theme 1-page 35 Flashcards
(23 cards)
name three reasons for the importance of cash to a business
-pay its suppliers and other debts
-prevent business failure
-promoting business
name two short-term sources of finance
-overdraft
-trade credit
name three long-term sources of finance
-retained profit
-loans
-share capital (selling shares of the business)
what is limited liability
private companies (LTD) have limited liability. The owner can only lose the amount of money they have invested. Their personal belongings are not liable
what is unlimited liability
sole traders have unlimited liability. The owner is legally responsible for any debts. Owners can lose personal belongings to pay debts.
what are the 3 benefits of being a sole trader
-makes all decisions
-easy to set up
-keep all profits
what are the three disadvantages of being a sole trader
-unlimited liability
-no one to cover when a sole trader is ill
-lots of pressure on one person
what are the 3 advantages of being in a partnership
-shared expertise and ideas
-owners share risk
-easier to raise finance
what are the 3 disadvantages of being in a partnership
-disagreements over decision making
-profits are shared
-no longer exists if one partner leaves
what are the 3 advantages of a private limited company
-limited liability
-easier to raise finance
-customers may trust an ltd more
what are the 3 disadvantages of a private limited company
-more info must be reported to the government
-shareholders may disagree
- more complex to set up
what are the 3 advantages of running a franchise
-brand image and reputation are already established
-higher chance of survival
-expensive marketing costs are already covered by the franchise
what are the 3 disadvantages of running a franchise
-the cost of initial investment is high
-owner has little freedom to make decisions
-franchisee will have to pay royalty (percentage of sales revenue) to the franchisor
name 4 factors influencing business location
-labour
-market
-materials
-competitors
list 3 ways the nature of a business can affect its location
tourism-may need to be near popular tourist attractions
retailing-may need to be situated on a busy high street
what is the impact of the internet on business location
-trading on the Internet (e-commerce) removes the need for a location because they trade online.This saves costs
list two ways businesses can adapt to changing needs
-changing the features of a product to incorporate new trends and technology
-adjusting price in response to competitor’s pricing
what is the impact of technology on the marketing mix
price-customers can easily compare prices with rivals
place-less need for bricks
promotion-advertising via social media
product-constantly be innovated
list three reasons for a business plan
-identify the needs of customers
-minimise risk
-forecast finances
what should a business plan contain
-business idea
-aims and objectives
-market research
-financial forecasts
-location
-sources of finance
-marketing mix
name all 8 stakeholders
-government
-local community
-customers
-employees
-pressure groups
-managers
-shareholders
-suppliers
list three types of technology a business uses
-payment systems
-e-commerce
-social media
list and explain three ways technology can affect businesses
costs-huge investment.Can improve efficiency and reduce costs
sales-innovating products with technology can boost sales and demand
marketing mix-can lower costs, make promotions easy, customers can buy products at any time
