understanding business activity Flashcards
1
Q
business activity def
A
the process of producing goods and services to satisfy customer demand
2
Q
need def
A
a good or service essential to living
3
Q
want def
A
a good or service that people would like, but that is not essential to living
4
Q
needs examples
A
water, shelter, food
5
Q
wants examples
A
phones, cars, holidays
6
Q
economic problem def
A
unlimited wants cannot be met because there are limited factors of production. this creates scarcity
7
Q
factors of production def
A
the resources needed to produce the goods and services - land, labour, capital and enterprise
8
Q
land meaning
A
all natural resources such as minerals, ores, fields, oil and forests.
9
Q
labour meaning
A
number of people available to work
10
Q
capital meaning
A
machinery, equipment and finance needed for production of goods and services.
11
Q
enterprise meaning
A
people prepared to take the risk of setting up a business - entrepreneurs
12
Q
scarcity def
A
there are not enough goods and services to meet the wants of the population
13
Q
opportunity cost def
A
the benefit that could have been gained from an alternative use of the same resource.
14
Q
specialization def
A
people and businessees concentrate on what they are best at
15
Q
division of labour def
A
production is divided into separate tasks and each worker does just one of those tasks.
16
Q
consumer goods def
A
products which are sold to the final consumer. they can be seen and touched, for example computers and food.
17
Q
consumer services def
A
non-tangible products such as insurance services, transport
18
Q
capital goods def
A
physical goods, such as machinery and delivery vehicles, used by other businesses to help produce other goods and services
19
Q
durable consumer goods
A
reuseable: tv, chairs
20
Q
non-durable consumer goods
A
used once: food and drink
21
Q
how can a brand increase added value
A
branding, service quality, product features, convenience
22
Q
primary sector def
A
firms whose business activity involves the extraction of natural resources
23
Q
business activites of the primary sector
A
farming, fishing, forestry, mining
24
Q
secondary sector def
A
firms that process and manufacture goods from natural resources
25
business activities of the secondary sector
refining, manufacturing, construction
26
examples of the primary sector
rice, fish, wood, coal
27
examples of the secondary sector
food canning, furniture making, car manufacturing
28
teritary sector def
firms that supply a service to consumers and other businesses
29
businesses in the tertiary sector
shops, restaurants, banks
30
chain of production def
the production and supply of goods to the final consumer involves the activities from primary, secondary and tertiary sector businesses.
31
what is a LDC
less developed country
32
what is a MDC
more developed country
33
industrialisation meaning
the growing importance of secondary sector business activity and the reduced importance of primary sector business activity. the emerging economies of both china and india are good examples.
34
de-industrialisation meaning
the growing importance of the tertiary sector and the reduced importance of the secondary sector. the uk and the usa are good examples of this type of economic activity
35
if consumers have a higher income...
they will expect better quality and a wider choice of products
they have a better education and know they can buy goods from suppliers in a differet region or country through e-commerce
have more leisure time - increase in demand for leisure activites
36
mixed economy def
an economy where the resources are owned and controlled by both the private and public sectors.
37
private sector def
the part of the economy that is owned and controlled by individuals and companies for profit
38
public sector def
the part of the economy controlled by the state or government
39
in what sector do consumer choices play a large part in business decision-making and their choice of product
private
40
who makes the decision of what, how, and for whom in a public sector business
the government
41
if some consumers cannot afford products a private sector business will
do nothing
42
if some consumers cannot afford products a public sector business will
sell them at a lower price or provide them free of charge.
43
entrepreneur def
an individual who has an idea for a business takes the financial risk of managing a new business.
44
what ideas for enterprise might an entrepreneur have
new idea for good or service
offering an existing good or service in a way that has not been offered before
ofering an existing good or service in a new location
45
characteristics of an entrepreneur
```
innovative
self-motivated and determined
self-confident
multiskilled
leaderhsip qualities
initiative
results driven
risk taker
good at networking
```
46
busienss plabn def
a detailed written document outlining the purpose and aims of a business which is often used to persuade lenders or investors to finance a business proposal.
47
revenue def
the amount a business earns frim the sale of its products
48
contents of a business plan
```
the business (workers,entrepreneur)
business opportunity
(market research)
the market
objectives of business
financial forecasts
```
49
how do business plans assist entrepreneurs
persuade lenders
purpose and direction
objectives and financial forecasts
50
when a business needs a new business plan for when it wants lenders or investors to provide finance what is it called
a corporate plan
51
why are governments keen to help start ups
they provide jobs
increase the variety of products available
competition in the market will lead to lower prices and better quality
small busiensses often provide specalist goods and services to consumers and larger firms
some will expand to be the next large firm
smaller businesses often have lower costs
52
business start up def
a newly formed business. they usually start small but some might grow to become much bigger
53
most common types of government support for start ups
```
grants/interest free loans
lower taxation rates
rent free premises for a period of time
free or subsidied training for workers
information, advice and support from specalist agencies
```
54
capital employed
value of all the long term finance invested into the business. used to buy the things that a business needs before it can produce goods or services, e.g factory/office buildings, machienry and inventory
55
can you use number of employees to measure business s size
yes but if one business has a lot of automation and fewer workers it will not be reliable.
56
why would some businesses expand
```
increased profits
larger market share
economies of scale
greater power to control the market
protection from the risk of takeover
```
57
internal growth
increasing the number of goods it can produce, eg machinery
developing new products
finding new markets for products
58
external growth
horizontal integration
forward vertical integration
backward vertical integration
conglomerate integration
59
what is external growth
when a business merges or takes over another business in another industry. this is known as integration
60
sole trader def
a business that is owned and controlled by just one person who takes all of the risks and all of the profits
61
why would someone be a sole trader
make the decisions
decide their hours
have a business about their skills and interests.
62
advaantage sof being a sole trader
quick and easy
complete control
small amount of start up capital
owner keeps all profit
63
disadvantages of being a sole trader
risks losing personal wealth (unlimited liability)
often difficult to raise funds
difficult to compete with larhe firms
long hours to make a living
if they die or retire the busienss no longer exists
64
start up capital def
the finance needed when firstr settign up a business
65
partnershup def
a business formed by two or more people who will share responsibility for the day to day running of the business. partners usually invest capital into the business and will share profits.
66
advantages of a partnership
greater access to finance
better dexcision making
management and runnign shared
easy to set up
67
disadv of a partnership
unlimited liablity
must share profits
business decisions binding to all partners even if they dont agree
partnershuips often fairly small
68
franchise def
a business system where entrepreneurs buy the right to use the name, logo and prodct of an existing business
69
adv of franchises
less chance of failure
| franchisor often prodes advice and training, and finance promotion, and checking the suppliers are good quality
70
disadv of franchises (to franchisee)
inital cost is expensive
franchuisor takes % of profits every year
strict controls on what the franchisee can do
franchisee will have to pay for local promotions
71
joint venture def
two or more businesses agree to wwork together on a project and set up a separate business for this purpose
72
adv of joint ventures
reduces risk and cuts costs
each busienss brings different expertise
market and product knowledge can be shared
73
disadv of joint ventures
mistakes damage the reputation of all the firms
| clash of different business cultures or styles of leaderhip
74
what is an unicncorporate dbusienss
one which does not have a seperate legal identity from its owners. owners legally responsible for activities of the business
75
what is an incorporated business
it has a seperate legal identity form the oweners. owners not legally responsible for the activties of thebuseinss
76
why would a business chose to change type of business organisation
reduce legal and financial risk
separate legal identity
to raise additional capital
77
what does choosing the type of business to depend on
```
number of owners
owners role in management of business
attitude to financial risk
how quickly the owners want to start operating
potential size of buisiness
```
78
public corporation def
a business organisation that is owned and controlled by the state
79
objective def
a statement of a specific target to be achieved. they should be smart
80
what does smart stand for
```
specific
measurable
achieveable and agreed
realsitic and releveant
time sepcifi
```
81
different business objectives
```
survival
profit
growth
market share
corporate social responsibility
```
82
market share def
the revenue of a business expressed as a percentage of total market revenue
83
corportate social responsibility def
busiensses taking responsibility for the impact their activities might have on society and the environemnt
84
pressure group def
organizations of like-minded people who put pressure on businesses and governments to change their policies to reach a predetermined objectives
85
social enterprise def
a busienss with social objectives that reinvests most of its profits back into the business or benefiting society at large
86
stake holder def
an individual or gorup which has an interest in a business because they are affected by its decisions
87
two types of stakeholder
exteral and internal
88
types of internal stakeholder
owners/shareholders
managers
employees
89
types of external stakeholder
```
lenders
suppliers
customers
government
local commuinity
```
90
objectives of a owner/shareholder as a stakeholder
to get high returns/dividends as a reward for risking investment
to benefit from an increase in share value
91
objectives of managers as a stakeholder
to have job satisfaction and status
| to recieve salary increases and bonuses
92
objectives of employees as a stakeholder
to have job security
| to receive a fair wage that reflects their contribution to society
93
objectives of lenders as a stkaeholder
to get interest payments hwen due
| to have borrwing repaid by the date
94
objectives of suppliers as a stakeholder
to get prompt payments for goods supplied on credit
| to be treated failry and not be forced to reduce their prices
95
objectives of cusotmers as stakeholders
to get quality goods after sales ervive
| to be charged a fair pruce
96
objectives of governmetn as stakeholders
to be paid the correct amount of taxes on time
| minimal spending on unemployment benefits
97
objectives of local community as stakeholders
to get benefits for local economy such as employment and subsidising community facilities
avoid negative impact of business activities such as pollution
98
public sector organizations benefits
accessible
affordable
open to all
99
horizontal integration
two firms in the sam eindustry and same sector of business activity
100
forward veritcal integration
two firms in the same industry but one is a customer of another
101
backward vertical integration
two firms in the same industry, but one is a supplierr to the other
102
conglomerate integration
two buisinesses in completely different businesses.
103
reasons for business failure
```
economic influences
poor planning
poor cash flow management
poor management skills
lack of objectives
failure to invest in new technologies
lack of finance
poor choice of location
poor marketing
competition
```
104
unincorporated business def
a business that does not have legal identity seperate from its owners. owners have unlimitied liability for business debts
105
unlimited liability def
if an unincorporated business fails, then the owners might have to use their personal wealth to finance any business debts.
106
shareholder def
a person or organisaton who owns shares in a limited company
107
private limited company def
often a small to medium sized company, owned by shareholders who have limited liability. the company cannot sell its shares to the general public
108
public limited company def
often a large company, owned by shareholders who have limited liability. company can sell shares to general public
109
ordinary shareholders def
the owners of a limited company
110
limited liability def
the shareholders in a limited liability company which fails only risk losing the amount they have invested and not any of their personal wealth
111
dividend def
a payment, out of profits, to shareholders as a reward for their investment
112
collateral def
non current assests offered as security against borrowing
