Everything Flashcards
(109 cards)
1
Q
What are the two ways you can run a business?
A
Sole trader and partnership
2
Q
What are three stakeholders of a business?
A
Shareholder, customers, the market
3
Q
What is a stakeholder? Name some examples
A
A person with an interest or concern in the business. Examples are Employees, Consumers, Investors, Suppliers, Owner
4
Q
What is the economic problem?
A
How to satisfy unlimited wants and needs with limited resources. All consumers have unlimited wants but only limited means on which to satisfy them resulting in consumers making choices.
5
Q
What is unlimited liability?
A
If the business fails, the owner is liable for all the debts and personal assets may have to be sold.
6
Q
What is scarcity?
A
Insufficient resources to satisfy our wants
7
Q
What is an opportunity cost?
A
The option that is given up when a choice is made
8
Q
What is a good?
A
A tangible item (things we can see and touch)
9
Q
What is a service?
A
An intangible act of help
10
Q
What are resources?
A
Things that can be used to produce or obtain goods and services to satisfy needs and wants.
11
Q
What are four limited means used by consumers to satisfy their wants
A
- Time
- Money
- Family
- Skills
12
Q
Name three characteristics of an entrepreneur
A
Innovative, Risk-taker, Hard worker, Determination, Enthusiastic, Leadership skills, Creativity, Networking skills
13
Q
What is the private sector?
A
Private sector is organizations and business owned/run by individuals.
14
Q
What is the public sector?
A
Public sector is organizations owned/run by the government (ex state schools, libraries, fire dept, IRD). These organisations operate to provide a service to the people of NZ not to make profit.
15
Q
What is a state owned enterprise(SOE)?
A
Public organisations that operate to provide a profit to the government. Ex NZ Post Limited, KiwiRail Holdings Limited, TransPower NZ Limited
16
Q
Where does the Govt get its money from?
A
Taxes (Income tax, GST, Company tax), Fines (police tickets, speeding tickets, court costs), Providing goods and services (from SOEs), Admission prices (eg to the pools, zoo, art gallery), Excise duty (extra ‘tax’ on cigarettes, alcohol, petrol)
17
Q
Where does the Govt spend its money?
A
Social welfare, Education, Health, The justice system, Roading and Infastructure, Research and development
18
Q
What is a sole trader?
A
An enterprise run by one person. Anyone can open up a business and start trading
19
Q
Advantages of being a sole trader
A
- Own boss
- Keep all the profits
- Decides when to work
- Makes all the decisions
- Easy to set up
20
Q
Disadvantages of being a sole trader
A
- No one to discuss decisions
- Hard to obtain finance
- Hard to have time off
- Unlimited liability
21
Q
What is a partnership?
A
Two or more people going into business together (2-20 people) where all involved provide finance.
22
Q
Advantages of partnership
A
- Share the set-up costs
- Share expertise
- Risks and responsibilities are shared
- Easy to set up
23
Q
Disadvantages of partnership
A
- The partners don’t have limited liability
- If one of the partners die then their stake has to be sold or dissolved
- Disagreements
- Other partner could suffer losses if one partner is dishonest
24
Q
What are limited companies?
A
Companies jointly owned by the people who’ve invested in the business
25
What is the difference between a public (limited) company (PLC) and a private (limited) company (Ltd)?
- Same as public and private company
A public limited company sells shares on the stock exchange and anyone can buy them (people who buy are called shareholders) while private limited companies can't share stocks on the stock market and don't publicly trade shares while also being limited to 50 shareholders. Private limited companies also can be any ownership that changed their business structure.
26
Advantages of limited companies
- The company exists separately from the owners and will continue to exist if one of the owners die
- A public listed company can raise money by selling shares
- All shareholders have limited liability (only responsible to pay debts of the company to the extent of value of their shares)
27
Disadvantages of limited companies
- It takes time, money and legal matters to set up a company
- The shares in a private limited company can't be sold or transferred without agreement from the other shareholders
- A public limited company can run the risk of takeover if competitors buy too many shares
- The financial reports must be filed in the company's office and are available for viewing
28
What is a co-operative?
Groups of people who agree to work together and pool their resources. All members have one vote and help in running the business. The workloads, decisions and profit is shared.
29
What is franchising?
A business based on the use of brand names, logos and plans of an exisiting successful business
30
What are the five Māori business concepts?
Pūtake (Reason for being), Tūranga (The position/anchor of the business), Tikanga (Values, rules, priorities, ethics and ways of doing business), Kaitiakitanga (Guardianship of resources), Rangatiratanga (Authority, leadership and rights)
31
What is an entrepreneur?
A person who sees potential in a business idea, takes the risks and has the initiative to develop the business and attempt to make profit.
32
What does an entrepreneur do?
They take advantage of business opportunities and take the risk of a business. Their reward for the risk is large profits (if they're successful)
33
Why is entrepreneurship important?
It's important for economic growth, productivity, innovation and employment.
34
Reasons for becoming an entrepreneur
More control over working life, Passionate about an idea or business, Opportunity for greater financial success, Want to escape an uninteresting job.
35
Reasons entrepreneurs fail
- Business started for wrong reasons (solely for profit)
- Lack of planning
- Poor management
- Insufficient capital
- Poor location
- Over expansion
- Poor marketing
36
What are the three categories of resources?
- Natural resources
- Capital resources
- Human resources
37
What are natural resources and what categories is it divided into?
Raw materials that can be harvested or extracted. It can be separated into 2 categories. Renewable resources (They can be regenerated or regrown eg wheat) and Non-renewable resources (They take longer to be generated eg oil)
38
What is a capital resource?
Man-made goods which are then used to produce other good and services eg fishing boats, nets
39
What are human resources and what categories can they be divided into?
Workers, managers and owners involved in production of a good or service. It is separated into labor which is the paid staff and enterprise which is the owner and risk taker.
40
What are resources for producers?
Raw materials, labour, machinery, buildings etc
41
What is the term that describes the group of people you are promoting the product to?
Target market
42
What is a positive incentive?
A financial reward for people making a choice. Ex: earn money, get an allowance, win a prize
43
What is a negative incentive?
A penalty for people financially for making a choice. Ex: Paying a parking ticket, paying a late fee at the library
44
What is a choice?
A decision between two or more alternatives (usually based on our values)
45
What are means?
The things we use to try and satisfy our needs and wants. That is time, skills, money etc
46
What is economics?
The study of how people and groups use their limited means to try and satisfy their needs and wants
47
What is the opportunity cost of a businessman deciding to sell his business?
Loss oof relationships with staff or loss of job
48
What are values?
The measure of the benefit derived from a good or service to the customer. What the customer thinks is important.
49
What is an economic value?
The price a customer is willing and able to pay for a good or service. What the customer is willing to sacrifice/trade for the product or service.
50
What are skills?
Talents and abilities people may have
51
What is a want?
Something we desire but isn't essential for survival
52
What is a need?
What we must have to survive
53
What is a renewable resource?
A resource that is able to be used more than once it is sustainable
54
What is the primary sector?
The sector of the economy where they extract raw materials from the earth, i.e. agriculture.
55
What is the secondary sector?
The sector of the economy that turns raw materials into finished goods; ie manufacturing furniture from wood; clothes from cotton etc.
56
What is the tertiary sector?
This is the sector of the economy that provides services to the population. ie banks, cafes, universities etc.
57
What is production?
The process of making goods and services
58
What is a risk?
The possibility of something going wrong, ex what a business may not be successful, and the owner might lose their funds that were put into the business.
59
What does innovative mean?
Being able to invent or introduce new ideas, products, services or methods
60
What are set up costs?
Expenses involved in starting a business and getting it up and running.
61
What is a budget?
A plan of expected income and expenditure
62
What is marketing?
The process of getting a product or service into the hands of the consumer.
63
What is a business?
A commercial undertaking to provide a good or service, usually with a hope of profit.
64
What is a right?
Something you’re entitled to e.g., right to go to the toilet during class, right to education.
65
What is a responsibility?
A duty, something you’re expected to do e.g., required to follow the school rules as set out by the school.
66
When was the Consumer Guarantees Act passed?
1993
67
When was the Fair Trading Act passed?
1986
68
Which act protects the consumer after they purchase the product?
Consumer Guarantees Act
69
Which act protects the consumer before they purchase the product?
Fair Trading Act
70
What is the Consumer Guarantees Act?
This act of parliament gives consumers guarantees about the quality of goods and services after they were purchased
71
How does the Fair Trading Act protect consumers?
It protects consumers by promoting fair competition, ensuring consumers can get accurate information before buying products and services, and promoting product safety
72
Under the Consumer Guarantees Act what things are guaranteed?
- Of acceptable quality
- Fit for their particular purpose
- Match the description given (e.g. buying from a catalogue)
- Be like the sample
- Must be spare parts available
- At a reasonable price
- For services reasonable time frame for completion
73
What does the Consumer Guarantees Act not cover?
- Private sales
- Goods purchased at auction
- Goods purchased by tender
74
What are the three remedies for the Consumer Guarantees Act?
If somethings goes wrong the seller must do one of the three R’s Repair, Replace, Refund
75
What Latin term forms the basis of the CGA?
Caveat Emptor- let the buyer beware
76
What does the Fair Trading Act make illegal?
- Misleading and deceptive conduct
- False and misleading representations
- Unfair trading practices
- Unfair contract terms
77
What does the Fair Trading Act apply to?
All aspects of the the promotion and sales of goods and services
- Advertising
- Pricing
- Sales techniques
- Financing
78
What are remedies for the Fair Trading Act?
1. Go back to the trader
2. If you have proof take individual legal action and the Disputes Tribunal or District Court might rule in your favour by making the
- Trader pay you damages-if you suffer losses
- Contract void or altered
- Trader refund your money
- Trader repair products or supply services
3. Report a trader to the Commerce Commission which investigates fair trading issues but doesn't act on behalf of individuals
The commission will either
- Give advice for the trader to fix and comply with the law
- Issue warnings
- Take the trader to court
79
What is fine print and what shouldn't it do?
Small print at the bottom that holds the details, terms and conditions. It shouldn't contradict the main selling message
80
What is the simplified accounting equation?
OE=A-L
(OE is owners equity, A is assets, L is liabilities)
81
What is bad debt?
Expenses which are written off when customers fail to pay their accounts.
82
What is a balance sheet?
Statement that shows the value of the business at a point in time for the owner
83
What is the extended accounting equation?
Assets + Expenses + Drawings = Liabilities + Owner's equity + Income
84
What is an income statement?
A statement that is used to calculate the net profit(revenue-expenses) or loss of the business for the accounting period
85
What are distribution expenses?
These are wages that are related directly to sales; ie advertising, wages, sales staff and commission
86
What are administrative expenses?
Expenses that are incurred in the day to day running of a business and don't relate to sales; ie wages-office staff, insurance and telephone expenses
87
What are finance costs?
Interest only (not interest received that's income). ie interest on mortgage, interest on loan, interest on bank overdraft
88
What are assets?
Something that we own. Can be separated into two categories. Current assets (Cash or can be turned into cash quickly; ie petty cash, accounts receivable, inventory) and Non-current assets (Assets that are large value items, bought once and used to create income for the business; ie delivery van, computer)
89
What are liabilities?
Money (a debt) that is owed to other people. Separated into two categories. Current liabilities (Liabilities that will be paid back in the short term ie accounts payable, bank overdraft) and Non-current liabilities (Liabilites that the owner will pay back over many years ie bank loan, mortgage etc)
90
What is equity?
The residual interest of the owners.
91
What side are debits and credits on?
Debits are on the left
Credits are on the right
92
What is branding?
A way of making your product stand out from competition by using a particular colour, slogan, logo etc
92
What's another name for the balance sheet?
Statement of financial position
93
What are competing firms?
Other firms in the same industry selling similar goods or services
94
What is market research?
Collecting and analyzing information on the market
95
What is promotion?
Informing potential consumers about your product and persuading them to buy it
96
What are channels of distribution?
The way in which goods will be avaliable to consumers- how they are going to get them to consumers. ex directly, through wholesalers, through agents, through retailers
97
What is the marketing mix?
The term used to describe the marketing choices made by a firm regarding product, price, place and promotion
98
What is a marketing plan?
A part of a formal business plan which outlines how the firm will get the right good/service to the right people in the right way
99
What is segmentation?
The process of dividing your group into a distinct group of consumers. It can be based on three areas, demographic, psychographic, geographic
100
What is a demographic?
Statistics that split audience by objective information like age, gender etc
101
What is a psychographic?
Grouping people together based on personal values and characteristics
102
What is a geographic?
Grouping people based on where they live
103
What is cost plus pricing?
Calculating the total cost of producing a product and adding a markup percentage for desired profit. Ex school uniform shop
104
What is penetration pricing?
Setting a low price to enter a new market or gain market share. Ex Nintendo, PlayStation
105
What is price skimming?
Setting a high initial price and gradually lowering it over time. Ex iPhone
106
What is competitive pricing?
Analysing competitors prices and charging similar or lower prices. Ex mcdonalds
107
What is promotional pricing?
When a company temporarily reduces the price of a product/service to boost sales. Ex seasonal sales
108
What is psychological pricing?
Subconsciously encouraging customers to buy goods by making them believe they're getting deals. Ex charging for 9.99 instead of 10.
