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Gcse Business > Making The Business Effective : Test 4 > Flashcards

Making The Business Effective : Test 4 Flashcards

1
Q

What is a sole trader ?

A

Businesses that have only one owner for example hairdressers, plumbers etc

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2
Q

What are advantages of sole traders ?

A
  • They are easy to set up
  • You get to be your own boss
  • You get all the profit and decide what gets done
  • Low set up costs
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3
Q

What are disadvantages of sole traders ?

A
  • You have unlimited liability because you aren’t legally separate from the business and therefore personal finances are at risk
  • It can be hard to raise money as banks see sole traders as risky so it may be hard to get a loan
  • You are unincorporated because the business doesn’t have its own legal identity so if the business is sued so are you
  • high level of responsibility and long hours
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4
Q

What is a partnership ?

A

Partnerships are generally between 2-20 partners. Each partner has an equal say in making decisions and an equal share of profits unless the deed of partnership ( an agreement ) says otherwise

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5
Q

What are advantages of a partnership ?

A
  • More owners means more ideas and skills
  • It means the workload is shared
  • More owners means more capital (money) can be put in the business to help it grow faster
  • quick to set up
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6
Q

What are disadvantages of partnerships ?

A
  • Each partner is legally responsible for what the other partners do
  • Most partnerships have unlimited liability
  • More owners means more disagreements
  • The profits are shared between the partners so if a sole trader decides to go into partnership with another person they could end up with less money
  • Long hours
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7
Q

What are the two types of limited companies

A

Private limited companies (Ltd) and Public limited companies (Plc)

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8
Q

Describe what private limited companies are ?

A

It can be a small or large business with unlimited liability. The owners are known as shareholders and have to be invited to get a share.

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9
Q

What are advantages of private limited companies ?

A
  • Limited liability meaning you only lose money invested not personal assets
  • It is easier for a private limited company to get a loan or a mortgage than it is easier for a sole trader or partnership
  • Shares in the business can be sold for money
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10
Q

What are disadvantages of private limited companies ?

A
  • They’re more expensive to set up than partnerships because of all the legal paperwork
  • Unlike sole traders or partnerships they are not legally obliged to publish its accounts every year
  • can be time consuming to set up
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11
Q

What is a franchise ?

A

A business that gives the right to another person or business to sell goods or services using its name. It does this by providing the person with a license. You have to pay a fee to be part of it but it comes with benefits including marketing, training, equipment, products ect

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12
Q

What is a franchisor ?

A

A business that gives franchisees the right to manufacture, distribute or sell its branded products in return for a fixed sum of money or a royalty payment.

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13
Q

What are franchisees ?

A

A business that agrees to manufacture, distribute or sell branded products under the license of a franchisor

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14
Q

What are advantages of franchises ?

A
  • the franchisee gets access to free training and marketing
  • the franchisee is part of an established business
  • it can be easier to make money
  • it is lower risk for a new entrepreneur than setting up a new business
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15
Q

What are disadvantages of franchising ?

A

-the franchisee has to pay a percentage of its profits to the franchisor. This is known as royalties
- it can be expensive to set up
- the franchisee cannot make individual business decisions without consulting the franchisor
- other franchises can be set up locally, which can cause competition for customers

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16
Q

What are the 4 P’s in the marketing mix

A

Product, Price, Promotion and Place

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17
Q

What is limited liability?

A

The business owners are only financially responsable for the business debts.

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18
Q

What is unlimited liability?

A

A business owner fully is responsable for all business debts and assets can be taken of the owner if in debt.

19
Q

What is a franchise?

A

The right given by one business to another to sell goods using its name

20
Q

What is a gap in the market?

A

A gap in the market is an opportunity for a business where customer needs and wants are not being met.

21
Q

What is a competitive environment?

A

A competitive environment is a market where there are other businesses producing the same or similar products and services.

22
Q

Define limited liability

A

Limited liability means that the business owner or owners are only responsible for business debts up to the value of their financial investment in the business

23
Q

Define unlimited liability

A

Unlimited liability means that the business owner or owners are personally responsible for all of the debts of the business, no matter what the value.

24
Q

Why is a business being close to target market important

A

It helps them not miss out and sales and be accessible to their target market

25
Q

Why is proximity to labour important

A

Businesses need to make sure they are located in an area that has people with skills relevant to the job role. In general, for roles with a low requirement for skills, a business would just need to be located near any populated area to ensure it can hire employees. For roles that require a high level of skill, such as a design engineer, computer scientist or solicitor, businesses may need to be located close to big cities, university towns or other areas that attract more highly-skilled people.

26
Q

Why is proximity to materials important

A

It can help save money as the raw materials will not have to be transported as far.

27
Q

What is a bulk gaining product

A

Where the product is larger than the raw materials used to produce it e.g bikes

28
Q

What are bulk reducing products ?

A

Where the product is smaller than the raw materials used to produce it

29
Q

What are the differences in proximity to competitors

A

Some business like to be located far away from competitors as they have more access to customers instead of having to fight of competition( petrol stations, corner shops).However some business like it for example car dealerships as customers are more likely to shop around.

30
Q

Do retail companies want to be located near or far from competitors?

A

Near

31
Q

Define e-commerce

A

E-commerce is any transaction that takes place through the internet

32
Q

Define M-commerce

A

M-commerce is any transaction that takes place using mobile technologies, for example a mobile phone app.

33
Q

What are benefits of e-commerce and m-commerce?

A
  • Lower costs
  • Flexible working hours
  • Access to larger market
    -Ability to be open 24 hours a day
  • Relatively low price and promotion
34
Q

Define product in the marketing mix

A

The product element refers to the products or services the business sells.

35
Q

Define price in the marketing mix

A

Price is the amount a business charges its customers for its product or service.

36
Q

What are some factors that influence price?

A

-competition – a business may need to reduce its prices to compete with other businesses.
-customer opinions – about the product and its worth.
-brand image – some products can have a higher price because customers perceive the business’ brand as desirable.
-availability – if a product is in short supply, this can drive up the price as customers are more likely to pay more for something in limited supply (eg a concert ticket).

37
Q

Define place in the marketing mix

A

Place refers to where the customer is able to purchase the product or service e.g. retail store, online website, directly from manufacturer

38
Q

What are the channels of distribution

A

The channels of distribution are the different ways in which a product gets from the producer to the end consumer

39
Q

What is promotion in the marketing mix

A

Promotion is the methods a business uses to create interest in its products and services among its customers and potential customers.

40
Q

What is a business plan?

A

A business plan is a document created by a business or entrepreneur that provides details about each element of the business.

41
Q

What is a business plan made up of

A

Business idea, smart objectives,market research, revenue, costs and profits, cash flow, sources of finance, location and marketing mix

42
Q

What does the SMART objective mean

A

Specific
Measurable
Agreed
Realistic
Time bound

43
Q

What is an advantage of a business plan

A

A business plan allows an entrepreneur to minimise the level of risk when setting up a business

44
Q

What are aims and objectives

A

An aim is the main goal and objectives are the steps to achieve it

Gcse Business (3 decks)

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