Unit 3.1

Question 1

Business Objectives

Answer 1

Aim that business wants to achieve - usually SMART

Question 2

SMART

Answer 2

Specific, Measurable, Achievable, Realistic, Timely

Question 3

Mission statement

Answer 3

Formal phrase that sets out aim of business

Question 4

Mission objectives

Answer 4

-Mission Statement
-Corporate strategy
-Business objectives
-Functional objectives

Question 5

Why set Objectives?

Answer 5

Show the business is progressing in the right direction

Question 6

Fixed costs

Answer 6

Do not vary depending on output

Question 7

Variable costs

Answer 7

Do vary depending on output

Question 8

Business forms

Answer 8

Legal structure in the UK. Most businesses in the UK are private limited companies, but not all

Question 9

Limited Liability

Answer 9

owner of the business has no personal liability for business debts - Owner has a separate legal identity from the business and is NOT liable for payment of debts etc.

Question 10

Unlimited liability

Answer 10

The owner has personal liability for business debts - if there is no money int he business then the owner would need to pay off debts from personal finances

Question 11

Sole trader

Answer 11

Business owned by the owner - have full control over the business’s decision making. - mainly small businesses - have the disadvantage of unlimited liability

Question 12

Private Limited Company (Ltd)

Answer 12

can expand by selling more shares - fiends and family can buy shares - shares cannot be bought by the public - Ltd owners have full control over who can buy shares. - Have benefit of limited liability.

Question 13

Public limited companies (PLC)

Answer 13

Share are mad available on the stock market - needs to issue a prospectus where potential investors are invited to purchase shares before flotation (called an IPO)

Question 14

Public sector organisations

Answer 14

owned by the UK government - Taxes go towards paying for these businesses - 5.2 million people are employed in the public sector

Question 15

Social enterprise

Answer 15

non-for-profit organisations - businesses with with primarily social objectives who excess profit is reinvested for that objective instead of being put back into the business

Question 16

Influences on business forms

Answer 16

objectives of the business
How the business is financed
what products and services are being offered

Question 17

Ordinary share capital

Answer 17

provides investors with voting rights (one vote per share ) and represent proportionate ownership of a company - receive dividend payments depending on a company’s performance.

Question 18

Market Capitalisation

Answer 18

Total value of the company or the total value of the shares in the company

Question 19

Dividends

Answer 19

Investors expect to be paid dividends after a company makes a profit

Question 20

Role of shareholders

Answer 20

owners of the company and provide financial backing in return for potential dividends

Question 21

Why shareholders invest

Answer 21

In hope of return on investment which is better than a bank’s savings account’s, this is there capital gain

Question 22

Influences on share price

Answer 22

Supply and demand in the market
Interest rates
Political climate
Management of the company

Question 23

Market conditions

Answer 23

Situation of a particular market at a particular point in time

Question 24

Interest rates

Answer 24

Cost of borrowing

Question 25

Demographic rates

Answer 25

Any factors relating to the structure of a population

Question 26

Fair trade

Answer 26

made between businesses in developed countries and developing countries in which fair prices are paid to the producers

Question 27

Social enterprises - Key facts

Answer 27

Over 100,000 in the UK contribute £60billion annually to the economy Employ 2million people

Question 28

Social enterprises, What?

Answer 28

a business that pledges to donate 50% of it's profits - aim is still to make profit but to also spend some capital om a cause of their choice.

Question 29

Social Value act

Answer 29

passed in 2012 - requires all commissioners who produce a service to consider social, economic and enviromental benefits

Question 30

Social enterprises - Examples

Answer 30

Tarem Services limited - aims to make sure cleaners are cared for at work - 2006, they gave their employees 6 monthly dividends

Question 31

PESTLE - Political

Answer 31

impact that government decisions have on a business - e.g. corporation tax

Question 32

PESTLE-Social Impacts

Answer 32

refers to trends which change over time. e.g. = increased migrant workers in UK means = lower wages = lower costs and lower prices.

Question 33

PESTLE-Economics

Answer 33

economic growth = growing consumer confidence = more spending. Also includes inflation, interest rates, and exchange rates.

Question 34

PESTLE-Technological

Answer 34

changes in technology give consumers more ways to buy = e.g. more goods from china. Can also include Robotics, E-commerce and automation.

Question 35

PESTLE-Legal

Answer 35

laws that effect businesses - categories = consumer laws, employment, laws and environmental laws.

Question 36

External environment

Answer 36

anything outside of the business that may have an impact on the way it operates

Question 37

Factors affecting cost and demand: Competition

Answer 37

many competitors and high demand = lower prices to attract customers

Question 38

Factors affecting cost and demand: Market conditions

Answer 38

type of market a business is going into - includes number of competitors, rivalry and market growth rate

Question 39

Factors affecting cost and demand: Incomes

Answer 39

higher incomes mean higher wages = higher costs for the business - however customers will also have more disposable income

Question 40

Factors affecting cost and demand: Interest rates

Answer 40

high rates = customers cant borrow money = demand will drop

Question 41

Factors affecting cost and demand: Demographic factors

Answer 41

UK now has an older population which leads to an increased demand for mobility products. Culture etc also affect the types of products being sold in an area

Question 42

Factors affecting cost and demand: Enviromental issues

Answer 42

being environmentally friendly can lead to higher costs but also higher demand

Question 43

Factors affecting cost and demand: Fair Trade

Answer 43

requires companies to pay prices no lower than the market price - customers are willing to pay higher prices for fairtrade products.