Unit 1 Business Flashcards
(127 cards)
1
Q
What is the purpose of a business activity? (1)
A
To produce goods and services that meet needs and wants of customers.
2
Q
What is a business activity (2)
A
- It is the process of combining resources (labour, cash, etc) and raw materials
- To create goods and services which satisfy customers needs and wants
3
Q
What are the advantages of a business activity? (3)
A
1) Creates job opportunities
2) Boost local economy
2) Supports locals by supplying demands
4
Q
What are consumer goods and state one example (2)
A
- Tangible (physical) products that people buy for personal use for needs and wants.
- Example: Food and phones
5
Q
What are consumer services and state one example (2)
A
- Intangible activities which provide benefits to consumers
- Example: Healthcare and education
6
Q
What are producer goods and state one example (2)
A
- Tangible (physical) items USED by businesses to PRODUCE items which can be sold to customers or other businesses.
- Example: Machinery and raw materials
7
Q
What are producer services and state one example (2)
A
- Intangible activities provided to businesses to help in the production or sale of consumer goods and services.
- Example: Marketing services
8
Q
What is a need and give an example of one (2)
A
- Something which is required for an individual to survive.
- Example: Food and water
9
Q
What is a want and give an example of one (2)
A
- Something which an individual desires to have but is not necessary for survival.
- Example: Phone
10
Q
Identify 3 advantages of a business understanding needs and wants (3)
A
1) Helps business create products which satisfy customer demands
2) Allows for effective marketing strategies
3) Customer satisfaction will be achieved
11
Q
What is a stakeholder? (1)
A
An individual or group with a direct interest in a business and how it affects them.
12
Q
Who are internal stakeholders and give a few examples (2)
A
- Individuals or groups of people who are DIRECTLY involved in a companies operations, decisions and outcomes and have a DIRECT INFLUENCE on the business.
- Examples: Managers, Owners, Employees, Investors
13
Q
Who are external stakeholders and give a few examples (2)
A
- Individuals or groups outside the business who have an interest in its activities but DO NOT HAVE DIRECT control over its operations.
- Examples: Customers, Government, Locals, Suppliers
14
Q
What is profit? (1)
A
Amount of money left over from a businesses sales after paying cost.
15
Q
What is revenue? (1)
A
Income gained from selling goods and services
16
Q
What is cost in business? (1)
A
Expenses the business must pay for in order to operate (like raw materials, rent, etc)
17
Q
What is fluctuation in business? (1)
A
It is an irregular rise and fall of levels in a businesses activity over time (like sales and demand, etc)
18
Q
List 3 causes of profit fluctuation and explain them (3)
A
1) Production cost - An increase in raw material prices
2) Change in demand - Seasonal change in customer demand (like winter, holiday, etc)
3) Competition - New competitors entering the market
19
Q
What is the formula for calculating profit? (1)
A
Profit = Total revenue - Total Cost
20
Q
How can a business make profit increase (positive profit fluctuation)? (3)
A
- A business can reduce costs which lowers expenses and allows the business to keep more of its income as profit.
- By implementing effective marketing strategies which boosts sales which leads to higher total revenue.
- By supplying consumers demand
21
Q
How can a businesses profit decrease over time (negative profit fluctuation)? (name 2)
A
- Increase in expenses (cost) lowers profit as there will be less leftover money
- Profit decreases because of new competition in the market and if the competition is big, you could lose profit
22
Q
What is a private sector? (1)
A
Private sector consists of businesses owned and operated by private individuals or groups
23
Q
What is a public sector? (1)
A
Public sector consists of government-owned and operated businesses which provide the public with goods and services
24
Q
Give 3 examples of a private sector business (3)
A
1) Raising Canes
2) Apple
3) Ben and Jerry’s
25
Give 3 examples of a public sector business (3)
1) Hamad hospital
2) Qatar energy
3) Khramaa
26
List 3 advantages of a private sector business (3)
1) Great responsiveness to customer needs (flexible)
2) Innovative products are made helping people
3) Increased job opportunities (private sectors usually need more employees)
27
List 1 disadvantages of a private sector business (1)
1) May prioritize profit over social responsibility
28
List 3 advantages of a public sector business (3)
1) Focuses on social objectives
2) Very stable and reliable as it is government-owned (wont go bankrupt)
3) Provide great services (almost guaranteed as its government owned)
29
List 2 disadvantages of a public sector business (2)
1) Limited flexibility (strict rules so harder to adapt for changes)
2) Government intervention makes public sector suffer (their decisions)
30
What does 'Enterprise' mean in business (what does it refer to)? (1)
Refers to a SPECIFIC business or organisation that operates within a sector.
31
What is a social enterprise and give an example of one (2)
- It is a non-profit organisations in the private sector for social purposes rather than profit.
- Examples include charities like UNICEF.
32
Why might stakeholders have conflicts? (1)
Conflicts happen because different stakeholders have different interests
33
Give an example of a stakeholder conflict that could happen in a business (1)
Employees may seek for higher wages, while owners want lower costs for profit.
34
List 1 advantage of stakeholder contribution (1)
Different inputs from people leads to improved business decisions
35
What is a business objective? (1)
It is a specific goal that a company aims to achieve within a certain amount of time.
36
What is the purpose of a business setting objectives? (1)
Provide purpose and direction for the organisation by setting clear goals to work towards
37
How can business objectives be categorised? (1)
They are categorised as financial objectives and non-financial objectives.
38
What is a financial objective? (1)
Goals focused on improving financial performance, such as increasing profit and sales.
39
What is a non financial objective? (1)
Goals which do not focus on creating a profit, instead they focus on social and environmental objectives etc
40
List 3 examples of financial objectives (3)
1) Increase profit
2) Increase sales
3) Decrease cost of production
41
List 2 examples of non-financial aims and objectives (2)
1) Environmental objectives
2) Social objectives (morally correct things)
42
How do the objectives between PUBLIC and PRIVATE sector businesses differ? (2)
Public sector objectives- Focus on providing essential services to citizens
Private sector objectives- Focus on profit maximisation.
43
Examples of public sector objectives (3)
1) Ensure people are happy with services provided
2) Maintain public services
3) Promote environmental objectives
BASICALLY NON FINANCIAL OBJECTIVES
44
Examples of private sector objectives (3)
1) Increase profits
2) Increase sales
3) Decrease cost of production
BASICALLY FINANCIAL OBJECTIVES
45
Why do objectives differ between businesses? (3)
They can differ due to factors such as:
1) Size of business (small would just want to survive and maintain cash flow whilst big ones would want to grow in market share and focus on expansion)
2) Level of competition faced (high competition want to make business survive whilst low competition would want to make profit)
3) Type of business
46
What are SMART objectives and what does it stand for? (5)
S = Specific (be clear on what to achieve)
M = Measurable (see how far that goal has or can be achieved)
A = Achievable (be realistic with objectives)
R = Relevant (should be relevant to business)
T = Time (time-frame bust be set and be realistic)
47
What are SMART objectives used for? (1)
To set clear, trackable, and achievable goals to improve performance and guide decision-making within a business.
48
List 3 points on why a business would CHANGE its objectives over time (3)
1) Competition in the market
2) State of the economy
3) Change in customer demands
49
How do public and private sector objectives impact stakeholders differently? (2)
- Public sector objectives benefit the community (still stakeholder) by providing essential services
- While private sector objectives impact stakeholders by offering job growth, and delivering innovative products to customers.
50
Why do small and large organisations have different business objectives? (2)
- Small businesses usually prioritise survival, cash flow, and customer loyalty
- Whilst large businesses focus on expansion, innovation, and profit
51
What is a sole trader? (1)
It is a type of business organisation owned and operated by a single individual by themselves.
52
What are the key characteristics of a sole trader business? (3)
1) They are owned by only one person
2) Unlimited liability
3) They are easy to set up with minimal legal requirements
53
What are the advantages of operating as a sole trader (3)?
1) Owner keeps all the profit
2) Little money needed to set up
3) Easy and cheap with no complex paperwork
54
What are the disadvantages of operating as a sole trader (3)?
1) Limited chance of growing bigger over other businesses
2) Unlimited liability
3) If owner is sick no one can run the business
55
Definition of liability? (1)
It is the responsibility of a business to pay off their debts
56
Definition of limited liability? (1)
Means that each individual in a company (like owners and shareholders) are only responsible for the company’s debts up to the amount they have invested.
57
Definition of unlimited liability? (1)
Means that the owners of a business are personally responsible for all the debts of the business.
58
Definition of unincorporated business? (1)
It is when the business and its owner are considered as the same legal entity, and any debts or legal issues the business faces are the owners responsibility as they have unlimited liability
59
Definition of incorporated business? (1)
It is a type of business that is legally separate from its owners so it can have debts without the owner worrying too much as owners will have limited liability so they are not personally responsible for the businesses debts
60
What are the features of an incorporated business? (3)
1) The company has a separate legal identity.
2) Owners (shareholders) have limited liability.
3) Incorporated businesses operate as private limited companies and public limited companies.
61
What are the features of an unincorporated business? (3)
1) Business and owner are identified as same identity
2) Owner has unlimited liability
3) Most operate as sole traders but a some operate as partnerships
62
What do entrepreneurs do? (1)
They start businesses and innovate to make money from business ideas and spot gaps in the market (they are automatically considered as owners)
63
What is a partnership? (1)
It is a type of business structure which has 2-20 owners who own the business together
64
What are the advantages of partnerships (3)?
- Will have multiple views and ideas from other people
- Workload is shared
- Easy and cheap to set up
65
What are the disadvantages of partnerships (3)?
- Profit has to be shared
- Unlimited Liability
- Disagreements
66
What is a deed of partnership and name 6 things that must be in the deed of partnership (6)
It is a legal document that states the partners rights in the event of a dispute.
Things included:
- Name of business
- Name of partners
- How much capital (money) each partner will contribute
- How profit/losses will be shared
- How they can leave the partnership
- Signed and witnessed
67
What do parters share? (3)
- Profit
- Decision making
- Workload
68
What is a limited partnership? (2)
- It involves some partners who contribute money and share profits but without participating in management.
- These partners have limited liability but one partner must have unlimited liability.
69
What are the 2 types of limited companies? (2)
Public limited company (Plc) and also Private limited company (Ltd)
70
Who does a public limited company sell shares to? (1)
They sell shares on the stock market.
71
Who does a private limited company sell shares to? (1)
They sell shares privately to family and friends only
72
What are the features of a private limited company? (3)
- Shares are only sold to family and friends.
- Limited liability
- Often has the letters LTD after the company name. In Qatar it is L.L.C or W.L.L.
73
What are the features of a public limited company? (3)
- Shares are sold on the stock market
- The company has limited liability
- Must contain the letters PLC after their name.
74
What are 2 advantages of a Private Limited Company? (2)
1) Limited liability
2) Simpler to set up than a public limited company, with fewer regulations.
75
What are 2 disadvantages of a Private Limited Company? (2)
1) Cannot raise lots of money from selling to the public.
2) Limited growth potential due to restricted share sales.
76
What are 2 advantages of a Public Limited Company? (2)
1) Can raise lots of money by selling shares to the public.
2) Ability to expand more rapidly due to access to public funds.
77
What is 1 disadvantages of a Public Limited Company? (1)
1) High regulations to open the business
78
What are dividents? (1)
The amount of profit set by owners in a limited company to be shared out amongst shareholders as a reward for investing in the company
79
What are the steps in forming a limited company? (4)
1) Register with Registrar of Companies at Companies House (organisation that regulates businesses from government)
2) Produce the Memorandum of Association
3) Produce the Articles of Association
4) Obtain a Certificate of Incorporation from the Companies’ Registrar
80
What is a public corporation? (1)
Organisations set up by law to run services with the governments permission. They are also controlled by the government which makes all decisions.
81
Why do public corporations exist? (2)
- They exist to provide essential services which are not fully given by private businesses.
- Government control also helps protect jobs, create employment, and maintain key industries like electricity, natural resources, and transport links.
82
What is the main source of finance in a public corporation? (1)
They gain money from tax to operate public corporations
83
List and explain 3 advantages of a public corporation (3)
1) Provide products to benefit the society - Social objective is their main objective instead of profit objectives
2) Can make a loss in the short-term - They will have a profit loss but they will continue operating if benefit to society is great and crucial
3) Availability and stability of finance - They have stable sources of financing which is mainly from the central government.
84
List and explain 2 disadvantages of a public corporation (2)
1. Slow and inefficient - Due to lack of strict profit targets and market competition.
2. Decisions based on political decisions rather than efficiency - Government may often interfere in business decisions for political reasons.
85
What is the definition of a franchise? (1)
It is a business arrangement where a franchisee pays for the rights to open a new branch for the franchisor's business using the franchisor's brand, product and business model
86
What is the definition of a franchisor? (1)
It is an individual or group who sells the rights to open stores to franchisee's and lets them sell their products/services using their brand, products and business model in exchange for fees.
87
What is the definition of a franchisee (1)
It is an individual or group who purchases the right to use and operate an already existing company’s brand name, trademarks and business model from the franchisor.
88
What are the advantages of being a franchisee? (3)
- Less risk (idea is already tested before use)
- Back-up support is given
- Set-up costs are predictable
89
What are the disadvantages of being a franchisee? (5)
- Profit must be shared with the franchisor
- Strict contracts must be signed
- Lack of independence
- Must obey to strict rules
- Expensive way to start a business
90
What are the advantages of being a franchisor? (4)
- Fast growth
- Cheap method of growth
- Franchisees can take risks for you
- Franchisees are usually more motivated
91
What are the disadvantages of being a franchisor? (4)
- Potential profit is shared with franchisee
- Poor preforming franchisees can damage brand's reputation
- Cost of support for franchisees could be high
- Franchisees can get supplies from other sources instead of proper one which can reduce quality of items
92
What are the features of a social enterprise? (4)
- Primarily social objectives are main priority
- Profits are reinvested in the business or the community
- Main objective isn't to maximise profits
- Can exist in the Public and Private sector
93
What are the 2 types of social enterprises? (2)
Cooperatives and Charities
94
What are the 2 types of cooperative social enterprises and explain them (4)
1) Consumer or Retail Cooperatives - Owned and controlled by members who buy shares, make decisions, and receive profits.
2) Worker Cooperatives- Businesses where employees share ownership and decision-making.
95
Explain what is a charity social enterprise (1)
They raise money for good causes and draw attention to people or groups who have disadvantage in society
96
Why do social enterprises exist? (1)
To fulfill social or environmental needs by responding to customer demand for ethical products and services. They also aim to fill gaps in the market.
97
List 3 examples of social enterprises (3)
- Qatar charity
- Sustainable Qatar
- TOMS shoes
98
What is a multinational company? (MNC) (1)
It is a large business that operates in at least two DIFFERENT countries, selling goods or services.
Note: A business is only an MNC if it has OPERATIONS in two or more countries, not just by selling products internationally.
99
What are the features of an MNC (5)?
- Huge assets
- Skilled and experienced people working
- Strong advertising/marketing capabilities
- Advanced technology
- Ownership is centered in home country
100
What are the advantages of a MNC TO a country (2)?
1) More job opportunities in the country
2) Company will pay tax (legal)
101
What are the disadvantages of a MNC TO a country (list 3)?
1) High-paying roles come from people from the home country so high-paying jobs aren't given to locals
2) They can charge low prices which results in them removing smaller local businesses
3) They are large so they can influence government decisions
102
Explain the importance of MNC's (3)
- Help lower production costs, which can lead to lower prices for consumers which is important to citizens.
- They make technological advancement, improving quality of product which is important for customers
- Create job opportunities globally, supporting local economies as more people will be employed.
103
Explain how MNC's grow/expand (3)
- MNCs expand by producing goods in different countries, allowing them to reduce costs because of how big the company is
- They grow through global marketing strategies to reach more customers.
- Research also lead to new products and entry into new markets attracting customers.
104
What is the difference between international and multinational businesses? (4)
- International businesses manages from one home country but operates globally for example: Amazon.
- Whilst multinational operates in multiple countries and produces items and services from multiple countries for example: KFC
105
Name 3 benefits of a business being an MNC (3)
- Larger consumer base (International market and customers)
- Can afford to lower costs as their big (more customers attracted)
- Higher reputation
106
Definition of the primary sector? (2)
- It is the sector where raw materials are grown and extracted.
- It is the first stage of production.
107
Definition of the secondary sector? (2)
- It is the sector where raw materials are processed and turned into goods.
- It is the second stage of production.
108
Definition of the tertiary sector? (2)
- It is the sector where goods or services are provided to the public and other businesses.
- It is the final stage of production.
109
Give 3 examples of jobs in the primary sector: (3)
- Farmers (farming)
- Miners (mining)
- Fishermen (fishing)
110
Give 3 examples of jobs in the secondary sector: (3)
- Car manufacturing
- Furniture making
- Construction workers
111
Give 3 examples of jobs in the tertiary sector: (3)
- Teachers (education)
- Bankers (banking and finance)
- Shop worker (retail)
112
Definition of interdependence between sectors? (1)
Businesses in different sectors rely on each other for goods and services to operate.
113
Explain the interdependence between the primary, secondary, and tertiary sectors: (2)
- Secondary sector relies on the primary sector to provide raw materials for manufacturing goods.
- Tertiary sector relies on the secondary sector to provide finished goods and on the primary sector for raw materials.
114
What is a chain of production? (1)
It shows the stages that a product goes through before it reaches the customer
115
What are the changes in the primary sector of business activity? (2)
- Natural resources have become depleted, so raw materials aren't always available
- Jobs in the primary sector have decreased due to technology improving in extracting resources.
116
What are the changes in the secondary sector of business activity? (1)
- Jobs in the secondary sector has decreased because countries like China provide cheaper goods (like Temu)
117
What are the changes in the tertiary sector of business activity? (1)
- Increased employment due to better education
118
Definition of deindustrialization? (1)
Deindustrialisation is the process where developed countries experience a decline in the importance of secondary-sector industries and a rise in tertiary sector industries
119
What is Privatization? (1)
The process of selling government-owned (public sector) businesses to private sector companies.
120
Why does the government privatize businesses? (2)
- To encourage competition in the market, which can lead to better services and increased innovation.
- And to also reduce government spending.
121
List 5 factors affecting business locations in general: (5)
1. Proximity to customers
2. Proximity to Labour (workers)
3. Proximity to suppliers
4. Proximity to competitors
5. Cost of area to rent out or buy
NOTE: Proximity is like distance
122
Why is the location of customers important for businesses? (2)
- Being located near customers increases sales
- Due to more people knowing the that the business is present if close to customers
123
When might the location of customers be less important for a business? (2)
- Some businesses (like car makers) do not sell directly to customers.
- Instead, they focus on affordable locations with skilled labour.
124
Why are transport links (like metro) important for businesses? (2)
- Businesses need to be accessible to suppliers
- Easy access to transport helps businesses distribute products efficiently.
125
Why do areas in places have different costs? (2)
- Because of the location, a more expensive place would be near a busy place
- Whilst a cheaper place would be in a less busy place
126
Name 4 types of businesses (4)
- Service
- Offices
- Manufacturing
- Agriculture/farming
127
How has the internet affected business location decisions? (2)
- Online retail gives flexibility in choosing where to set up their business
- Making it less reliant on physical stores where people go to
