paper 1 flashcards-1st topic-Business activity

Question 1

what is an enterprise

Answer 1

Seeing an opportunity to provide a product or service that people are willing to buy.

Question 2

what is an entrepreneur

Answer 2

r: Someone who takes the risk of starting and running a business.

Question 3

3 purposes of an enterprise

Answer 3

1.spotting a business opportunity
2.developing a business idea
3.satisfying customers needs

Question 4

characteristics of an Entrepreneur

Answer 4

1.risk taker
2.creative
3.determined
4.confident

Question 5

what is a risk

Answer 5

these are the possible losses an entrepreneur may face from opening a business

Question 6

what are the rewards

Answer 6

this is the benefit of having a business

Question 7

what is a business plan

Answer 7

A plan that set out details on the product or service being sold it includes finance and marketing as well as the market research

Question 8

what are some of the business aims

Answer 8

1.Increase Profitability
2.Survival
3.Business Growth
4.Increase Market Share

Question 9

what is the business objectives

Answer 9

specific,measurable steps that need to be taken to achieve detailing the exact outcomes and action required

Question 10

what is a market

Answer 10

The group of people who you want to sell to or where businesses sell their products/services

Question 11

what is a target market

Answer 11

A group of customers which the business has decided to sell to

Question 12

resources

Answer 12

Things businesses need to make it work including finance (money), staff and materials

Question 13

what is the purpose of planning and why do we do these

Answer 13

reducing risk-(much as possible and to identify early on any problem areas that the business might face) and helping a business succeed-(Allows for reflection on idea, to give owners some direction once plan is written down its more likely to be followed,attracts investors and funding)

Question 14

how does a business plan help an owner identify a market

Answer 14

1.helps them plan possible markets to sell to or places to sell (k)
2.sets out plans to research if customers in that market would purchase the product (k)
3.will give the owner an indication of whether it will be successful or not (k)

Question 15

what are the limitations of a business plan(EV-EVALUATION)

Answer 15

benefits: -limit risk by
1.offering strategic guidance
2.risk identification
3.resource management
-increased change of success by
1.clear vision
2.investor confidence
3.progress tracking
DRAWBACK/LIMITATIONS
1.time consuming
2.inaccuracy
3.rigdity

Question 16

what is liability

Answer 16

what a business owns and who is responsible for paying for it

Question 17

what is UNlimited liability

Answer 17

responsibility for the debts of a business rests with the owner of the business

Question 18

what is limited liability

Answer 18

the responsibility or the debts of a business is limited to the amount invested by a shareholder.

Question 19

what is a sole trader

Answer 19

A sole trader is a business that is owned by one person. It may have one or more employees.

Question 20

what is a start up business

Answer 20

A startup is a business that has just started up and is including itself in the market

Question 21

what is an established business

Answer 21

Mature businesses with proven market presence, stable revenue streams, and established organisational structures.

Question 22

what is a stakeholder

Answer 22

A stakeholder is anyone that is interested or affected by a business’ decision

Question 23

how does a stakeholder influence business activity

Answer 23

1. Employees
   can influence the success of an organisation by their productivity and efficiency in the tasks they do everyday. They can also resort to industrial action (strike) if they disagree with working conditions, pay or company policies
   2.Suppliers
   can decide whether to raise prices for orders which can obviously affect a firm’s profits. Also a supplier’s reliability could affect production.
   3.Government
   can influence a firm by introducing new laws that can affect operations such as the National Minimum Wage, or they can raise Corporation Tax which would eat into a firm’s profits
   4.Customers
   can influence a business by deciding to continue to purchase goods and services from the organisation. They can choose to take their custom elsewhere.
   5.Local community
   can influence a business by protesting against the building of premises

Question 24

what are methods of growth

Answer 24

Internal (organic) Growth: New products (innovation, research and development), new markets (through changing the marketing mix or taking advantage of technology and/or expanding overseas)
External (inorganic) Growth: merging with or taking over another business. There are 3 types.
Vertical Growth
Horizontal Growth
Diversify

Question 25

what is external growth

Answer 25

external growth occurs when two or more companies merge or acquire each other.

Question 26

what are problems for rapid growth

Answer 26

Morale may drop if staff cannot cope with the extra work. Productivity can decrease. There may be a shortage of cash to meet expansion costs. Management may be under pressure, operating reactively rather than proactively. Difficulty to supervise standards - The quality of your products and services could drop, causing an increase in customer complaints. You may even lose customers to your competitors.

Question 27

what are the problems of mergers/takeover

Answer 27

Clash of cultures Possible move away from core competencies of the original business may cause issues of control when it gets too big. Unreliable merger partners 75% of all mergers fail (worse than divorce rates)