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A level business > What is a business? > Flashcards

What is a business? Flashcards

(53 cards)

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1
Q

What is a mission statement?

A

A qualitative description about the organisation allowing stakeholders to know the businesses intention

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2
Q

What are the main functions of a business objective?

A
  1. Defines the overall objectives of the business
  2. Driven by the mission statement
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3
Q

What is the main purposes of a functional objective?

A
  1. Defines the objectives of each department
  2. Driven by business objectives
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4
Q

List 4 functions of profit.

A
  1. Source of finance
  2. Attracts investors
  3. Motivates employees
  4. Allows for financial stability
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5
Q

Define revenue

A

The total made from sales

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6
Q

Define fixed costs

A

Costs that do not vary with output

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7
Q

Define variable costs

A

Costs that vary with output

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8
Q

Give two examples of incorporated businesses

A

LTD
PLC

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9
Q

What type of businesses have limited liability

A

Incorporated businesses

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10
Q

What is meant by having limited laibility?

A

The owners and the business are seen as two separate legal entities
Shareholders do not put their personal assets at risk

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11
Q

Is limited liability advantageous or disadvantageous

A

Advantageous

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12
Q

What are two examples of an unincorporated business

A

Sole trader
Partnerships

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13
Q

What type of liability do unincorporated businesses have?

A

Unlimited laibility

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14
Q

What is meant by unlimited liability?

A

When the business and the owner are seen as the same legal entity, thus in the situation of the business incurring debts, they put their assets at risk

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15
Q

Who finances the public sector businesses?

A

Financed by governments

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16
Q

Who finances the private sector businesses

A

Financed by entrepreneurs

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17
Q

How do we calculate market capitalisation?

A

Number of ordinary issued shares x Share price (At current market price)

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18
Q

How do we calculate ordinary share capital

A

Number of ordinary shares issued x share price (At first issue)

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19
Q

What is a non profit organisation?

A

A business that is set up to pursue objectives that benefit society

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20
Q

How do non profit organisations raise their money?

A

Fundraising

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21
Q

Advantages of owning non profit organisations

A

Lower tax= more profit= more to reinvest into persuing social objectives

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22
Q

Is a LTD incorporated?

23
Q

What is an LTD, who owns it and who manages it

Study These Flashcards
A

An LTD is a company that is owned by shareholders and is managed by directors in which shareholders can choose

24
Q

Properties of an LTD

Study These Flashcards
A

Shareholders are invite only
Shares are not sold on the stock exchange
Shareholders can only loose what they invest

25
Pros of an LTD
Limited liability Additional sources of finance Control over who becomes a shareholder
26
Cons of an LTD
Shared profits Legally must publish financial accounts more beauracracy
27
What questions may arise if a firm wants to switch from a LTD to a PLC
Will profits be higher Do you need control over who becomes a shareholder? Do you need financing from the stock exchange
28
What type of business is a sole trader?
Unincorporated business
29
What is a sole trader?
A business owned by one individual who retains all profits generated
30
Pros of a sole trader
1. Simple to setup 2. No need to publish finances 3. Retain all profits 4. Fast decision making
31
Cons of sole trader
1. Unlimited liability 2. Fewer sources of finance 3. Limited expertise 4. Hard to take time off
32
Why shold a sole trader become an LTD?
Will you make more profits? Got any assets you want to risk Do you need full control is there a need for external financing?
33
What is a PLC
A PLC is a company that commonly offers its shares to the general public via the stock exchange.
34
List 3 features of a PLC
ANY FROM: 1. Limied liability 2. must raise 50000 in share capital 3. minimum of 2 directors and 1 secretary 4. Needs to publish its financial accounts
35
What does an LTD gain access to when it becomes a PLC
The stock exchange
36
Why might an LTD become a PLC
Greater profits Loss of control greater financing
37
What is meant by the stock exchange
The stock exchange is a market where PLCs can sell shares to the public
38
What is meant by the term Flotation
Flotation is the process of an LTD offering shares for sale on the stock market to therefore become a PLC
39
Pros of flotation
Raises finance Shareholders retain limited liability more media exposure
40
Cons of flotation
Expensive Anyone can buy shares- risking a takeover short sighted shareholders only care about dividends
41
What features of the external environment can affect cost and demand
Competition Market conditions Incomes Interest rates Demographic Environmental issues
42
How does competetion affect costs for firms?
High competition= Higher marketing costs
43
How does competition affect demand
Consumers are more sensetive to a change in price
44
how does unemployment conditions affect costs
High unemployment= larger supply of labour=hire high skill at low price
45
How does seasonal market conditions affect demand
seasonality- increases in the hospitality industry in the summer due to increased tourism
46
How do incomes affect costs?
If the economy is doing well, incomes rise= increase in costs
47
How do incomes affect demand?
Income increases lead to increases in demand for luxury goods
48
How do interest rates affect costs
Higher interest rates means higher costs on loans increasing COPs
49
How do interest rates affect demand?
Higher interest rates = less spending as people are incentivised to save
50
How do demographic factors affect costs?
Increases in immigration increases the supply of labour lowering costs
51
How do demographic factors affect demand?
Ageing population increases demand for certain industries
52
How do environmental issues affect costs?
Fairtrade= ethical =expensive
53
How do environmental issues affect demand
Fairtrade= ethical = higher demand

A level business (6 decks)

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