Business In The Real World Flashcards

Question

What are employment laws?

Answer 1

• The National Living Wage is higher than the National Minimum Wage - workers get it if they’re over 25. • The Government's National Living Wage was introduced on 1 April 2016 for all working people aged 25 and over, and is set at £7.20 per hour.

Answer 2

• Health and Safety at work Act 1974 • All workers have a right to work in places where risks to their health and safety are properly controlled • Health and safety is about stopping you getting hurt at work or ill through work • The employer is responsible for health and safety, but the employees must help

Answer 3

Consumer Rights Act 2015 Goods must be; as described, fit for purpose and satisfactory quality This will have an impact on costs for a business as they need to make sure the goods are “satisfactory quality”

Answer 4

▪ A sole trader is a business which has only one owner ▪ Also known as a sole proprietor

Answer 5

• Small shop • Plumber • Electrician • Cleaner • Hairdresser • Website designer

Answer 6

This means that the business and the owner are ONE legal entity. In short if a customer sues the business, they will in fact sue the owner If the business gets into debt, the owner gets into debt

Answer 7

• Partners are all joint owners of the business • The partners of the business may do decision making themselves or they may employ manager

Answer 8

• Doctors • Dentists • Accountants • Solicitors • Vets

Answer 9

Limited liability protects a business owner’s personal funds from being used to pay business debts.

Answer 10

• Shares cannot be bought by the public, the share issue is limited (hence the ltd) to friends and family who can buy shares in the business • Owners control who buys the shares • Minimum 2 people – no maximum

Answer 11

• Shares can be bought and sold by anyone on the Stock Exchange • Can expand by selling more shares • Limited liability

Answer 12

• A not-for-profit organisation is one that has the objective of something other than making a profit (but it still might make a profit) • They are dedicated to a social cause • Surplus revenue is used to further their mission, and is not paid to shareholders • They have limited liability

Answer 13

• In its first year of trading, a start-up business may aim to just survive

Answer 14

• The objective is to reach a sustainable level of sales that allows the business to reach its break-even point

Answer 15

• Profit is total revenue (revenue into a business) minus total costs (costs out of a business)

Answer 16

– Increase revenue into the business – Reduce costs out of the business

Answer 17

• As businesses trade and develop over time, the objectives may change and they owners may wish to grow the business

Answer 18

• The business may wish to increase the number of shops or outlets that they have in the UK (this is the domestic or home market)

Answer 19

• The business may wish to expand into other countries, for example Europe (this is the international market)

Answer 20

• A business may aim to increase their market share. This is the percentage of sales held by a business in a market.

Answer 21

• Some businesses will need to set customer satisfaction objectives to meet a quality standard

Answer 22

• Social enterprises are businesses trading for social or environmental purposes • Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social and/or environmental purpose is absolutely central to what they do • Unlike a charity, they relay on trade not donations to make the money

Answer 23

• Ethics is the principal of knowing right decisions from wrong ones in business • Having ethical objectives is expensive and will cost the business money

Answer 24

• Shareholder value is; where shareholders, in a business, earn a return from their investment which is greater than their required rate of return • This means the business may make decisions to buy or sell goods just to maximise the amount of money they can give back to their shareholders, possibly at the expense of ethics or the environment

Answer 25

(a) Setting business objectives gives specific targets by which business performance can be measured (b) Setting objectives can be used to motivate workers to be more productive (c) Setting objectives clarifies business direction and aids decision making

Answer 26

• Objectives can help to keep the owner and the employees all working towards common goals • Objectives help the owner keep an eye on profitability, costs and profit margins

Answer 27

A. Business size will have an impact on objectives B. Level of competition faced will also change the objectives C. Type of business; sole trader, partnership, ltd or plc

Answer 28

• Social enterprises, e.g. Big Issue VIDEO • These types of organisations might have these objectives: – Aim to tackle the effects of poverty – Provide jobs and tackle unemployment – Help children with a social need – Tackle the issue of an aging population – Help the homeless – Education and training initiatives

Answer 29

• A stakeholder is defined as anyone who has an interest in a business and is affected by the actions of the business

Answer 30

• Role; to start and run a business to make a profit • Objectives; to get a good return on any money they have invested in the business

Answer 31

• Role; to work in a business in return for wages • Objectives; To have job satisfaction, to have job security so they can pay their bills, to get promoted

Answer 32

• Role; to buy goods or services from the business • Objectives; to get a good choice of goods or services, to get value for money, to get quality products at low prices, to have the opportunity to buy innovative products

Answer 33

• Role; For those who live near a business who may be affected by its operations • Objectives; They want the business to provide jobs, they want the business to operate in an ethical way, they may also want them to buy from local suppliers and to not pollute the local atmosphere

Answer 34

• Role; to provide the business with goods or services that they might need • Objectives; they want to charge high prices to make a profit, they want customer loyalty with repeat orders, they also want payment on time, they may also want larger orders

Answer 35

• Employees want higher wages but owners and shareholders don’t want to pay higher wages, as this will raise costs and therefore impact profit

Answer 36

• Cost of rent for shops in town centres and shopping centres will be higher than elsewhere • Premises are often the second largest cost after wages • Small businesses that can start from home can make a huge cost saving

Answer 37

• Some businesses may decide to open in a certain location because they have been given a government grant • Government grants do not need to be paid back, they are given to businesses to encourage them to set up in areas which have high unemployment

Answer 38

• Adequate supply of cheap and skilled labour is necessary for businesses • Some businesses may move to areas of high unemployment so there is a large pool of applicants for any jobs they advertise

Answer 39

• A business start-up will need to think about its location in terms of proximity to materials • The closer a business can be to the raw materials it needs for production, the lower the costs of production will be

Answer 40

• A document which sets out the future plans for a business • It is how an entrepreneur will explain how they will turn their idea into a successful business • The entrepreneur may then show the plan to a bank to ask for a business loan

Answer 41

• To help set up a new business • To help the business raise finance • To help the business to set objectives • To outline how functions of the business will be organised

Answer 42

• Fixed costs are costs that do NOT vary with the level of business • These are all running costs of the business that do not fall into variable costs. These are costs that you need to pay no matter how much goods or services you produce.

Answer 43

• Variable costs are costs that DO vary with the level of trade • These are the direct costs associated with the production of the goods/services which will be sold • This will include the cost of the materials used to produce the goods/services, along with the direct labour cost

Answer 44

• Total costs is calculated when all your fixed and variable costs are added together

Answer 45

• Money into your business through sales is called sales revenue • This will be cash paid by customers for your goods

Answer 46

• Sales revenue is calculated when you multiply the price of the goods by the quantity you have sold

Answer 47

Gross profit Net profit

Answer 48

Gross profit (GP) is sales revenue (SR) minus variable costs (VC)

Answer 49

Net profit (NP) is sales revenue (SR) minus fixed (FC) AND variable costs (VC)

Answer 50

Np = SR = (FC + VC)

Business In The Real World Flashcards

(74 cards)