Unit 1 Flashcards
1
Q
A business
A
Any organisation that sells goods or provides services
2
Q
Goods
A
A physical product
Eg. A car
3
Q
Service
A
Non-physical items
Eg. A haircut
4
Q
Small business
A
- has less than 50 staff
- solo ownership
- usually operate in one area
5
Q
Reasons to start a business
A
- Money
- independence (flexible hours)
- doing something they enjoy
- gaps in the market
6
Q
Entrepreneur
A
Someone who sets up a business
7
Q
Risk
A
The chance of a loss or damage/ the probability of something going wrong
8
Q
Calculated risk
A
A risk which has been given consideration
Costs and potential benefits have been weighed up and compared to the probability of failure
9
Q
Examples of risk
A
- going bankrupt
- no sales
- lack of security
- poor execution
- aggressive response from competitors
10
Q
Examples of reward
A
- earning money
- building something
- seeing hard work go somewhere
11
Q
Adding value
A
Adding value to each part of the production
Eg. Growing trees
|
Cut trees
|
Season timber
|
Construct furniture
|
End product
12
Q
Examples of adding value
A
- branding
- quality
- USP
- Speed
- convenience
13
Q
Wants
A
A want is something you would like but can live without
Eg. A car
14
Q
Needs
A
A need is something you rely on to live and is a necessity
Eg. Food
15
Q
Internal finance
A
Money earned within the business
Eg. Profit
16
Q
External finance
A
Money obtained outside the business
Eg. Loans
17
Q
Short term finance
A
Sources of money which can be paid back quickly
18
Q
Long term finance
A
Sources of money which are paid back over a period of time (over a year)
19
Q
Trade credit
A
When a supplier allows you to pay later for goods or services
20
Q
Overdraft
A
An overdraft is when you can withdraw more money than you have
21
Q
Break even
A
Break even is the point at which the total revenue of a business equals the total costs
22
Q
Cash inflow
A
Money coming into the business
Eg. Sales
23
Q
Cash outflow
A
Money coming out of the business
Eg. Rent
24
Q
Primary research
A
Research a business does themselves
25
Market research
The process of gathering information about the market and customers needs and wants in order to inform the business’s decisions
26
Margin of safety
How many sales made after the break even point has been reached
27
Advantages and disadvantages of personal savings
+security
+quick
+no interest
-limited amount
28
Advantages and disadvantages of crowdfunding
+quick
+alternative to a loan
-lots of work
-if target isn’t reached money has to be given back
29
Advantages and disadvantages of long term loans
+quick
+fixed interest rate
-high interest
30
Advantages and disadvantages of venture capital
+skills from investors
+money
-lose a percentage of the business
31
Advantages and disadvantages of share capital
+raise large amounts of money
| -may be tension between shareholders
32
Advantages and disadvantages of retained profit
+it’s your money
+no interest
-no guarantee the business will make profit
33
Advantages and disadvantages of questionnaires
```
Primary research
+up to date data
+easy to analyse
+cheap online
-people may find it a nuisance
-online may not be honest
```
34
Advantages and disadvantages of focus groups
```
Primary research
+up to date
+in depth response
-time consuming
-costly
```
35
Advantages and disadvantages of interviews
```
Primary research
+detailed response
+cheap over the phone
-expensive in person
-time consuming
```
36
Advantages and disadvantages of observations
```
Primary research
+in depth
+up to date
-expensive
-may give misleading responses
-time consuming
```
37
Secondary research
Research published by people or organisations that are not related to the business specifically
38
Advantages of secondary research
* quick
* gathered on a larger scale
* may be cheap or free to access
39
Disadvantages of secondary research
* biased
* not specific to the business
* may be costly
* may be outdated
40
Market segmentation
Grouping the market into categories to know who you’re selling to and how to advertise to them
Eg.age
41
Pros and cons of market maps
+straight forward
+clear to see gaps in the market
-they’re subjected (based of opinions)
-doesn’t tell the full story
42
Qualitative data
| (pros+cons)
Usually opinions
+detailed descriptions
-costly
-time consuming
43
Quantitive data
| Pros+cons
```
Usually numbers and statistics
+quick to understand
+easy to analyse
-not much detail
-lacks opinions
```
44
Equation for total revenue
Price x quantity = total revenue
45
Revenue
How much the business earns
46
Fixed costs
Costs which do not vary with output
| Eg. Rent
47
Variable costs
Costs which change directly with the output
| Eg. Packaging
48
Limited liability
The businesses finances are separate from the owners meaning if the business goes into debt the owner won’t lose personal assets
49
Un-limited liability
The owner has full responsibility for the businesses finances so if the businesses goes into debt the owner may have to sell personal assets
50
Sole trader
One person running a business themselves
51
Advantages and disadvantages of a sole trader
```
+cheap
+simple
+don’t need to publish accounts
-un-limited liability
-fewer sources of income (eg.shares)
```
52
Partnership
Several people running the business
53
Advantages and disadvantages of a partnership
```
+wider expertise
+share risk
+easier to grow business finance
-share profit
-potential arguments
-decisions affect everyone
```
54
Private limited company
The shareholders (owners) have a separate legal identity to the company
55
Advantages and disadvantages of a private limited company
```
+limited liability
+additional sources of finance
+control who shareholders are
+selling shares
-no access to stock exchange
-legal requirement to publish financial accounts
```
56
Franchise
When a business gives another business permission to trade using its name and products in return for fees and shares of its profits
57
Advantages of a franchise
```
+branding
+lower risk
+training
+skills
+advertising already done
```
58
disadvantages of a franchise
- limited growth
- lack of freedom
- brand reputation can be damaged by other franchises
59
Location
Where the business decides to operate
60
Things a business must consider when choosing location
* competitors
* cost of rent
* traffic
* distance from suppliers
61
E-commerce
Selling and buying online
62
M-commerce
Using mobile technologies (apps) to carry out business transactions
63
Business multichannel
Operating in a physical location and an e-commerce site
64
Business plan
Written document that describes things such as objectives, strategy, market, financial forecast etc
65
What’s included in a business plan?
* aims
* people (skills, employees)
* products/services
* the market
* competition
* marketing
* finance
* operations
66
Stakeholder
Someone with an interest for the business
| Eg. Customers,government etc
67
Legislation
Rules/law of the country that customers and businesses must follow
68
Trades description act
Prevents manufacturers misleading consumers as to what they’re spending money on
69
Sales of goods act
The goods should match any sample you were shown and should be the right quality for the price
70
Consumer rights act
What should happen if goods are faulty and unfair contracts, consumer had rights (receipts)
71
What happens when interest rates are high?
* consumers spend less as they have less money
| * may lead to fall in demand for businesses
72
What happens when interest rates are low?
* people get more loans
* people have more disposable income
* higher demand for businesses
73
Inflation
The increase of the prices overtime
| This means everyday items increase in price (usually 2% a year)
74
Exchange rate
The price of one currency in terms of another
| Eg. £1 = $1.50
75
Appreciation
An increase in the value of a currency
76
Depreciation
A decrease in the value of a currency
77
What does SPICED stand for?
```
Strong
Pound
Imports
Cheap
Exports
Dear (expensive)
```
78
Tax
Taxation is the process of imposing charges on a business and individuals by the government
79
Types of taxes
* VAT (value added tax)
* income tax
* corporation tax
80
How to answer 3 mark questions?
1x BLT
81
How to answer 6 mark questions?
2x BLT
| +context
82
How to answer 9 mark questions?
Pro
Con
Conclusion:
AJIM
83
How to answer 12 mark questions?
Agree
Disagree Or 2 separate points
Conclusion- AJIM
84
What does AJIM stand for?
Answer
Justify
It depends on
Most important
