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Higher Business - Finance > Understanding Business > Flashcards

Understanding Business Flashcards

1
Q

Methods to max customer satisfaction 4

A

Research customer wants
Customer comment cards
Produce products customers want
Charge fair prices

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2
Q

Why should firm try to max customer satisfaction 5

A

More likely to max sales
Complaints reduced which saves time
Customer loyalty
Good rep, grant may be easier to get
Avoids bad press

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3
Q

What is the 4 sectors of industry

A

Primary
Secondary
Tertiary
Qiatinery

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4
Q

What is primary sector

A

Extraction of raw mats

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5
Q

What is secondary sector

A

Development of products or raw mats

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6
Q

What is tertiary sector

A

Sectorninvolved in providing service

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7
Q

What is quatenery sector

A

Consists of industries proving info services

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8
Q

What is the sectors of economy

A

Private
Public
Third

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9
Q

Describe social enterprise

A

Set up to support cause
Profits reinevtesd

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10
Q

What is thus ord OWNED , CONTROLLED AND FINANCED by - LTD

A

Owned by shareholders
Controlled by director or manager in charge of specific area
Financed by share capital from friends n fam

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11
Q

What is thus ord OWNED , CONTROLLED AND FINANCED by - PLC

A

Owned by shareholders
Controlled by board of directors
Financed by share capital the stock market

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12
Q

What is thus ord OWNED , CONTROLLED AND FINANCED by - charity

A

Owned by board of trustees
Controlled by manager of shop
Finanaced by donations

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13
Q

What is thus ord OWNED , CONTROLLED AND FINANCED by - government org

A

Owned by government offices
Controlled by local councillors
Finance by tax revenue

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14
Q

Benefits of LTD 3

A

Raise more capital than sole graders and partnerships
Shareholders have limited liability
Annual accounts don’t have to be made public

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15
Q

Disadvantages of ltd 3

A

Profits shared with other shareholders
Consent of other shareholders needed before shares sold
Expansion limited to freinds and fam

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16
Q

Advantages of PLC 4

A

Shares sold on stock exchange
Firm ran by board of directors
Raise very large amount of capital from selling hsares
Can accesses larger loans for cheaper as less risky investment than a sole trader or partnership

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17
Q

Disadvantages of PLC 4

A

Shareholders can freely sell shares
Dividends must be shared with tons of shareholders
Could be subject to financial takeober
Annual accounts must be published which costs and can give potential investors bad view

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18
Q

Charity advantages 4

A

Funded by donations
Attract good employees
Exempt from some taxes
Lower wage costs as staff often volunteers

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19
Q

Negatives of a charity

A

High staff turnover
Lesser marketing budget than other firms

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20
Q

Government funded org advantages 3

A

Funded by taxes
Ran by ministers who aren’t always experts in feild
Accountable to public so can’t take large risks

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21
Q

Government funded org disadvantages 2

A

Slow to make decisions
Cannot chase profit as an objective

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22
Q

What is unlimited kiability

A

Means owners or partners have full responsibility for business debts

23
Q

Positives of having objectives 3

A

Firm can measure performance against goal
Objectives influence future decisions (makes firm think twice)
All workers follow a common goal

24
Q

Ways to be social responsible 5

A

Recycle
Donate to charity
RSPCA AND FAIR TARDE N THAT
treating staff fairbby giving fair wages and hours
Equal opportunities policy (pay men n women equal )

25
Q

Advantages of being socially responsible 4

A

Good rep
Employees more motivated
Can boost sales
Can attract a new market segment

26
Q

Costs of being socially responsible

A

Additional costs
Firm may focus on being it too much and loose focus of more important goals like sales n profits
Firm need to make sure stance is implied through allsegments if firm (eg marketing and finance)

27
Q

What’s the 2 methods of growth

A

Organically
Inorganicallly

28
Q

Give 3 methods of organic growth

A

New machines that increase outpu
Advertising to increase customer base
New product development

29
Q

What is organic growth

A

Growing from inside firm

30
Q

What is inorganic growth

A

Growth from outsude firm, ie buying iver or merging with another firm

31
Q

Advantages of organic growth

A

No loss of control of firm
Launch if new products mean firm can gain new market segments
Opening new physical branches means can reach new customers if it’s in new location
Expanding existing premises can increase space for products n boost sales
E-commerce means business can trade 24/7 worldwide

32
Q

What is horizontal growth

A

When two firms on same stage of production join together
Ie a retailer buys over another retailer

33
Q

Pros of horizontal integration 4

A

Common knowledge of market
Reduces number of competitors
Similar skilled employees
Easier to get bulk buying discounts

34
Q

Cons of horizontal integration 2

A

Firm not spreading risk
If firm raise prices too much due to less competitors to the point it’s unfair on customers gov can step in

35
Q

What is vertical integration

A

When a firm acquires a firm on different stage of production either forwards or backwards

36
Q

What is backwards vertical intergrstionn

A

When a firm merges with a supplier

37
Q

What is forward vertical integration

A

When a firm merges W it’s customers

38
Q

Pros of backwards vintergartiom 2;

A

Control supply of raw mats
Removes profit margin supplier would demand

39
Q

Pros of forwards intergrstion 1

A

Control image and distribution of products

40
Q

Cons of vertical integration

A

May be difficult to get bulk buying discounts
More risky as firm lack knowledge or skills in new area

41
Q

What is divestment

A

A method of growth where firm sells off some assets such as a factory or smaller oats of business to raise finance

42
Q

What is a political factor

A

Any action taken by government

43
Q

What is an economic factor

A

Current state of economy that will influence a business

44
Q

What is a social cultural factor

A

1) population trends
2) cultural trends and buying habits

45
Q

What is a technological factor

A

Latest developments with tech that influence how firm operates

46
Q

What is an environmental factor

A

Involves any law or action to promote the uphold the upkeep of environment

47
Q

What is a competitive factor

A

Actions of competitors that force the firm to react

48
Q

What is a completion policy

A

Prevent and reduce companies that holdback or limit competition
Basically when a firm dominates the market too much

49
Q

What is 3 implications of competition policy

A

Firms prevented from merging or acquiring other business if they become too large
Firms will be monitored to ensure they’re prices aren’t too high
Companies can complain to CMA if they see other business being anticompetitive ie agreeing with another business to lower prices to knock a firm out the market

50
Q

What’s a stakeholder

A

Any Person or org that has an intrest in the succes of a firm

51
Q

Name 4 internal stakeholders

A

Shareholders
Employees
Managers
Owners

52
Q

Name 5 external stakeholders

A

Bank
Suppliers
Government
Customers
Local community

53
Q

Stakeholder conflict example

A

Manager wants employees to work extra hours WHERE AS employees want to work required payed hours

54
Q

Interdependent stakeholders example

A

Managers want employees to produce as many goods as possible AND SO employees want firm to train them on how to use machines properly

AND SO …. THEREFORE

Higher Business - Finance (5 decks)

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