Unit 1 Flashcards
(35 cards)
What is a business?
An organization that uses resources to produce a good or service that satisfies the needs of consumers.
Businesses also add value, whereby the output produced is worth more than the inputs.
What does the primary sector involve?
Extraction, harvesting, and conversion of natural resources for use by firms.
Examples include coffee, metals, and fruit.
What is the secondary sector?
Manufacture and production of products from raw materials.
Examples include clothing, mobile phones, and inputs for other companies like steel.
Define the tertiary sector.
Service industry.
Examples include banking, insurance, education, and tourism.
What does the quaternary sector focus on?
Intellectual, knowledge-based activities regarding information.
Examples include research and development.
Who is an entrepreneur?
Someone who takes a financial risk, starting and managing a new company, in return for profit.
List some of the main business functions.
- Human resources
- Finance and Accounts
- Marketing
- Operations Management
What are common challenges new businesses face?
- Financial problems
- Lack of own start-up capital
- Lack of cash flow
- Lack of customers
- Strong competition
- Poor marketing
- Hiring the wrong people
- High production costs
- Legal problems
- External influences
Why would someone start a business?
- Money
- Inheritance
- Autonomy
- Challenge
- Security
- Hobbies
What is a business plan?
A document that sets out the business idea, its goals and objectives, and other details of how the business will operate.
What are the elements of a business plan?
- Marketing & Sales
- Human Resources
- Operations Management
- Finance
What is the purpose of a business plan?
- Planning
- Raise finance
- Establish targets
What is the public sector?
Firms owned and controlled by the government.
Examples include hospitals, police, and public schools.
Define the private sector.
Firms owned and controlled by individuals rather than the government, usually run for profit.
What is a sole trader?
An individual who owns and controls their own business, taking all risks and keeping all profits.
What is a partnership?
Two or more people combine to form a business enterprise, sharing risks and profits.
What are the pros of starting a business alone?
- Easy to set up
- Full control
- Owner keeps profits
- Closer contact to the market
What are the cons of starting a business alone?
- Unlimited liability
- Responsible for all areas
- Less start-up capital
What are the pros of starting a business with a partner?
- Share work and specialize
- More capital allows expansion
- More input in decision-making
What are the cons of starting a business with a partner?
- Unlimited liability
- More time for decision-making
- Profits are split
What are the characteristics of limited companies?
- Legal Personality
- Limited Liability
- Owned by shareholders
- Continuity
- Legalities
What is a privately held company?
An incorporated company with limited liability, owned by shareholders, not listed on a stock exchange.
Define publicly held companies.
Public limited companies that are incorporated, have limited liability, and are listed on the stock exchange.
What are the pros of private limited companies?
- Limited liability
- Can raise more finance
- Can hire specialist managers
- Finances are private
