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Business A Level > Term 1 > Flashcards

Term 1 Flashcards

1
Q

What are entrepreneurs characteristics?

A
  1. Risk taker
  2. Self belief and confidence
  3. Persistence and drive
  4. Leadership skills
    Ability to work under pressure
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2
Q

In what ways do entrepreneurs access risk?

A
  1. Strained relationships
  2. Time consuming
  3. Financial loss
  4. Access competition
  5. Resources needed
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3
Q

What are the factors of production?

A
  1. Land (natural resources available for production) e.g. iron, coal, water, oil
  2. Labour (educated/skilled) e.g. not just about quantity but quality, human input into production
  3. Capital (machinery/new technology) e.g. financial resources, leads to efficiency + productivity
  4. Enterprise e.g. individually willing to take risk, reward for risk is profit
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4
Q

Definition of Opportunity cost?

A

The cost of the next best alternative forgone

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5
Q

Definition for adding value?

A

Difference between the price of the finished product/service and the cost of the inputs involved in making it

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6
Q

In what ways would a business add value to a product of service?

A

Branding
Quality
Material
Warranty
Face to face service

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7
Q

Definition of building a brand?

A

A reputation for quality, value etc that customers are prepared to pay for

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8
Q

What are the benefits of adding value?

A
  1. Higher price
  2. Point of difference from competition (protecting from competitors)
  3. USP (unique selling point)
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9
Q

Name the functions of a business?

A

Accounting and finance
Operations Management
Marketing
Human Resources Management
Customer service
Sales team

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10
Q

What are the constraints of a business?

A

Competition
Employee skills
Finance available
The economy
Legislation

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11
Q

3 sectors of the economy - define primary sector?

A

The activities undertaken by directly using natural resources e.g.mining, farming, fishing, forestry
(Only accounts for 1% of the economy)

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12
Q

3 sectors of the economy - define secondary sector?

A

Involves converting raw material into finished goods e.g. manufacturing/construction, assembly plants, goods can be finished/unfinished
(Accounts for approximately 19% of the economy)

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13
Q

3 sectors of the economy - define tertiary sector?

A

Provision of services e.g. financial services, leisure services, transport.
(Most important as accounts for 80% of economy)

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14
Q

What are shareholders/owners mainly interested in?

A

The percentage profit increasing, dividend payments, market growth

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15
Q

What are managers and employees mainly interested in?

A

Safe working conditions, opportunity for promotion, good pay

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16
Q

What are customers mainly interested in?

A

Value for money, product quality, good customer service

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17
Q

What is a stakeholder?

A

Any individual or organisations who have a vested interest in the activities and decision making of a business. (DO NOT CONFUSE WITH SHAREHOLDER)

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18
Q

Private Sector:

A

Privately owned (individuals/companies)
Generally run to make profit
Act ethically/good customer service
Profit returns to shareholders

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19
Q

Public Sector:

A

Owned and run on behalf of the public
Funded by government
Not generally run for profit
Public services

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20
Q

Examples of Third Sector Organisations

A

Voluntary and community group
Charities
Social enterprises
Cooperatives
Value driven (not necessarily motivated by profit but desire to achieve)
Social goals (public welfare)

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21
Q

Define Unincorporated

A

Unlimited liability, owner is the business, operate as sole traders, owner suffers business losses too

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22
Q

Define incorporated

A

Limited liability, legal difference between company and owners

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23
Q

Define sole trader

A

Someone who sets up and owns the business individually

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24
Q

Advantages of sole traders:

A

Overrule all decisions
Take all profits
Complete control
Easy/quick to set up

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25
Disadvantages of sole traders:
Unlimited liability Harder to raise finance Lack of ideas No continuity
26
Advantages of the Franchiser:
Firm may not have to spend large amounts of money in order to expand Products necessary for franchise to operate are under the franchisers control Applicants can be carefully selected for suitability
27
Disadvantages for the franchiser:
Control issues The cost of supporting the Franchisees Possibility of conflict/ bad reputation
28
Advantages to the Franchisee:
Lower risk (proven business product) Support advice and training Marketing (National) Maybe easier to obtain finance
29
Disadvantages to the Franchisee:
Profit is shared Franchise fees Suppliers have to be bought from the franchiser Less control and independence Business can’t be sold without permission Franchise maybe for a fixed period
30
What is a cooperative?
A business that is owned and run by its members (employees and customers), profits are shared between members rather than being distributed to shareholders.
31
Advantages of Cooperatives:
Legally straightforward to establish (legal documentation is straightforward) Liability for members is usually limited A higher quality of service is likely to be provided (as customers likely to be members) Customers usually loyal and supportive
32
Disadvantages of cooperatives:
Capital can be limited (limited to what members contribute) Weak management (those selected may not have grasp of business principle) Slower decision making (too much involvement of members) Employees may want more (instead of profit being reinvested to reach the coops aims)
33
Define market:
Any situation where buyers and sellers are in contact in order to establish price
34
Advantages of a physical market: (buyer)
Try clothes on before buying Brands can offer services Choose correct size Easier access to products
35
Disadvantages to a physical market: (buyer)
Takes more time Wider variety of products online
36
Advantages of a non-physical market: (buyer)
Quick and easy Wider variety Next day delivery Stocks
37
Disadvantages of a non-physical market: (buyer)
Size issues Can’t try product on Scams
38
Advantages for a physical market: (seller)
Offer customer service Face to face selling Display products
39
Disadvantages of a physical market: (seller)
Have to pay rent Pay workers Cleanliness Location Security
40
Advantages of non-physical market: (seller)
Don’t pay rent Easy to run Minimal physical cost e.g. workers One place -simple Access Organisation
41
Disadvantages of non-physical market: (seller)
Stock issues vs demand Returns could be high IT costs Visibility
42
Define competition:
Describe as rivalry amongst sellers to gain more market share
43
Define market share:
The percentage of total sales in an industry generated by a particular company
44
Define market price:
Price range that customers are prepared to buy within
45
What is a competitive market?
A market where a large number of firms producing a similar product or service are competing to meet needs of a large number of consumers. Competing mainly on price, therefore difficult to increase it, must sell at going rate.
46
What is a barrier to entry?
What makes it difficult to enter into a market e.g. cost, regulation, brand loyalty, technology
47
What is a monoploy?
A market dominated by one seller, any firm with more than 25% of industry’s sales. A dominant firm has at least 40% of industries sales
48
What is economies of scale?
The cost per unit of production decreases as volume of product increases
49
Define fixed costs:
Costs do not vary with the level of output (factory, machines, rent, etc)
50
Define variable costs:
Costs that change in proportion to the level of goods or services a business produces
51
What is bulk purchasing?
When companies can buy parts in larger quantities at a discount, reducing the cost of the final product
52
What is operational efficiency?
with more production, the company can optimise its manufacturing process reducing time and waste per product.
53
Describe Economies of scale:
Where monopolies can achieve economies of scale, meaning they can produce goods or services at a lower cost per unit due to their large scale of production. This can potentially lead to lower prices for consumers.
54
What is an oligopoly?
An oligopoly exists where a market is dominated by a few firms
55
What is collusion?
Collusion takes place when rival companies cooperate for their mutual benefit. When two or more parties act together to influence production and/or price levels, preventing fair competition. Common in an oligopoly/duopoly.
56
What is anti-competitive behaviour?
Strategies designed to limit the degree of competition inside a market
57
What is monopolistic competition?
A market structure with many competing firms each of whom supplies a slightly differentiated product e.g. taxi business = late pick up times, disabled access, good customer rapport
58
What are the characteristics of a Competitive Market?
Large number of firms no ability to compete on price no barriers to entry very little product differentiation E.g. farm/dairy
59
Characteristics of a Monopoly:
One firm in the market Can set price (high) Barriers to entry are subject to gov regulation No products that directly compete E.g. gas (utilities)
60
Characteristics of a monopolistic competition:
Many sellers Limited ability to control price Few barriers to entry A few differences in products E.g. retail, fast food, clothing stores
61
Characteristics of an Oligopoly?
Few large dominant firms Some ability to control price Many barriers to entry Some product differentiation E.g. mobile phone networks, airlines
62
What is a mark up?
The difference between the price of a product and how much it cost to produce
63
What can companies do to increase market share?
Better promotion Reaching target market Offer discounts, deals, promotions Change price strategies Merge with competitors Understand customer needs
64
What is market power?
The ability of a firm to influence or control the terms and conditions on which goods are bought and sold.
65
Define market dominance:
A measure of market share compared to competitors
66
Define barrier to exit:
The factors that could prevent a firm from leaving a market even if they wanted too
67
What is a merger?
Where two companies join together to form a new larger business
68
What is an acquisition/takeover?
Where control of another company is achieved by buying a majority of its shares
69
What is meant by a hostile takeover?
Board rejects offer Goes to shareholders May still be contested and costly Board could leave
70
Define Organic/Internal Growth:
Involves the expansion of a business from within
71
Examples of organic growth:
Opening new stores Launching new products Employing more workers Increasing product capacity Investing in new technology Launching products into new markets
72
What is the CMA?
Competition and Markets Authority
73
What does the CMA do?
Takes action against businesses and individuals that take part in cartels or anti-competitive behaviour
74
What sanctions can the CMA apply?
Fined 10% of Global Turnover Customers and competitors can sue for damage Individuals can be disqualified from being a company director Fine individuals for failure to comply I.e. CMA requests info
75
What is the demand?
The amount of a good/service that customers are willing and able to buy at any given price
76
What is the supply?
The amount of a good/service that sellers are willing and able to sell at any given price
77
What is the equilibrium price?
Situation in a market where demand is equal to supply I.e. both parties are happy. I’m theory customers can buy what the want and shops have no unsold stock

Business A Level (1 decks)

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