
A
Non-profit making businesses like charities.
15
Q
Who is a stakeholder?
A
An individual or group with an interest in the operation of a business.
16
Q
Who is a shareholder?
A
People who invest money in shares of the business.
17
Q
List the reasons why business activity is needed.
A
- Provides goods and services from limited resources to satisfy unlimited wants
- Scarcity is the result of the economic problem
- Choice is necessary for scarce resources
- Specialization is required to make the most out of resources.
18
Q
What are business objectives?
A
Goals set by a business.
19
Q
What does it mean for a business to diversify?
A
To increase the range of goods or services it produces.
20
Q
What is revenue in a business context?
A
Money from the sale of goods and services.
21
Q
What is financial security in business?
A
Also called profit satisficing – making enough profit to satisfy the needs of the owners.
22
Q
List some non-financial objectives of a business.
A
- Increasing rates of recycling
- Improve the quality of education
- Providing employment for local people
- Personal satisfaction
- Challenge
- Independence and control.
23
Q
Why might business objectives change?
A
Businesses must respond to events or changes in circumstances.
24
Q
What is a sole trader?
A
A business owned and operated by just one person.
25
List advantages of a sole trader.
* The owner keeps all the profit
* Independent control
* Simple to set up
* Flexibility
* Personal service.
26
What is a partnership?
A business owned by between 2 and 20 people.
27
What is a deed of partnership?
A legal document that states the formal rights of partners.
28
What is a limited partnership?
Where some partners contribute capital but do not take part in running the business.
29
Define social enterprises.
Businesses with important objectives other than making profit.
30
What are cooperatives?
A group of people who agree to work together and pool their money.
31
What is the definition of an entrepreneur?
An individual who introduces changes and new ideas, organizes resources, makes decisions, and takes risks.
32
What is unlimited liability?
Owners can be held responsible for the debts of the business.
33
What is a franchise?
A structure allowing one business to trade under the name of another.
34
What is a private limited company (Ltd)?
A business organization with a separate legal identity from its owners.
35
What advantages do shareholders have in a private limited company?
* Limited liability
* More capital can be raised
* Control cannot be lost to outsiders.
36
What is a public limited company (PLC)?
A company that can sell shares to the public and has limited liability.
37
What is market share?
The percentage of an industry or market's total sales earned by a particular company.
38
What are the features of limited companies?
* Owners have limited liability
* Raises capital by selling shares
* Shareholders elect directors.
39
What are the disadvantages of limited companies?
* Financial information must be public
* Costs money and time to set up.
40
Define a multinational company.
A large business with significant operations in at least two different countries.
41
What is privatisation?
The transfer of public sector resources to the private sector.
42
List factors affecting the appropriateness of different forms of ownership.
* Liability
* Size and scale
* Capital requirements
* Control and decision-making.
43
What factors influence business location?
* Closeness to the market
* Closeness to labour
* Closeness to materials
* Cost of premises.
44
What are trade barriers?
Measures used by governments to control the level of imports into their country.
45
What is urbanisation?
Constructing more buildings on rural land to provide businesses with more labor and additional markets.
46
What is globalisation?
The growing integration of the world’s economies.
47
List advantages of globalisation.
* Access to larger markets
* Lower costs
* Access to labor
* Reduced taxation.
48
List disadvantages of globalisation.
* Competition
* International takeovers
* Increased risk of external shocks.
49
What are the features of multinational businesses?
* Large assets
* Well-trained workforce
* Using economies of scale.
50
How can businesses become multinational?
* Producing goods in countries with low costs
* Extracting raw materials needed for production.
51
What are some reasons businesses become multinational?
Businesses become multinational to:
* Produce goods in countries with low costs
* Extract raw materials needed for production
* Reduce transport costs by producing goods nearer to the market
* Avoid trade barriers by locating factories in different countries
* Expand into different markets to spread risks.
52
What are the advantages of a business becoming multinational?
Advantages include:
* Larger customer base
* Lower costs
* Higher profile in the market and better reputation
* Avoiding trade barriers by locating factories in different countries
* Lower taxes by basing the head office in a country with low tax rates.
53
What are the advantages of multinational enterprises (MNEs) to the economy?
Advantages include:
* Increase in employment
* Injection into the local economy
* Training and education for employees
* MNEs paying tax in the host country
* Helps global knowledge and understanding.
54
What are the disadvantages of multinational enterprises (MNEs) to the economy?
Disadvantages include:
* Environmental damage
* Exploitation of less developed countries
* Repatriation of profits
* Lack of accountability in weak governments.
55
What is the definition of international trade?
International trade allows countries to obtain goods that cannot be produced domestically or are cheaper when bought from overseas.
56
What is the difference between visible trade and invisible trade?
Visible trade refers to trading in physical goods, while invisible trade refers to trading in services.
57
What is the balance of trade?
The balance of trade (or visible balance) is the difference between visible exports and visible imports.
58
What is appreciation in the context of exchange rates?
Appreciation is when the exchange rate is worth more against other currencies.
59
What is depreciation in the context of exchange rates?
Depreciation is when the exchange rate is worth less against other currencies.
60
What is fiscal policy?
Fiscal policy involves using changes in taxation and government expenditure to manage the economy.
61
What are direct and indirect taxes?
Direct taxes charge people on their income (e.g., income tax, corporation tax), while indirect taxes are levied on spending (e.g., value-added tax).
62
What are the effects of lowering income tax on businesses?
Lowering income tax can lead to more spending in the economy, prompting businesses to expand and increase production.
63
What is protectionism in trade policy?
Protectionism is the use of trade barriers to protect domestic producers.
64
What are tariffs?
Tariffs are taxes on imports.
65
What is a quota in trade policy?
A quota is a physical limit on the quantity of imports allowed into a country.
66
What is monetary policy?
Monetary policy involves using changes in interest rates and the money supply to manage the economy.
67
What are some social factors that affect business activity?
Social factors include:
* Increased consumer awareness
* Changing demand patterns
* Increased numbers of women at work
* More part-time workers.
68
What are some technological factors that affect business activity?
Technological factors include:
* Improvement in technology leading to capital-intensive production
* Introduction of robots
* Use of IT in service industries.
69
What is sustainable development?
Sustainable development refers to using resources in a way that they can be replaced.
70
What is the significance of employee satisfaction in business success?
Employee satisfaction can lead to increased productivity and contribute to a positive corporate culture.
71
What are some reasons for business failure?
Reasons for business failure include:
* Cash flow problems
* Lack of finance
* Ineffective marketing
* Poor leadership.
72
What is overtrading?
Overtrading is when a company expands its operations too rapidly without sufficient financial resources.
73
Fill in the blank: The _______ is the amount of revenue generated by a business, guiding its success.
[revenue]
74
True or False: Depreciation means the exchange rate is worth more against other currencies.
False
