Unit 1 - Business in the Real World Flashcards
What is the primary purpose of businesses in the Private Sector?
To make a profit, but may also exist for the benefit of others.
What do Public Sector organisations provide?
Services to the population, such as schools and hospitals.
What are the Factors of Production?
- Land
- Labour
- Capital
- Enterprise
What does Opportunity Cost refer to?
The value of the next best alternative lost when making a choice.
What is a Sole Trader?
A business owned by one individual with unlimited liability.
What is the difference between Private Limited (Ltd.) and Public Limited (PLC.) companies?
Ltd. has limited liability and is usually smaller, while PLC. can sell shares on the stock market and is larger.
What is Enterprise in the context of business?
The act of doing business by investing and working to increase the value of raw materials.
What are the advantages of being a Sole Trader?
- Keep all profits
- Own boss
- Cheapest to set up
What is the objective of Profit Maximisation?
To achieve the most profit possible.
What is Market Share?
The percentage of a product sold in the UK by a single business.
Who are considered stakeholders in a business?
- Shareholders
- Customers
- Local Community
- Government
- Banks/Creditors
- Suppliers
- Trade Unions
- Special Interest Groups
What can conflict between stakeholders arise from?
Contradictory interests, such as local community wanting fewer lorries while managers want more sales.
Why is business location important?
It impacts costs of getting products to market and access to raw materials or customers.
What is a business plan?
A written document that describes a business, its objectives, strategies, market, and financial forecasts.
What is a Takeover?
When one company buys another, either by purchasing shares or the entire company.
What is a Merger?
When two companies agree to join together, with both original sets of owners retaining some ownership.
What is Forward Vertical Integration?
When a business integrates with another closer to the customer.
What is Outsourcing?
Paying another company to perform certain jobs or work for you.
What are Economies of Scale?
Benefits of getting larger, such as purchasing and technical advantages.
What are Diseconomies of Scale?
Drawbacks of getting larger, such as communication and coordination challenges.
Fill in the blank: A business owned by multiple individuals is called a ______.
Partnership
What is the aim of Customer Satisfaction?
To meet or exceed customer expectations related to the product or service received.
What is the role of Directors in a business?
They have significant influence as they control the business.
What is the relationship between business size and objectives?
Bigger businesses will have different aims than smaller ones.
