Unit 1 Business in the real world Flashcards
(34 cards)
What is the definition of a good and a service?
A good is a physical item like books or furniture.
A service is an action performed by other people ti do something for the customer. For example, barbers and plumbers provide a service.
Name the three sectors of the economy and what they do.
Primary Sector-produces raw materials.
Secondary Sector-manafactures good.
Teritary Sector-provides services
Define enterprise.
Enterprise can mean either a business or organisation, or the personal qualities which mean you can see and take advantage of new business opportunities.
What can enterprise involve?
Enterprise involves identifying new business opportunities and taking advantage of them. Enterprise can also involve starting up a new business or helping an existing one to expand by coming up with new ideas.
What is an entrepreneur?
An entrepreneur is somebody who takes on risks of enterprise activity.
List 4 qualities that an entrepreneur should have.
Hard working-to produce and strengthen good ideas.
Organised-to keep top on day to day tasks.
Innovative-to come up with new ideas.
Willingness-to take calculated risk.
State two advantages of being a sole trader.
Easy to set up.
You get to be your own boss.
You decide alone what happens to any profit.
State two disadvantages of being a sole trader.
May have to work long hours and might not get many holidays.
You have unlimited liability. (Explain)
It can be hard to raise money. Banks see sole traders as risky, so may be hard to get a loan. Often have to rely on your own savings or even family and friends.
State two advantages of being a partnership.
More owners results in more ideas, a greater range of skills and expertise.
More people to share the work.
More owners means more capital (money) can be put into the business, so it can grow faster.
State two disadvantages of being a partnership.
Each partner is legally responsible for what all the other partners do.
Like sole traders, most partnerships have unlimited liability.
More owners means more disagreements. You aren’t the only boss.
All profits are shared between the partners.
State two advantages of being a Private Limited Company (LTD).
You have limited liability.
It’s easier to get a loan of mortgage.
For somebody to buy shares all of the other shareholders must agree.
State two disadvantages of being a Private Limited Company (LTD).
They’re more expensive to set up because of all of the legal paperwork you must complete.
The company is legally obliged to publish its accounts every year. (They do not need to be made public).
State two advantages of being a Public Limited Company (PLC)
Much more capital can be raised by a PLC than by any other kind of business.
The helps the company to expand and diversify.
They have limited liability.
State two disadvantages of being a Public Limited Company (PLC)
Can be hard to get lots of shareholders to agree on how the business is run. Each shareholder has very little say (unless they own a lot of shares).
The accounts have to be made public-so everyone (including competitors) can see if a business is struggling.
More shareholders means there’s more people wanting to get hold of the profits.
State 7 different aims businesses can have.
Survival Maximise Profit Growth Increase Shareholder Value Increase Market Share Do What's Right Socially and Ethically Achieve Customer Satisfaction
Name the different stakeholders.
Owners Employees Local community Government Customers Suppliers
What is the equation for revenue?
Revenue = sales x price
What is revenue?
Revenue is the income earned by a business.
What is the average unit cost?
The average unit cost is how much each product costs to make.
What is the equation for average unit cost?
Average unit cost = total cost / output
What is profit?
Profit is the difference between revenue and costs over a period of time.
What is the equation for profit?
Profit = revenue - costs
What is a business plan?
A business plan is an outline of what a business will do and how is aims to do it.
A business plan must include at least seven sections. List and describe the main seven.
Personal Details- of the owner, like a CV.
Mission Statement- way of describing the aims of the company.
Objectives- more specific than aims.
Product Description- includes details of the market and competitors.
Production Details- how the firm will make it product or provide it service. It should list all equipment need and the location.
Staffing requirements- personnel needed, how many people, their job descriptions and the expected wage bill.
Finance- should explain how much money is needed to start up the business.
