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topic 1 Flashcards

1
Q

what is an enterprise

A

another name for a business it describes the actions of someone who takes a risk by setting up or investing and running a business

an entrepreneur is someone who takes those risks

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2
Q

reasons for starting a business

A

making a profit

skills & interest

investing money

being your own boss

work- life balance

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3
Q

what are the aims of start up entrepreneurs vs established entrepreneurs

A

start up are generally more money focused as they need to survive

established can do charity related things as well

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4
Q

business definition

A

an organization that exists to produce goods and services on a commercial basis to customers

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5
Q

what are needs

A

goods and services that we have to consume if we are to live - e. g warmth , shelter, food

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6
Q

what are wants

A

goods and services that we would like but do not have to consume in order to survive - e.g holidays & smart phones

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7
Q

what is an opportunity cost

A

measuring the cost of what you purchase in terms of the alternative that you have given up e.g going to a concert

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8
Q

what are objectives of social enterprises

A
  • protect the environment
  • donate to charities
  • making an impact rather than profit
  • provide job opportunities for unemployed youth
  • ethical business practice
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9
Q

what are the production sectors

A

primary
secondary
tertiary

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10
Q

what is primary sector

A

involves extracting raw materials from natural environment e.g mining , farming, fishing

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11
Q

what is secondary sector

A

transforming raw materials into finished products , e.g steel , manaufacturing, clothing , construction

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12
Q

tertiary sector

A

providing services , e.g cleaning , retail shops

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13
Q

changes in business environment

A 
legislation (laws)
economic
social
environmental 
political
technological
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14
Q

what is a sole trader

A

individuals owning business on his/ her own. they can also employ people but don’t share ownership of business , e.g hairdresser , gardeners, plumbers and electrician

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15
Q

disadvantage of being a sole trader

A

all money is at risk if you fail, may not have all skills you need , making all decisions can be stressful , can be difficult to raise finance - heavy workload

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16
Q

what is a private limited company

A

can raise funds from investors , such as friends & family but not from general public e.g river island , wilkinson and clark’s

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17
Q

what is unlimited liability

A

when it comes to money owed by a business , the owners have to use their own personal funds to pay for any debts (by selling homes or other assets ) if there is not enough money in the business to do so they are liable for any debts that the business incurs

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18
Q

what is liquidation

A

turning assets into cash

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19
Q

advantages of partnership

A
  • simple to form business
  • minimal paperwork once partnership agreed and set up
  • partners provide specialist knowledge and skills
  • jobs can be shared
  • greater potential to raise finance
  • any losses will be shared
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20
Q

disadvantages of partnership

A
  • unlimited liability
  • partners hv to live with decisions of others
  • decision making takes longer
  • harder today raise finance than a company
  • profit has to be shared
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21
Q

advantages of a private limited company

A

limited liability protects personal wealth of shareholders

easier to raise finance as can sell shares

stable form of structure - company continues to exist even when shareholders change

original owners are likely to retain control

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22
Q

disadvantages of private limited company

A

shareholders have to agree abojt how profits are distributed

finance limited to ‘friends and family ‘

less privacy - public disclosure of company information but not as extreme as PLC

directors legal duties are stricter

greater administrative costs then setting up as a sole trader or partnership

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23
Q

what is a public limited companies

A

most of largest business in country e.g BP, boots and barclays

PLC are complicated & expensive to set up but can raise large sums of money through lifting shares on stock exchange

trading shares can make company vulnerable to possible takeover

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24
Q

advantages of public limited companies

A
  • limited liability protects personal wealth of shareholders

can raise large sums of finance via the stock exchange which is permanently invested

stable form of structure - business contributes to exist even when shareholders change

form is more prestigious

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25
disadvantages of public limited company
shareholders hv to agree about profit distribution greater administrative costs finance can be limited by stock market valuation of company public can see company information and accounts risk of company being taken over separation of ownership and control
26
differences between PLC and LTD
LTD shares sold only to family and friends PLC public share holders
27
profit maximization
profit is main objective for most business this is the reward to entrepreneur for their hard work and risks undertaken
28
market / share sales maximization
some business will be more concerned with increasing market share or becoming market leader
29
growth
not all business want to grow but most do, this means that they can increase their profits and value of business
30
social / ethical responsibilities
increasingly businesses are aware of their respsonsibilities to the society in which they operate , related to correct ethical behavuoir
31
customer satisfaction
some businesses pride themselves on providing a quality service of selling quality products
32
shareholder value
a company will be interested in how much their dividend payment will be or share the price
33
what is purpose of setting business objectives
direction - clear objections allow to decide on what direction it takes focus for employees- follow business in objections allows planning- clear objectives allow for consistent planning measurement of success- can then connect on change business strategy if it’s not working
34
objective of size
over half of new businesses fail with inv five years and many new do not survive much beyond launch. customer satisfaction or being ethical could be an objective to help complete
35
level of competition
if a business doesn’t have much competition it may focus on profit maximization whereas if there is a lot of competition a focus on customer satisfaction on maintaining market share will be important
36
type of business objective
not- for - profit organization may focus on social or ethical objectives a sole trader may focus on survival rather than growth
37
what is a stakeholder
any individual or organization who has a vested interest in the activities and decision making of a business
38
shareholders or owners objective
return on investment & profits and dividend , success and growth of business proper running of business
39
managers & employees objectives
rewards , including basic pay and other financial intentions, job security and working conditions , promoting opportunities and job satisfaction and status moviation, roles and responsibility
40
customer objectives
value for money, product quality and customer service
41
suppliers objectives
continued profitable trade with the business, financial stability
42
banks & other finance providers objectives
profitability and cash flows of the business, growth in profits and value of business
43
government objectives
correct collection and payment of taxes, helping businesses to grow- creating jobs , compliance with business legislation
44
local community objectives
success of business- creating and retaining jobs, compliance with local laws and regulations (e.g noise pollution )
45
what is trade union
group that looks afyer rights of workers
46
factors affecting location decisions
proximity to market : need to be located near particular center of population competitions : where there is a gap in the market there is no competitor and might be a good reason to locate raw materials: more important for primary sector jobs and manaufacturing costs: having premises means a business has to pay rates, insurance and many other ongoing costs as well as rental purchase costs. costs of premises and labor varies in diff locations labor : intensive businesses often look to locate in areas of traditionally low wages or higher unemployment
47
what does a business plan have
describes business objectives and aim strategies markets financial forecasts
48
why do we need a buesinss plan
``` organization more ideas direction contingency plan more profit potentially investors monitor how you are doing provides a focus ```
49
what are costs
costs are amounts that a business incurs in order to make goods and or provide services
50
what are variable costs
costs which change as output varies - lower risk for a start up : no sales = no variable costs
51
fixed costs
costs which do not change when output varies - fixed costs increase risk of a start up
52
what are semi-fixed costs
some costs are fixed in short term but chancd once a certain level of output is reached
53
equation for total costs
total costs = fixed costs + variable costs
54
what is internal growth
``` franchising opening new business introducing new product ranges opening new stores outsourcing - when company puts someone to work for them e commerce ```
55
external growth
merger (2 complained joint to make 1) | takeover / acquisition
56
internal growth definition
also known as organic growth and achieved by selling more of its products
57
external growth definition
also known as integration it is achieved by joining with another business
58
what is horizontal integration
a business joins a business at the same stage stage of production process
59
what is vertical integration
a business joins with its suppliers (backward and vertical ) or it distributors
60
what is conglomerate integration
a business joins a business in a different market
61
factors affecting method of growth
``` size of business nature of product position in the market financial position of business regulation ```
62
what is streamlining
look at business where jobs are duplicated , they get rid of one. how they get round that increase of employees
63
adaptations of growth
``` economies of scale access to more retailers / outlets greater brand awareness less vulnerable to take over greater range of rewards for staff diversify/ spread the risk ```
64
disadvantages of growth
``` diseconomies of scale slower decision making communication more difficult employees may become demotivated co ordination can be more difficult increases costs ```
65
what is an opportunity cost
cost of doing one tbing VS another
66
how are economies of scale achieved
when cost per unit falls as production increases
67
how do diseconomies of scale occur
when cost per unit increases as the scale of production increases
68
why do ineffiencies arise as business gets larger
control - problems in monitoring productivity and work quality / increasing wastage of resources - workers may get away with low production communication - more difficult in a big business , as organization , structure becomes more complex and chains of command become larger. this can make decision making slower and communicate innacurately and workers become demotivated
69
avergae cost per unit equation
total costs divided by output
70
markup equation
avergae costs per unit X 5%

business gcse (1 decks)

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