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Introduction to Business > Enterprise & Business Functions > Flashcards

Flashcards in Enterprise & Business Functions Deck (30):

Enterprise defintion

Another word for “business”


Actions of a risk taker who starts up their own business = entrepreneur


Entrepreneur definition

Someone who’s wanted to run/own their own business and is prepared to take risks


Entrepreneur characteristics and abilities

Self confidence in what they’re doing and themselves

Energy and enthusiasm for the business (even the boring parts)

Being comfortable & able to face risk (financially, family)

Motivation and communication

Being able to work under pressure





Why governments like and encourage entrepreneurs

Shareholders are pleased as business reaches objectives & is profitable

More employed as employees means secure jobs, consistent suppliers and orders, business growth = MORE TAXES PAID

Exports taking place improving the UK’s trade balance

Government receiving TAX REVENUE from all the different types of tax


What are the factors of production



Resources (INPUTS) into products people wanna buy (OUTPUTS)


What’s the C in CELL for

Buildings, tools and machinery (NOT MONEY)


What’s the 2 L’s in CELL for

Land - natural resources, fields, minerals, what can be grown/done on top of the land

Labour - all of the Human Resources available I.e workers


What’s the E in CELL for


The one who owns, manages, operates and organises the CLL to make the profit


What’s adding value

Selling a product at a price that’s higher than what it costs to produce it


Business functions

-large business = ran by lots of specialists
-new entrepreneurs = juggle a lot or all of it

- Finance & accounting
- HR
- Operations
- Production
- Marketing


What’s the chain of production

The stages that a product passes through until it reaches the end (consumer)


Chain of production importance?

That value is added at each step of the chain and becomes of more worth


Primary sector as business output

Extracting the raw materials

Farming, fishing, forestry, mining, oil/gas extraction


Secondary sector as business output

Manufacturing and construction
Raw materials ➡️ semi finished and finished products

Building houses, roads, factories

Producing a car engine to contribute to the final assembly of the card


Tertiary sector as business output

Businesses concerned with services

Retailing, banking, transport


Which business sector is the largest and why?

Tertiary sector

Highest GDP output of 80%

Our advanced de-industrialised economy


Why have manufacturing lost its value within the UK?

Because of imports and exports, manufacturing and production can take place almost anywhere

UK produces and exports machine tools, engineering, electrical parts, pharmaceuticals and aircraft

Manufacturing needs to be strong if you want strong exports = secondary benefits

More raw materials will be needed to make the components up in manufacturing = primary benefits


The private sector is?

Businesses that are owned and run by private individuals usually for a profit


The public sector is?

Businesses owned and run by central and local government

BBC and the NHS


Deindustrialisation definition

The decline in the secondary sector of the economy


What’s the third sector?

Not the public or private sector

Includes charities, community groups, faith groups, social enterprises and cooperatives

They’re motivated by the ambition to achieves social goals rather than to maximise profit

(Improve housing, reduce poverty, help the environment)


Does the third sector receive a profit?

Profit can be made BUT

any that is made is reinvested into the business in order to improve the service that they provide


What legal forms can third sector businesses take?

Some can be associations of people with shared objectives / values

Some operate as a company but with not for personal profit aimed reasons (charities, cooperatives)


What’s a sole trader?

The simplest form of business organisation

Owns the business

Makes all the decisions affecting the business

Can employ lots of people and not be the only person who works there

Will have overall control

The business and the owner are together and NOT separate = UN-INCORPORATED


Sole trader advantages

Easy start up with few legal requirements

Can be started with little capital

Keeps all the profit after tax

Can make their own decisions without consulting with others

No shares in the business from others - no takeovers!

Can be kept private (bar providing income tax information) & no accounts need to be published


Sole trader disadvantages

Fully responsible for their own debts
= therefore responsible or forced to sell assets and possessions to cover the costs of the debt

Unlimited liability ^^^

Must preform all aspects of the business
= (marketing, finance etc.)
= cannot cover all these things perfectly
= some aspects will suffer more than others

Difficult to raise capital to expand (small businesses seen as risky) so lack of opportunities to grow

First years of business particularly stressful and hard to control
=long working hours to build up a business rep

No continuity (sole trader dies means business is not passed on)


What’s a partnership?

Two or more people running a business together

Not a legal entity in its own right (like a sole trader)

2-20 max partners

DEED OF PARTNERSHIP - legal document


What’s the DEED OF PARTNERSHIP have in and clarify?

The duties and responsibilities for each partner

Finance arrangements (joint or separate accounts?)

How much income each partner can take from the business

How much money each partner is expected to contribute to the business

How decisions are going to be made within the business

Arrangements for taking on new partners

Absence, sickness and holiday arrangements


Partnership advantages

Easy to establish

Partners are able to specialise in what they do best

Shared work

Different people of different skill sets can be employed

Income tax being paid so business can be kept private (like a sole trader)


Partnership disadvantages

Liable for any debts = unlimited liability
Contribute money to the business but don’t run it = limited liability
= ‘sleeping partners’

A partnership must have at least one partner with unlimited liability

Disagreements in decision making and a slower process

Difficult to expand despite the maximum number of partners of 20 being involved = can still lack capital

Shared profits and losses