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Introduction To Business Flashcards

Introduction to business (88 cards)

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1
Q

what are the characteristics of an entrepreneur?

A

-risk taker
-innovative
-initiative
-confident

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2
Q

what is enterprise

A

another word for business

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3
Q

positive effects of entrepreneurial activity

A

-more employment opportunities
-less unemployment
-lower prices
-increased rates of economic growth

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4
Q

negative effect of entrepreneurial activity

A

-leads to redundancies
-higher prices

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5
Q

How would an entrepreneur assess risk?

A

-can they afford to fail financially
-viability of business plan (optimistic or realistic)
-appreciate sacrifices (time consuming, strained relationships and declined mental wellbeing)

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6
Q

the 4 factors of production

A

-land
-labour
-enterprise
-capital

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7
Q

land =

A

natural resources (wood,coal,oil)
do NOT call these raw materials

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8
Q

labour =

A

employees need to be educated and skilled

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9
Q

capital =

A

Money AND assets. E.g machinery.
Leads to efficiency and productivity

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10
Q

4 factors of the decision making process

A

risks
rewards
uncertainty
opportunity cost

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11
Q

economic uncertainty

A

competition
changing production process
interest

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12
Q

opportunity cost

A

the cost of the next best alternative forgone. (missing out on a good opportunity)

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13
Q

added value

A

equivalent to the increase in value that a business creates by undertaking the production process

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14
Q

adding value

A

The difference between the price of the finished product and the cost of the inputs involved in making it.
cost of final product - cost of input

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15
Q

What is a stakeholder?

A

any individual or organisations who have an interest in the activities and decision making of a business

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16
Q

what are shareholders’ best interests for the business

A

growth
profit
dividends

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17
Q

what are the employees’ best interests for the business?

A

salary
safe working conditions
bonuses
promotion opportunity
job security

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18
Q

what are the customers’ best interests for the business?

A

good quality goods and services
value for money

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19
Q

what is the private sector?

A

-privately owned e.g LTD or PLC
-they’re generally run to make a profit
-act ethically
-good customer service

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20
Q

what is the public sector?

A

-owned by the community
-profit put back into the company

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21
Q

what is the social goals sector (third sector)?

A

-voulantary / charitable work
- e.g oxfam

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22
Q

unicorporated means

A

unlimited liability

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23
Q

incorporated means

A

limited liability

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24
Q

what types of business are unincorporated in the private sector?

A

-sole trader
-partnership

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25
what types of business are incorporated in the private sector?
- Private limited company - Public limited company
26
Primary sector
Activities undertaken by directly using natural resources. 1% of UK economy
27
Secondary sector
Converting natural resources into finished goods - 19% of UK economy
28
Tertiary sector
Provision (providing) of services - 80% of UK economy
29
Stakeholder
Any individual or organisations who have a vested interest in the activities and decision making of a business
30
What do Shareholders/owners want from a business
Growth or business, profit, bigger dividends
31
What do managers and employees want from a business
Salary, safe working conditions, bonuses, promotion opportunity, job security
32
What do customers want from a business
Good quality goods and services. Value for money
33
Who supports cut jobs or close units?
Owners, shareholders
34
Who opposes cut jobs or close units?
Employees, community, government
35
Who supports adding extra shifts to increase capacity?
Customers, government, suppliers
36
Who opposes adding extra shifts to increase capacity?
Owners, employees
37
Who supports introducing greater automation?
Customers, owners
38
Who opposes introducing greater automation
Employees and government
39
Who supports increasing selling prices
Owners government
40
Who opposes increasing selling prices
Customers
41
Advantages of sole trader
Can keep all profits Don’t have to share sales info Easier decision making Greater control No deed of partnership Minimal paperwork
42
Disadvantages of sole trader
Limited ideas Unlimited liability Strained relationships Can’t sell shares Harder to raise finance Non continuity
43
Advantages of partnerships
More ideas/ skills Continuity Easier to raise finance Minimal paperwork
44
Disadvantages of partnerships
Deed of partnerships Long decision making time Unlimited liability Shared profits
45
Economies of scale
Cost/unit becomes lower
46
Advantages of limited liability
Easier to raise finance Stable form of structure
47
Disadvantages of limited liability
Greater admin costs Public disclosure of company information Directors legal duties
48
what is a franchiser
business with a well known brand name
49
what is a franchise
a business
50
what is a franchisee
(group of) individuals buying the right of using the brand name
51
advantages for the franchiser
- the firm may not have to spend large amounts money to expand - products necessary for franchise to operate are under the franchisers control
52
disadvantages for the franchiser
- control issues - the cost of supporting the franchisees - possible conflict
53
advantages to the franchisee
- lower risk - support advice and training - marketing - may be easier to obtain finance
54
disadvantages to the franchisee
- profit is shared - franchise fees - supplies have to be bought from the franchiser - less control and independence - business cannot be sold without permission - maybe for a fixed period
55
what are co-operatives
a business that is owned and run by its members. Profits are shared between members rather than being distributed to shareholders.
56
advantages of a cooperative
- legally straightforward to establish - usually limited liability for members - a higher quality of service is usually provided - customers are loyal and supportive
57
Types of integration
Horizontal Forward vertical Backwards vertical Diversification
58
Horizontal
Buying from the same market
59
Forward vertical
Buying something further on in the supply chain (BMW+ dealership)
60
Backward vertical
Buying the supplier (BMW+tyre factory)
61
Diversification
BMW + aldi
62
Supply chain
Raw materials Manufacturing Distribution Retail ^ down the supply chain v up the supply chain
63
Joint venture
Involves two or more businesses looking their resources and expertise to achieve a particular goal. The risks and rewards of the enterprise are also shared
64
Reasons behind forming a joint venture
Business expansion Development of new products Moving into new markets
65
Benefits of a joint venture
Reduces risk Sharing expertise
66
Synergy
Two parts coming together but being worth more than two parts
67
Drawbacks of a joint venture
Disagreements (management styles) Synergy is not guaranteed Legal disputes
68
Management styles
Autocratic - controlling Democratic- workforce has freedom
69
Strategic alliance
An arrangement between two companies that have decided to share resources to undertake a specific, mutually beneficial project. A strategic alliance is less involved and less permanent than a joint venture e.g toys in happy meals
70
What are the differences between a joint venture vs a strategic alliance
In a strategic alliance, the companies remain separate entities. In a joint venture, a new entity is formed
71
72
Drawbacks of joint venture
Disagreements Different management styles (autocratic - controlling, democratic - workforce has freedom) Synergy is not guaranteed Legal disputes
73
Strategic alliance
An arrangement between two companies that have decided to share resources to undertake a specific, mutually beneficial project. A strategic alliance 8s less involved and less permanent than a joint venture e.g the toys in happy meals
74
What are the differences between strategic alliance and joint venture
In a strategic alliance, the companies remain separate entities. In a joint venture, a new entity is formed.
75
Synergy
The interaction or cooperation of two or more businesses to produce a combined effect greater than the sum of their separate parts
76
Economies of scale
As the business grows, the average cost/unit falls
77
Diseconomies of scale
When unit costs rise as output rises
78
Purchasing EOS
Buying in bulk, procurement
79
Financial EOS
Lower interest on loans
80
Managerial EOS
Higher skilled management
81
Technical EOS
Better technology = more productivity
82
Marketing EOS
More sales = marketing paid off faster
83
Risk bearing EOS
Can afford more risk as there’s a higher variation of products/ services
84
Concentration EOS
Nearer to competitors, big market, experienced workers and suppliers
85
Diseconomies of scales:
Poor communication between chain of command. Messages distorted Less productive
86
Information EOS
Big organisations can share information
87
Solutions to diseconomies of scale
Delegation of decision making Making jobs more interesting Splitting employees into teams
88

Business A-level (3 decks)

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