Business in the real world Flashcards
(25 cards)
What is a good?
A product or item that is tangible.
What is a service?
Something that is intangible.
What are the four factors of production?
1) labor- work
2) land- raw materials
3) capital- where it is sold
4) entrepreneurship- the idea of running the business as a good or service.
Why and when do you use/need the four factors of production?
Inputs that are needed to start a business.
How do the factors work?
Input to transition to output to goods and service.
What is the definition of a entrepreneur?
Someone who is willing to take a risk in a business.
What are the dynamic business environment for a Legal business?
Government laws.
What are the dynamic business environment for a technological business?
Tech developments.
What are the dynamic business environment for an economic business?
Economy- affecting a business, could be:
- tax
- GDP
- interest rates
- exchange rate
What are the dynamic business environment for an environmental business?
environmental changes.
What are sole traders?
They are business’ run by only one person. They are self employed and have unlimited liability
What is unlimited liability?
Unlimited liability is completely responsible for business debts - risking personal assets.
What is a partnership?
Business’ owned by 2-20 people. They have to contain a deed of partnership which highlight all financial aspects and have unlimited liability.
It is useful to Have a partnership as you can share different skills and expertise.
What are ltd’s?
Companies that sell shares to friends and family. They have limited liability and require £2 share capital to set up
What are plc’s?
Company where shares are sold on the stock market to anyone. They have limited liability. They need a £50k min share capital.
They have to publish the accounts. And if they are not performing well anyone can see it which could make them sell the shares
What is limited liability?
Owner (shareholders) only responsible for the amount that they had invested in.
What are not for profit organisations?
Business’ that raise money for ‘good causes’
What are franchisors?
Business that sells rights to another business to use the name, product or process
What are franchisees?
A business tat has legal rights to use the business they are franchising from.
What are some benefits for franchising?
Ors: growth is paid for by the franchisee
Ees: safe strategy for them 6-7% fail rate
Ors: Quick growth for the franchisor
Ees: most of the profits are collected and kept by the franchisee.
What are some drawbacks of franchising?
Ees: the franchisor can end the franchise without reason
Ors: a franchisee could not kept to their legal agreement which could damage the business
Ors: if one franchise attracts poor publicity, the franchisor takes a hit.
What are the four functional areas?
- Marketing
- Finance
- Human Resources
- Production ( operations)
What is expansion?
Increase in size or status.
Why would a business want to grow?
- Gain customers
- increase your market share
- brand recognition / increase in reputation
- the bigger you are the lower the bulk costs. Economies of scale…
