Topic 1.4 Flashcards
(19 cards)
What is limited liability?
Limited liability means that the business owner or owners are only responsible for business
debts up to the value of their financial investment in the business.
What is unlimited liability?
Unlimited liability means that the business owner or owners are personally responsible for all of the debts of the business, no matter what the value.
Advantages and disadvantages of being a Sole trader
Advantages-
-it is quick and easy to set up as a sole trader
-the business owner will have a lot of control over the business and its money
-It has low set-up costs
Disadvantages-
-it has the risk of unlimited liability
-it can involve long work hours and stressful conditions
-there is a high level of responsibility for the owner
Advantages and disadvantages of being in a Partnership
Advantages-
-they are usually quick and easy to set up
-there is shared decision-making by the owners
-there is shared responsibility for debt by the owners
Disadvantages-
-they can involve long work hours
-conflict amongst owners can occur
-there is the risk of
unlimited liability
Advantages and disadvantages of a Private limited company?
Advantages-
-the owners have limited liability
-it gives individuals the opportunity to be their own boss
Disadvantages-
-there is often more paperwork
in some instances
-other people are able to view the business’s financial information
-it can be very time consuming to set up
Advantages and Disadvantages of running a franchise
Advantages-
-the franchisee gets access to free training and marketing
-the franchisee is part of an established business
-it can be easier to make money
Disadvantages-
-the franchisee has to pay a percentage of its profits to the franchisor. This is known as royalties
-it can be expensive to set up
-the franchisee cannot make individual business decisions without consulting the franchisor
How does proximity to market affect business location?
The term market refers to a business’ customers and
consumers. For businesses such as takeaways, corner shops, clothes shops, pop-up food businesses and hairdressers, being close to their market is extremely important.
For online shops it is not important.
How does proximity to market affect business location?
The term labour refers to people whom a business employs or would potentially want to employ. For most companies, it is important to be close to high-quality labour or to be located in an area to which employees are willing to travel.
How does proximity to materials affect business location?
For some products, being close to the raw materials is extremely important for saving money. For other products, it often makes more sense to be located close to the market and transport the raw materials further.
How does proximity to competitors affect business location?
Many businesses like to be located far away from their competitors so that they have access to more customers without having to fight off competition. For businesses such as petrol stations, corner shops and barber shops, this works extremely well.
What are the benefits of e-commerce and m- commerce?
-lower costs
-flexible working hours
access to a much larger market of potential customers
-ability to be open 24 hours a day, seven days a week
-relatively low-price marketing and promotion
What are the four P’s (marketing mix)
- product
-price
-place
-promotion
What is the importance of product in the marketing mix?
The product element refers to the products or services the business sells.
A business should conduct
market research
to find out the needs and wants of its
target market
.
What is the importance of product in the marketing mix?
Price is the amount a business charges its customers for its product or service.
Prices are set according to how much a customer is willing and able to pay. Customers want value for money and this may mean a business needs to set low prices to generate high levels of sales.
What is the importance of place in the marketing mix?
Place
Place refers to where the customer is able to purchase the product or service. This can include:
a retail store
an online store or app
directly from the manufacturer
What is the importance of promotion in the marketing mix?
Promotion is the methods a business uses to create interest in its products and services among its customers and potential customers. The main aim of promotion is to either persuade customers to purchase, or inform about products.
This includes:
TV adverts
use of billboards
social media activity
influencers
What is a business plan?
A business plan is a document created by a business or
entrepreneur
that provides details about each element of the business. Creating a business plan means an entrepreneur considers all of the different elements of their business.
What is a business plan used to identify?
the business idea; business aims and
objectives; target market (market research); forecast
revenue, cost and profit; cash-flow forecast; sources of
finance; location; marketing mix.
How does a business plan help a business obtain finance?
A business plan is essential when a new business is attempting to raise
finance from a bank or potential business
investors
An entrepreneur is able to take a business plan into a meeting with a bank or investors to provide evidence of why the entrepreneur believes the business will succeed.
