Flashcards in Topic 1 - The Basics Of A Business Deck (64):
What are the four functions of a business?
What are the important factors of marketing?
Advertising, Celebrity Endorsement, target users and what would attract them
What are the important factors of finance?
Tax, money, profit+loss, investments
What are the important factors of Human Resources?
Teamwork, Motivation, Employees
What are the important factors of Production?
Quality, batches, manufacturing
State an example of product success
State an example of product failure
MP3/Music players or tapes. Due to the evolution of technology these items have been replaced with products that comply the needs of our society today, eg. Spotify
Why do people start up their own business?
Unique idea, up for a challenge, passion, money, inspired by others.
What qualities does an entrepreneur need?
Determination, hard working, organised, risk taker, market knowledge
What are the two different types of market?
Niche Market and Mass Market
What is a niche market?
A small market which is specific for certain people, eg. Bentley
What is the mass market?
A big market targeted for everyone, eg. Water
What is a Good?
Something that is tangible (can touch)
What is a Service?
Something that is intangible (can’t touch), eg. Car wash
What is a customer and consumer?
The customer buys the product, whereas the consumer uses the product NAPPIES
What would some aims of a start up business be?
- To survive (75% fail)
- Break-even (pay off all the debts from starting your business)
- Get customers by raising awareness
What would the main aims of a growing multinational business be?
- Increase sales figures (stronger profit)
- Innovation ( launch new products to suit today’s society, to fit in the market)
- Explore new countries
- Up the number of stores
- Go online
- Improve ethics
What is an Aim?
It is a goal or target that the business hopes to reach, eg. We want to expand into Europe
What is an objective?
The steps needed to achieve an aim, eg. We want a new office in London by June
What is a mission statement?
An outline of their values, beliefs or key goals
What are objectives?
Why set aims and objectives?
- Gives them direction
- To measure progress
- Future planning
What is meant by business ethics?
Being a company who cares about their community and gives fair wages to their employees.DOING THE RIGHT THING
Why do businesses set profit as an objective?
- Main reason why people create a business
- People rely on money to keep the business going
- Something to aim for (if you work harder you can achieve a bigger profit)
What are the benefits of acting ethically as a business?
- Good reputation
- Your employees will carry on working for you (reliable)
- People will want to work for you
- People will see your business as a kind and loyal community to be a part of
What is a sole trader?
A business that is owned and run by a single individual, eg. Stalls or corner shops are usually run by sole traders
Advantages of being a sole trader
- Customise it fully to your likings
- Don’t have problems with employees
- Keep all profits to yourself
- Rewarding, Satisfaction
Disadvantages of being a sole trader
- No one to help
- Very intense, hard work
- Need to be very good at all aspects of a business
- Start-up very difficult
- UNLIMITED LIABILITY
What is capital?
What is unlimited liability?
When a business owner is fully responsible for all debts of the business. You can lose personals assets if their business fails.
What is a partnership?
A business owned by between 2-20 people
What is the deed of partnership and what is it composed of?
A legal document/contract to authorise your partnership. It includes: % of ownerships, how the profits are divided, process of leaving, roles/sleeping partners?, how decisions are made, process of inviting a new partner
What do both sole traders and partnerships have?
Positives of partnerships
- Partners raise capital together
- Different areas of expertise
- Risk is shared
- Flexibility over when you work
Disadvantages of partnerships
- Conflicts may arise
- Reduced amount of privacy
- Unlimited liability
- Length of decision making
- Control is shared between partners
Who is an entrepreneur?
Someone who starts their own business
What does a limited company have?
Who owns a limited company?
What are shareholders seen as?
Separate legal identity to their company meaning they are not held responsible for the debts of a business. They only have to pay for the debts up to the amount they originally invested into the business.
Do shareholders run a company?
No. They appoint managers to manage it for them.
What are private limited companies known as?
What do private limited companies do?
They trade their shares privately and not on the stock exchange. You need permission to buy shares by the existing shareholders.
What are public limited companies known as?
What do public limited companies do?
They trade their shares publicly on the stock exchange. Anyone can buy shares in their business.
What is the process of becoming a limited company?
They have to do the memorandum of association, articles of association and then they are given a certificate of incorporation.
What do private limited companies often suffer from?
Divorce of ownership and control. This is where the managers and shareholders disagree about the business and use of money.
Who is in the private sector?
Sole traders, partnerships, Ltds, Plcs and franchises
Who is in the public sector?
The government (NHS, education, emergency services, the council)
What is a franchise?
Where a business sells the rights to another business to use their product, name or process.
Who is a franchisee?
The one who opens a branch of a business.
Who is a franchisor?
The person you buy the right of opening a franchise from
Benefits of franchises?
- A product, no need for an idea
- Established customers
- Marketing sorted
Do franchises provide staff for franchisees?
No. They don’t supply staff for them.
What is a charities aim?
Not to make a profit, more concerning their service to the community.
What is calculated risk?
When you take a risk, knowing the consequences. You’ve calculated them and you’re ready to deal with them.
What is a social enterprise?
A business that is set up not to make money but to raise awareness. They reinvest their money into the community or their business. Eg. CAFOD
What is the difference between a social enterprise and a traditional enterprise?
- Trad is solely to make money but Social is not about the profit
- Trad don’t focus on the community whereas Social purely do
- Trad compete with others whereas Social don’t really
Why would someone set up a social enterprise?
- Raise awareness and money
- Wanting to make a change
What’s important about the location of a business?
- Wealth of the area
- Close to competitors
What is money coming in called?
Revenue = units sold x selling price per unit
What are the total costs of a business?
Fixed cost + Variable costs
What is profit in a business?
Revenue - Total costs
Who is a stakeholder?
Anyone who is involved or affected by the business