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Understanding Business Flashcards

(48 cards)

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1
Q

Document setting out the external rules and relationships of an organisation

A

Memorandum of Association

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2
Q

Document setting out the internal rules and relationships of an organisation

A

Articles of Association

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3
Q

Document enabling a PLC to begin trading

A

Certificate of trading

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4
Q

Document confirming that an organisation has company status

A

Certificate of Incorporation

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5
Q

Company controlled by individuals and restricted groups

A

Private Ltd company

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6
Q

Organisation which operates and trades in a number of different countries

A

multinational

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7
Q

Part-ownership of a company

A

Share

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8
Q

The return to the shareholder of a company

A

Dividend

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9
Q

Company whose shares are traded on the Stock Exchange

A

Public Limited Company (PLC)

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10
Q

A formal agreement setting out the legal details of a partnership

A

Deed of partnership

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11
Q

A business association of between 2 and 20 owners who have clear rights and responsibilities to each other

A

Partnership

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12
Q

A partner who is not involved in the day-to-day running of a partnership

A

Sleeping Partner

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13
Q

An arrangement whereby the debts of a part-owner of an organisation are restricted to how much they have put into the organisation

A

Limited liability

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14
Q

Describe a good

A

A good is a product that can be seen and touched, for example a phone, car or book

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15
Q

Describe a service

A

A service is something that cannot be seen or touched, they are provided, for example a hairdresser, teacher or bank

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16
Q

What is a need?

A

Needs are requirements for survival, needs can be satisfied for the vast majority of people, for example shelter, food and water

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17
Q

What is a want?

A

Wants are required to make life pleasant for us, this includes luxuries and other non-essential items, such as holidays, cars and mobile phones

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18
Q

What are the factors of production (CELL)?

A

Capital
Enterprise
Land
Labour

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19
Q

Describe Capital

A

Capital is the tools, machinery and equipment that a business owns or controls. This also includes the finance (money) that is invested in the business by the owner.

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20
Q

Describe Enterprise

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A

The entrepreneur him/herself. Enterprise is the business idea that the entrepreneur has on how to use land, labour and capital in their business.

21
Q

Describe Land

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A

Land is the natural resources which the business uses, this includes water, trees, fields, and things they produce such as oil and fish.

22
Q

Describe Labour

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A

Labour means the workforce of a business - human workers of all kinds, the return for labour is Wages.

23
Q

Describe the creation of wealth

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A

Wealth is created by using Land, Capital, and Labour to make a product/provide a service which people find valuable. You then sell your product/service for more than it cost to make/do, giving you a profit.

24
Q

What are the sectors of industry?

Study These Flashcards
A

Primary
Secondary
Tertiary

25
Describe the Primary Sector
The primary sector extracts. They carry out the first stage of production - extracting things from nature. NATURAL RESOURCES. Examples are: farming, fishing, oil and gas exploration, forestry and mining.
26
Describe the Secondary Sector
The secondary sector manufactures. They carry out the second stage of production - manufacturing, building and processing. Turn RAW MATERIALS (natural resources) into finished goods. Examples are: food manufacturers, sawmills and oil refineries
27
Describe the Tertiary Sector
The tertiary sector provides services. This includes selling on the finished product to the customer. Examples are; insurance, banking, education, hairdressing, and transport
28
What are the sectors of economy?
Sole Trader Partnership Private Limited Company
29
What is a Sole Trader?
Businesses that are Sole Trader are owned and controlled by a single person.
30
How are Sole Traders funded?
``` Owners own savings Loans - family/friends Bank Loan Mortgage Government Grant ```
31
What is a Partnership?
They are owned by between 2-20 people. They are controlled by general partners who have a say in the running of the business.
32
How is a Partnership funded?
Partners own savings Bank Loans Mortgages Government Grant
33
What is a Private Limited Company?
They are owned by at least 2 shareholders. Shareholders have to be invited to buy a share in the company, and the companies are controlled by an elected Board of Directors.
34
How are Private Limited Companies funded?
Shareholders investing in shares Bank Loan Mortgage Debentures
35
How do you maximise customer service?
Customer service can be maximised by having well trained, polite staff.
36
Why is customer service important to the success of the business?
If the staff do not have good customer service your business will start to develop a bad reputation. Whereas if your staff have good customer service you will gain customer loyalty and they will tell their friends/family which will build up your market share
37
What are the advantages of being a Sole Trader?
``` Easy to set up - no legal documents needed Smaller size means less capital needed Decisions are quick to make Profits do not need to be shared Business affairs can be kept private Can choose own hours of work ```
38
What are the disadvantages of being a Sole Trader?
Finance can be difficult to raise Limited discounts due to small size of business Ill-health, holidays, ect can affect business Personal possessions endangered by unlimited liability
39
What are the advantages of being in a Partnership?
Increased money available compared to a Sole Trader Opportunity to increase size of business Affairs can be kept private Risks spread amongst partners Workload, responsibility and decision making shared Partners can specialise in specific roles
40
What are disadvantages of being in a Partnership?
Unlimited liability Disagreements can occur Profits must be shared A legal document known as a Partnership Agreement needs to be created
41
What are advantages of a Private Limited Company?
Limited liability Ability to sell share so may have access to more capital Larger so can employ specialists
42
What are disadvantages of a Private Limited Company?
Shares cannot be sold to the general public on the stock market Financial information is not completely private A limit on the amount of capital that can be raised through selling shares More difficult to set up due to legal requirements
43
Advantages of a Social Enterprise
Social aims can endear a social enterprise to customers Good quality employees who believe in the social 'mission' are attracted to the organisation They are likely to receive government grants due to their positive impact on society 'Asset lock' means that, should the enterprise be closed down, the sale of any assets and any profits will be used to benefit their cause
44
Disadvantages of a Social Enterprise
Have to compete in the commercial market and face the same challenges and risks common to all businesses Having the necessary resources and skills to move towards becoming a social enterprise Will introduce certain controls and restrictions as defined by its constitution, and that it will be expected to operate commercially, generating a proportion of its income from trading
45
Advantages of being a Charity
Helps people in need Helps the community Public recognition and trust Tax relief
46
Disadvantages of being a Charity
They relay on donations - might not make enough money | Restrictions and requirements
47
Advantages of being a Public funded Organisation
Erase of raising funds | Speedy decisions
48
Disadvantages of being a Public funded Organisation
Political interference Consumer interests ignored Financial burden

Business Management (5 decks)

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