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quacksy + elixir > Business: Chapter 1 > Flashcards

Business: Chapter 1 Flashcards

1
Q

Definition of Partnership

A

A form of business in which two or more people agree to jointly own a business (long term)

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2
Q

How many companies can perform in partnership together on one business?

A

2 to 20

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3
Q

Definition of Private Limited Company

A

A business owned by shareholders that cannot sell shares to the public

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4
Q

Definition of Public Limited Company

A

A business owned by shareholders but can still sell shares to the public, shares are tradeable on stock exchange

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5
Q

To whom do private limited companies sell their shares to?

A

To friends and family

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6
Q

Which sector are private and public limited companies in?

A

Private sector

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7
Q

Why do businesses sell shares?

A

To expand their company

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8
Q

What are the factors of private limited companies?

A
  • limited stability for shareholders
  • shared capital
  • incorporated business has legal identity
  • owners are in control
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9
Q

What are the factors of public limited companies?

A
  • limited liability for shareholders
  • shares sold to public = large sum of capital
  • tradeable shares
  • incorporated business has legal identity
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9
Q

Whhat kind of business is largest in the business industry?

A

Public limited company

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10
Q

Definition of Sole Trader

A

A business owned by one person

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11
Q

What are the benefits of being a sole trader?

A
  • own boss
  • easy to set up
  • close to customer
  • accounts not published
  • work incentive
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12
Q

Definition of Joint Venture

A

When two or more businesses start a new project together, sharing capital risks and profit (short term)

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13
Q

What are the advantages of joint ventures?

A
  • sharing of costs
  • shared risks
  • local knowledge
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14
Q

What are the disadvantages of joint ventures?

A
  • profits must be shared
  • different ideas/mindset
  • disagreements
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15
Q

What is the ultimate goal of partnerships and joint ventures?

A

Working together to earn profit

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16
Q

What are the general stakeholder/business objectives?

A
  • survival
  • profit
  • returns to shareholders
  • growth
  • increase market share
  • service to community
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17
Q

What are different objectives of stakeholders that can cause conflicts?

A
  • directors (growth)
  • workers (jobs)
  • consumers (lower price and better quality)
  • local community (eco-friendly/jobs)
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18
Q

Definition of Entrepreneur

A

A person who organises, operates and takes the risk for a new business venture

19
Q

What are the characteristics of an entrepreneur? (at least 5)

A
  • risk-taking
  • creative
  • communicative
  • optimistic
  • self-confident
  • innovative
  • independent
19
Q

What are the advantages of being an entrepreneur?

A
  • flexibility (time + money)
  • own innovation
  • may become successful
  • make use of own interest
19
Q

What are the disadvantages of being an entrepreneur?

A
  • put in own capital
  • risky + lose income
  • lack of knowledge + experience
  • invest own income
20
Q

What is the formula to calculate added value?

A

(selling price) - (price of materials/components) = added value

20
Q

Definition of Added Value

A

Difference between selling price of a product and the cost of materials bought

21
Q

How do business increase added value?

A

By increasing the market price or reducing the component cost

22
Q

What are the risks of increasing added value?

A
  • consumers might not be willing to pay more
  • reducing component cost might reduce the quality of the product
23
Q

Definition of Factors of Production

A

The resources needed to produce goods or services. There are four factors of production and they are in limited supply.

24
Q

What are the four factors of production?

A

Land, Labour, Capital, Enterprise

25
Q

Definition of Specialisation

A

Occurs when people and business concentrate on what they are best at

26
Q

Definitiion of Scarcity

A

The lack of sufficient products to fulfill the total wants of the production

27
Q

Definition of Economic Problem

A

There exists unlimited wants but limited resources to produce goods and services to satisfy these wants. This creates scarcity.

28
Q

Definition of Needs

A

A good or service that is essential for living

29
Q

Definition of Wants

A

A good or service that people would like to have, but is not essential for living.

30
Q

Definition of Opportunity Cost

A

The next best alternative given up by choosing another item.

31
Q

Definition of Division of Labour

A

When the production process is split up into different tasks and each worker performs one of the tasks in which they have expertise.

32
Q

What are the advantages of business growth?

A
  • increase market share
  • increase profit
  • lower average cost
  • higher status
33
Q

What are the disadvantages of business growth?

A
  • cost of growth
  • management problems
  • poor communication
34
Q

Definition of Mixed Economy

A

Economy that has businesses in both private and public sector

35
Q

Who owns a private sector business?

A

Entrepreneur/CEO

36
Q

Who owns a public sector business?

A

Government

37
Q

What are two types of business growth?

A

External growth and Internal growth

38
Q

What are the three types of integration in external growth?

A
  • horizontal (w/ competitor)
  • vertical (w/ supplier)
  • conglomerate (w/ business in different industry)
39
Q

What is internal growth?

A

Business expanding its existing operations

40
Q

Why do business stay small?

A
  • owner’s objective
  • market size
  • type of industry

*includes problems linked to business growth

41
Q

Why do businesses fail?

A
  • poor financial management
  • over expansion
  • failure to plan for change
  • poor operations management

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