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Business A-Level > Unit 1 > Flashcards

Unit 1 Flashcards

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1
Q

Why do businesses exist?

A

to satisfy wants and needs

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2
Q

What is a business?

A

an organisation set up to provide goods and services to customers.

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3
Q

What is a good?

A

a physical product e.g. food

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4
Q

What is a service?

A

an intangible item e.g insurance

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5
Q

What are the 3 things a business can be split up into?

A

B2B - tata steel
B2C - sony
C2C - ebay

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6
Q

What are the 3 types of businesses?

A

primary
secondary
tertiary

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7
Q

What is the primary sector?

A

obtains the raw materials

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8
Q

What is the secondary sector?

A

uses the raw materials to produce something - also known as the manufacturing sector

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9
Q

What is the tertiary sector?

A

concerned with the supply of services

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10
Q

What is an aim?

A

a long term plan for the business which its corporate objectives are derived

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11
Q

What is an objective?

A

sets out what clearly needs to be achieved

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12
Q

What must a objective or aim be ?

A

SMART

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13
Q

List 3 common business objectives?

A
  • maximise profit
  • survival
  • growth
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14
Q

Why do businesses set objectives?

A
  • gives workers a goal to work towards
  • can provide employees with motivation
  • track progress
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15
Q

What is business cost ?

A

is the expenditure a firm makes as part of its trading e.g labour and raw materials

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16
Q

What are fixed costs?

A

costs which doesn’t change with output

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17
Q

What are variable costs?

A

costs which change with output

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18
Q

What are semi-variable costs?

A

costs which have characteristics which are both fixed and variable e.g. transport

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19
Q

What is the calculation for total costs?

A

fixed costs + variable costs

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20
Q

What is average cost?

A

is the cost of producing one unit

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21
Q

How does the business benefit from knowing costs?

A

helps set prices to maximise the most profit

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22
Q

What is revenue ?

A

the income the business receives over a long period of time.

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23
Q

What is the calculation for revenue?

A

quantity sold x average selling price

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24
Q

What is profit?

A

when a businesses revenue is higher than the costs

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25
What is the calculation for profit?
total revenue - total costs
26
What does profit depend on?
profit margin | quantity of sales
27
What is profit margin?
the amount or percentage of the final selling price that is profit
28
Why are profits important ?
Attracts customers - lead customers to believe that the product is desirable Persuade individuals and banks to invest in them Larger businesses may buy
29
What is the public sector?
is owned and ran by the government
30
What is the private sector?
is owned and ran by private people
31
What are the 3 organisations owned by the government?
public corporation public services municipal services
32
What are public corporations?
are enterprises owned by the state but offer products to both public and private sectors e.g. channel 4
33
What are public services?
provides a service to the nation e.g. NHS
34
What are municipal services ?
are offered by the local governments and councils e.g leisure
35
What is privatisation?
when the state (government) sells businesses they owned and sell it to the private sector.
36
What are 2 reasons why the government privatise?
- raises finances for the government | - privately run businesses are more efficient
37
What is a sole trader?
business that is owned and managed by one person but may employ other people
38
What are 2 advantages of a sole trader?
- keep all profits | - easy and cheap to set up
39
What are 2 disadvantages of a sole trader?
- unlimited liability | - long hours
40
What is a partnership?
two or more people
41
What are 2 advantages of a partnership?
- specialist skills | - more ideas
42
What are 2 disadvantages of a partnership?
- split profit | - more conflict
43
What are the 3 legal documents a business has to do before setting up?
memorandum of association articles of association register with company house
44
What is a company ?
a business organisation that has its own legal identity and has limited liability
45
What is a incorporation ?
is the process of establishing a business as a separate legal identity which allows it to benefit from limited liability
46
What is a shareholder?
is an investor in and one of the owners of the business
47
What are dividends ?
are a share in the profits of a company that are distributed to the holders of certain types of company shares.
48
What is unlimited liability ?
means that there is no distinction between the business and the individual. So if the business was declared bankrupt personal belongings can be taken to pay off any debts.
49
How do we get rid of unlimited liability?
by becoming a company, through the incorporation process
50
What is limited liability?
means there is a difference between the company and owner personal assets are not at risk just the investment.
51
What are the 2 types of companies?
private limited companies (Ltd) | public limited companies (PLC)
52
How can you measure the size of a PLC?
market capitalisation
53
What is market capitalisation?
the total value of the issued shares of a PLC
54
What is the calculation for market capitalisation?
share price x number of shares
55
What is another name for a not-for-profit business?
social enterprise
56
What are the risks of buying shares?
share prices can fall dramatically no matter how well a business is ran low profits = low dividends
57
What can influence share prices?
company's performance and business environment
58
What are the assumptions of increased share prices?
well managed | easier to raise capital
59
Disadvantages of decreased share prices
poor management difficult to raise capital vulnerable to takeover
60
What is the external environment?
external forces that can influence a business activities but the business have no control over
61
What are 2 positive factors of the external environment?
- products becoming fashionable, raising demand - major competitor leaves the market - number of consumers in a country increases
62
What are negative factors of the external environment?
- consumers demand environmentally friendly products, increasing costs - new businesses entering the market increasing competition - market oversupplied with products, depressing prices
63
What are market conditions ?
features of a market e.g levels of sales
64
How is income determined?
GDP
65
What does GDP measure?
the value of a country's total output of goods and services over a time period
66
What are real incomes?
incomes that are adjusted for the rate of inflation to show changes to purchasing power
67
What are nominal incomes?
unadjusted wage e.g without inflation
68
Out of the 3 types of goods which are elastic and inelastic?
normal elastic | luxury and inferior inelastic
69
What are interest rates?
price of borrowed money
70
What happens if interest rates increase?
people save more spend less
71
What happens if interest rates decrease?
people spend more and save less
72
What is inflation ?
the changes of a price
73
What does high inflation mean/ cause?
high interest rates the £ appreciates exports more expensive imports cheaper
74
What does low inflation mean/ cause?
low interest rates the £ depreciates imports are more expensive exports cheaper
75
What does appreciation and depreciation do to the pound?
appreciation - makes the pound stronger | depreciation - makes the pound weaker
76
How do businesses pollute?
emission of gas in the production process pollution when transporting goods, congestion and noise dumping destroying natural environments
77
What is fair trade?
where a fair price is given for a good/ service

Business A-Level (11 decks)

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