Section 1 Business In The Real World Flashcards
State and explain the 4 factors of production
Land-Space your business needs.
Labour-The work done by people to contribute to the production
Capital-The equipment,factories that help produce the goods or services
Enterprise-Refers to people who take risks and create things from the other 3 factors of production
State 3 Sole trader advantages
Can make all the major decisions
Get to be your own boss
You get to decide what happens to the profit.
State 3 sole trader disadvantages
Might have to work long hours
You have unlimited liability (have to pay back everything if in debt)
Can be hard to raise money.
State 3 advantages to a partnership
More owners mean more ideas.
Means more money can be put into the business
People can share work
State 3 disadvantages to a partnership
They have unlimited liability
More owners could mean more disagreements
Profits are shared between the partners.
What is a sole trader
Business that only has one owner (most of these are small businesses).
What is a not-for-profit organisation
Businesses who don’t try to make profit and if they do it get’s put back into the business.They need to generate enough money to cover costs, many have charity status and rely on donations.
State and explain 3 business aims
Survival-Short term aim as 60% of businesses fail in the first 5 years.
Maximise profit-Get as much profit as possible however it would take a lot of time to make any profit.
Growth-Some firms would like to grow domestically or even internationally
State 4 possible stakeholders in a business
-Customers
-government
-Employees
-Owners
How do you calculate total costs
Variable costs + fixed costs.
How do you calculate average unit cost
Total cost divided by output
How do you calculate revenue
Sales x price
Two qualities an entrepreneur should have
Hardworking-as they need to run the business thamselves
Innovative-To come up with ideas and solutions for the business.
Give two examples of a fixed cost
Rent
Insurance
What is the location of your business influenced by 3 factors.
Competition-Are there similar businesses nearby jf so it’s easier to find employees in that work
Location of market-Locate near to customers for easy access
Cost-Many large firms have factories in india and china to keep wages low.
What is internal expansion
When a business grows by expanding it’s own activities
What are 3 advantages to E-commerce
Firms sell products on the internet
Businesses can access larger market
It’s cheaper to set up.
What are 2 disadvantages to E-commerce
Has to be regularly updated
Any technical problems cause customers to be unhappy
Two reasons why someone would be an entepreneur
-Wants to pursue an interest in creating products or providing a service.
-Some people would want the independence of being their own boss.
What is external expansion
Expanding by working with other businesses
What is a merger
When two or more firms join together to form a larger firm
What is a takeover
An existing firm buys more than half the shares in another firm.
What is outsourcing
When a business pays another firm to carry out it’s tasks.
Advantages of a business plan
-Reduces risk as it provides guide for business
-Helps secure finance e.g a bank loan
-Doing market research can reduce risk of failure
