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A-Level Business > Intro to business > Flashcards

Intro to business Flashcards

1
Q

What is a sole trader?

A

A business owned and operated by one person, although they can employ staff

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2
Q

Pros of being a sole trader?

A
  • The owner has complete control over the business
  • Big incentives to work hard (keep all the profits)
  • Few legal regulations when setting up the business
  • Owner chooses their own holidays and work hours
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3
Q

Cons of being a sole trader?

A
  • No one to discuss business matters with
  • Business has unlimited liability
  • Hard to raise finance
  • Business is likely to remain small
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4
Q

What is a partnership?

A

A group or association of between 2 and 20 people who agree to own and run a business together

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5
Q

Pros of a partnership?

A
  • The owners have complete control over the business
  • More capital is available to invest
  • Individual partners can offer specialisms
  • Continuity - partners can cover others absence
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6
Q

Cons of a partnership?

A
  • Disagreement between partners
  • Business has unlimited liability
  • Number of partners is limited to 20
  • A partner could be unreliable or dishonest
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7
Q

What is a Private limited company?

A

A company in which a number of shareholders (less than 50) contribute funds to the company in return for shares. Shares can’t be sold on the stock exchange.

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8
Q

Pros of a private limited company?

A
  • Business has limited liability
  • Easier to raise capital
  • Management is shared
  • More specialisation can occur
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9
Q

Cons of being a private limited company?

A
  • Expensive to set up
  • Shares can’t be sold to the public
  • Less privacy as members of the public can see them
  • Accounts must be lodged with registrar of companies
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10
Q

What is limited liability?

A

Owners are only responsible for the amount of money invested

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11
Q

What does LTD mean?

A

Private limited company

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12
Q

What is a public limited company?

A

A company in which an unlimited number of shareholders contribute funds to the company in return for shares. Shares can be sold on the stock exchange.

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13
Q

Pros of being a public limited company?

A
  • Business has limited liability
  • Much easier to raise finance as shares can be sold on the stock exchange
  • The business will still exist if one of the shareholders dies
  • High degree of specialisation
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14
Q

Cons of being a public limited company?

A
  • The company is vulnerable to takeovers
  • Shareholders receive some of the profit in dividends
  • Annual accounts have to be published in full
  • May have communication and management problems due to size
  • Legal issues when forming or running a PLC
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15
Q

What is enterprise?

A

The process by which new businesses are formed in order to offer products and services in a market

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16
Q

What is an entrepreneur?

A

A person who spots an opportunity and shows initiative and a willingness to take risks in order to benefit from the potential rewards

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17
Q

What are the 4 factors of production?

A
  • Land
  • Labour
  • Capital
  • Enterprise
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18
Q

What is the difference between added value and profit?

A
  • Added value is the additional worth that is built into a product or service
  • Profit is the remaining money after all the costs associated with creating that value are paid off
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19
Q

What is the primary sector?

A

Extraction of natural resources (e.g. oil, gas)

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20
Q

What is the secondary sector?

A

The sector where manufacturing takes place

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21
Q

What is the tertiary sector?

A

The sector where the goods/service are sold to the consumer

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22
Q

What is the private sector?

A

Run by individuals and firms rather than the government

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23
Q

What is the public sector?

A

Usually compromised of organisations that are owned and operated by the government and exist to provide services for its citizens

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24
Q

What is the third sector?

A

The range of organisations that are neither public sector nor private sector. Includes voluntary and community organisations

25
What is a local market?
A local market is the local community
26
What is a national market?
A market much broader across a whole country or several regions
27
What is an international/global market?
A marketplace where goods and services are exchanged across national borders
28
What is a national business?
Operates within one country
29
What is a multinational business?
Operates in a number of countries
30
What are business functions?
- Human resources - Customer service - Sales and marketing - Research and development - Administration and IT - Production/operations - Finance and accounts
31
What is human resources?
- Recruitment and retention - Dismissal - Redundancy - Motivation - Training staff - Health and safety / conditions at work
32
What is customer service?
- Monitoring distribution - After-sales service - Handling consumer enquiries - Offering advice to consumers - Dealing with customer complaints - Publicity and public relations
33
What is sales and marketing?
- Market research - Promotion strategies - Pricing strategies - Sales strategies - The sales team
34
What is research and development?
- New product development - Product improvements - Competitive advantage - Value added - Product testing - Cost savings
35
What is administration and IT?
- Managing property - Reception - Overview of quality control - Use of IT systems
36
What is production / operations?
- Acquiring resources - Monitoring costs - Production methods - Efficiency
37
What is finance and accounts?
- Cash flow - Preparing accounts - Raising finance
38
Why do some businesses stay small?
- Owners choice - Market size - local or niche - Access and availability of capital - Market domination
39
What is a franchise?
A marketing arrangement allowing another business to trade in the same style as an existing business
40
What is a franchisor?
The person or business who offers to franchise to other businesses its trading methods, products and business logos
41
What is a franchisee?
A person or business buying the franchise
42
How can you assess a franchise opportunity?
- Location of the franchise - Successes of other franchises - What the business is / how it operates - Competition in same market sector - How financially secure the franchisor is
43
Pros of a franchise for a franchisee?
- Training provided by franchisor - Equipment often provided by franchisor - Brand name - Finding customers
44
Cons of a franchise for a franchisee?
- Initial investment is very high - Need permission from the franchisor to sell or close down - Franchisor can end the agreement and shut you down whenever they want to - Royalty fee
45
Pros for a franchisor of a franchise?
- Initial fee from franchisee - Royalty payments received - Growth of a business - Access to talent
46
Cons for a franchisor of a franchise?
- Reputation is at risk - A lack of control - Slow growth
47
What is a cooperative business?
A member owned organisation that operates for the mutual benefit of its members. Ran and owned by its members, profits are shared
48
Pros of cooperatives?
- Easy to form - Limited liability - Low cost of operations - Income tax exemption - Internal financing
49
Cons of cooperatives?
- Lack of secrecy - Lack of interest - Corruption - Lack of mutual interest
50
What are the 7 cooperative principles?
- Voluntary and open membership - Democratic member control - Member economic participation - Autonomy and independence - Education, training and information - Cooperation among cooperatives - Concern for community
51
What are the 5 types of cooperatives?
- Consumer cooperatives - Worker cooperatives - Producer cooperatives - Purchasing or shared services cooperatives - Multi-stakeholder cooperatives
52
What is the minimum number of members in a cooperative?
- 10 - No maximum
53
What is a joint venture?
A joint venture is a separate business identity created by two or more parties, involving shared ownership, return and risks
54
Pros of a joint venture?
- Specialist skills from individual partners - Increased capital - Increased innovation and development
55
Cons of a joint venture?
- Profit is shared - Partners may have different goals - Shared control - Dependency on partners
56
What is a strategic alliance?
An arrangement between two businesses to undertake a mutually beneficial project while each retains its independence
57
Pros of a strategic alliance?
- Can be flexible - Businesses do not need to merge capital and can remain independent
58
Cons of a strategic alliance?
- May be differences in how the two businesses are run - Must be trust between the two businesses - In a long-term strategic alliance one party may become dependent on the other

A-Level Business (9 decks)

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