Understanding business Flashcards
(16 cards)
What are the factors of production
Land- the natural resources in the business
Labour- the people that work for the business
Capital- the assets of the business (machinery, money)
Enterprise- the ideas in the business
What are the sectors of economy
Private- owned and controlled by private individuals, aim to make a profit
Public- owned and controlled by the government on behalf of taxpayer, aim to provide an essential service
Third- owned by trustees controlled by board of trustees, aim to raise donations or awareness for good cause
What is a sole trader
A business that is owned and controlled by one person and financed by personal savings, bank loans, grants
What are advantages and disadvantages of a sole trader
A- owner makes all decisions, can keep all profit
D- heavy workload, unlimited liability (may have to sell personal belongings if business fails)
What is a partnership
A business that is owned and controlled by 2 or more people and financed by personal savings, bank loans, grants
What are advantages and disadvantages of a partnrship
A- more ideas to contribute, can share workload
D- profits must be split, disagreements can occur
What is a private limited company
Owned by- shareholders
Controlled by- board of directors
Financed- selling shares, bank loans, grants
What are advantages and disadvantages of a LTD
A- limited liability (only lose the money that they have invested in the business if business fails)
D- difficult to set up
What are the types of businesses in the private sector
Sole trader, partnership, private limited company (LTD)
What is a social enterprise
Run like a business in the private sector but all profit is reinvested back into the business. Owned and controlled by private individual. Financed through retained profits
What are external factors
Things that happen outside the business that the business has no control over
What are the external factors
Political- any government activity that can impact the business ( laws, tax)
Economic- any changed within the local or national economy
Social- the things that affect the habits and spending of customers( lifestyles, tastes and trends)
Technology- the technology that is available out with the business
Environmental- issues to do with the environment ( weather, climate change or green issues such as recycling and pollution
Competitive- how an organisation responds and deals with competition
What are stakeholders and give examples
Anyone who has an interest in the success or failure of a business- employees, customers, suppliers, government, owners, local community
How would stakeholders impact/ influence on a business
Employees: influence- work rate. Impact- strikes
Customers: influence- by going elsewhere which would impact the business as it would mean fewer profits
Suppliers: influence by putting up prices of supplies which would impact the business as they have to spend more money on supplies
What are benefits of having satisfied customers
Customer loyalty- customers will return to the business meaning increased sales and profits
Good reputation- customers could give recommendations meaning gaining more customers
Employee satisfaction- happier employees means more motivated
Can charge higher prices- customers know they receive high quality service so will be happy to pay higher prices so more profit
What are the sectors of industry
Primary- extract natural resources from the land
Secondary- the manufacturing of raw materials into new products
Tertiary- provide a service
