Understanding Business Flashcards
(35 cards)
What are 4 sectors of industry ?
Primary , secondary, tertiary and quaternary
Describe the primary sector
businesses which are involved in extracting natural resources
describe the tertiary sector
businesses which provide a service rather than producing physical goods
describe the secondary sector
businesses that are involved with manufacturing and construction
describe the quaternary sector
businesses which provide information and knowledge such as medical research and loyalty cards
which 2 sectors are becoming increasingly popular in the UK
tertiary and quaternary
what are the 3 sectors of economy?
public, private and third
what sector of economy does the NHS belong to
public
what type of organisations operate in the third sector of economy
charities and social enterprises
4 advantages of being a public limited company
- large amounts of capital can be raised by selling shares
- large organisations are considered less risky by lenders
- shareholders have limited liability
- shares can be given to employees to motivate them
4 disadvantages of being a public limited company
- must abide by rules and guidelines stated in the Companies Act
- have to share profits as shareholders expect dividends
- no control over who can purchases sales
- can be taken over if a rival firm can acquire enough sales
5 most common sources of finance used by a plc
- selling shares
- issuing debentures
- bank loans
- government grants
- retained profits
advantages for a franchisee
- brand is already established
- franchisor provides training for staff
- advertising costs paid by franchisor
advantages for a franchisor
- market share increases
- risk is shared
- income received from franchisee
disadvantages for a franchisor
- reputation could be damaged by a franchisee
- only a percentage of profits are received
disadvantages for a franchisee
- expensive to set up
- little control over products
- profits shared with franchisor
5 features of a multinational organisation
- operates in several organisations
- has a distinct home base country
- will have a global brand
- can dominate markets across many countries
- can greatly influence local economies
6 advantages of being a multinational organisation
- much larger market so more customers
- economies of scale as business is bigger
- profits and sales are higher so happy shareholders
- greater brand awareness
- business costs can be reduced by taking advantage of local tax rates
- wages can be lower by taking advantage of cheaper local labour rates
6 disadvantages of being multinational
- cultural variations have to be overcome eg Halal meat
- moving stock/staff may increase transport costs
- more difficult to control and maintain consistency
- language barriers need to be overcome
- political instability in some countries may cause problems
- local legislation can make trading difficult in some countries
advantages of third sector organisations (3)
- charities are exempt from paying some taxes
- volunteers work for free so wage costs are low
- private companies are willing to donate to and sponsor charities as its good PR
disadvantages of third sector organisations (3)
- volunteers may leave for paid work so staff turnover can be high
- difficult to compete with organisations in the private sector
- rely heavily on the generosity of the community for finance
advantages of social enterprises (4)
- easier to raise funds as government are more likely to provide grants
- addressing social issues makes it easier to gain public attention, less promotion required
- celebs will be willing to help
- gives business a USP
describe what satisficing is
only making a level of profit that is sufficient to keep all stakeholders satisfied
identify 3 objectives a business may have
- profit maximisation
- sales maximisation
- survival
