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Business Studies GCSE > Unit 1-Business In The Real World > Flashcards

Unit 1-Business In The Real World Flashcards

1
Q

What is Enterprise?

A

The actions of someone who takes a risk by setting up, investing in and running a business.

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2
Q

What is an Entrepreneur?

A

Someone who takes a calculated risk through starting a business and makes an investment of their own money to set it up.

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3
Q

What are some characteristics of an Entrepreneur?

A

-Innovative
-Risk-Taker
-Hard working
-Organised

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4
Q

Why might someone decide to become an entrepreneur?

A

-Be their own boss
-Flexible working hours
-Earn more money
-Identify a gap in the market
-Dissatisfaction with current job
-Personal development

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5
Q

What is a Business?

A

An organisation that exists to produce goods or supply services to customers.

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6
Q

What are goods?

A

-Actual objects, that can be felt and touched and are produced and consumed.

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7
Q

What is a service.

A

Activities that are intangible, provided by a business.

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8
Q

What are needs?

A

Goods and services we need to live. E.g. Food, water.

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9
Q

What are Wants?

A

Goods and services that we like to consume but do not need to survive. E.g. Phone, Holidays.

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10
Q

What does Opportunity Cost mean?

A

The cost of what has been given up, sacrificed or forfeited when another option has been chosen.

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11
Q

What are Not-For-Profit Organisations?

A

An organisation set up to provide a good or service to help others without gaining a profit. E.g. Charities, social enterprises

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12
Q

What is the first business sector?

A

The Primary Sector-Extracting raw material. E.g. Farming,Mining

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13
Q

What is the second business sector?

A

The Secondary Sector-Manufacturing goods. E.g Car manufacturing, Chocolate factory.

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14
Q

What is the third sector?

A

The Tertiary Sector-Providing services. E.g. Shops, hairdressing.

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15
Q

What are the four factors of production?

A

Land-Where the business is based, natural resources on the land.
Labour-People working in the business.
Capital-Machinery,buildings needed by the business to produce the products.
Enterprise-Refers to the entrepreneurs who take risks and create things from the other factors of production .

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16
Q

What is dynamic nature of business?

A

The idea that business is constantly changing because external factors are always changing.

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17
Q

What are some changes in the business environment/external factors?

A

-Legislation
-Economic
-Technological
-Environmental
-Social

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18
Q

What is a Sole trader and what are the benefits?

A

An individual who has sole ownership of a business, can also employ people. E.g. hairdressers, electricians.
-Easy to set up, you are your own boss, you decide what to do with profit.

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19
Q

What are some drawback of being a sole trader?

A

-Unlimited liability
-May not have all the skills needed
-Making decisions can be stressful
-heavy workload.

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20
Q

What is a partnership?

A

A business is owned by more than one person, generally between 2-20.E.g. doctors, dentists.

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21
Q

What are the benefits of being a partnership?

A

-Simple to form
-Losses will be shared
-Workload shared.

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22
Q

What are the drawbacks of being a partnership?

A

-Unlimited liability
-Decision-making can take longer
-Profits are shared.

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23
Q

What does unlimited liability mean?

A

Owners have to use their own personal funds to pay for debts.

24
Q

What are limited companies?

A

Have a separate legal identity from the owners meaning money belongs to the company not owners, owned by shareholders who have limited liability.

25
What does limited liability mean?
Shareholders only lose the money they have invested.
26
What is a Private limited company?
An LTD can raise funds from investors, such as friends and family but not from the public as its shares are not listed on the stock exchange.
27
What are the benefits of being a Private Limited Company?
-Limited Liability -Easier to raise finance -There is a stable form of structure.
28
What are the drawbacks of being a Private Limited Company?
-Shareholders have to agree about how profits are distributed -Less privacy -Greater administrative costs
29
What is a Public limited company?
A PLC is a company where shares can be sold to the public on the stock exchange.
30
What are the advantages of being a Public limited company?
-Limited liability -Stable form of structure -Can raise money through the stock exchange
31
What are the disadvantages of being a Public limited company?
-Shareholders may not agree on things -Public can see company information and accounts. -Complicated and expensive to set up.
32
What is a Social enterprise?
-To be classed as a social enterprise, at least 50% of surplus money must be reinvested into the enterprise or to help the social need.
33
What is an aim?
It states the overall purpose for the business, the long term goal.
34
What is a Mission statement?
A description of the overall aims of a business.
35
What is an objective?
Specific, measurable targets to help meet the aims of the business.
36
What are some examples of a business's objectives?
-Survival -Profit Maximisation -Market share/sales maximisation and becoming market leader. -Growth-Increase profits through expanding within the home market or internationally. -Shareholder value-Want to increase dividend payment so Shareholders are happy. -Being Social/ethically friendly. -Customer Satisfaction
37
What are the role of objectives in running a business?
-Allow a business to decide on the direction it should take -All employees should follow them. -Allows planning -Measurement of success
38
How will objectives differ between businesses?
-The size of the business -Level of competition faced-If there is little competition a business might focus on profit maximisation while if there is a lot of competition they may focus on customer satisfaction or market share. Type of business-Not-For-Profit organisations will focus on social/ethical objectives. Sole trader may focus on survival. PLC's may focus on growth and maximising shareholder value.
39
How can you judge success from objectives?
-Businesses can go back and see if they have met their objectives. -A common objective is 'profit'. E.G. If the business has met a yearly profit target.
40
What is a Stakeholder and what are some examples?
Any individual or organisation who has a vested interest in the activities and decision-making of a business. For example:Employees, Customers, Suppliers, Government, Local Community and shareholders.
41
What are the different objectives of different stakeholders?
Shareholder-Growth of business and high dividend payments. Employees-Rewards, job security, job satisfaction. Customers-Value for money, product quality. Suppliers-Continued, profitable trade. Government-Growth of business, correct payment of taxes. Local Community-Creating jobs, minimal environmental impact.
42
What are some factors affecting Location?
-Availability of raw materials. -Proximity to the market. -Costs. -Labour -Competition.
43
What is a business plan?
A written document that describes a business, its objectives, strategies, market and its financial forecast.
44
What information is included in a Business Plan?
-The idea, objectives and targets, market overview, how the business will operate, cash-flow forecast.
45
What are the advantages of having a Business Plan?
-Reduces risk, allows to review the business's progress, help to secure finance.
46
What are the disadvantages of having a Business Plan?
-Sales may be overestimated. -May need constant updating. -Requires time.
47
What does Economies of Scale mean?
-Achieved when the average cost per unit falls as the scale of production increases.
48
What are the two types of Economies of Scale?
Purchasing-Achieved when big businesses are able to negotiate discounts for buying bulk supplies, reduces unit cost. Technical-Investing in expensive machinery for production, allows bigger businesses to produce greater quantities resulting in average unit cost of production decreasing.
49
What does Diseconomies of scale mean?
Occurs when the average cost per unit increases and the scale if production increases.
50
What are the two types of Diseconomies of Scale?
Control-Large businesses may experience problems monitoring productivity and work quality. Motivation-May decrease in a growing business, as workers may feel that managers don't value them as individuals, may result in a decrease of productivity.
51
What are some factors that may affect the method of growth?
-Size of business -Nature of product -Position in the market -Financial position of business
52
What are the advantages of external growth?
-Quicker, increased market share and power and risk is spread.
53
What are the disadvantages of External growth?
-Can be expensive, managers may not be experienced enough.
54
What are the advantages of growth?
-Economies of Scale -Access to more retailers -less vulnerable to takeovers -Easier to raise finance
55
What are the disadvantages of growth?
-Diseconomies of Scale -Slower decision-making -Employees may become de-motivated, -Increased costs and relationships with customers may be lost.

Business Studies GCSE (8 decks)

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