What is Business? Flashcards Preview

AQA A level Business > What is Business? > Flashcards

Flashcards in What is Business? Deck (39)
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What is a mission statement?

A general statement of where the business is heading, expressed to make it seem especially purposeful and motivating.


What are SMART objectives?

  • Specific
  • Measurable
  • Agreed
  • Realisitc
  • Time Specific


Why do businesses set objectives?

  • Managers can feel confident in making decisions
  • Motivation
  • Basis for devising the strategy
  • Budgeting


What are objectives?

Stated measurable targets of how to achieve business aims


What is profit maximisation?

Maximising turnover while reducing costs


What are satisficing objectives?

Trying to make enough profit to keep owners comfortable


What is cash flow?

The total amount of money coming and out of a business



What are variable costs?

Costs that vary with the level of output


What is a sole trader?

Only one person owns the business


What are the advantages of being a sole trader?

  • Quick and easy to set up
  • Owner has complete control over decision making
  • Minimal paperwork
  • Easy to close/shut down
  • 1 person benefits financially
  • No administrative costs to pay when setting up


What are the disadvnatges of being a sole trader?

  • Unlimited liability
  • Limitied source of finance
  • The business is the owner e.g. the business suffers if the owner is ill
  • Pay more tax than a company


What is unlimited liability?

The owner is responsible for the total amount of debts and obligations of that business


What is limited liability?

Shareholders of the business are legally responsible for the debts of the business only to the extent to the value of the share in the business


What is a business partnership?

Business is started and owned by more than 1 person


What are the advantages of being in a business partnership?

  • Quite simple - minimal paperwork once set up
  • Expertise and effort from more than one owner
  • Specialist skills
  • Greater potential to raise finance


What are the disadvantages of being in a business partnership?

  • Unlimited liability
  • A poor decison made by one owner may damage the interests of the other partners
  • Harder to raise finance than a company
  • Complicated to sell or close


What is a Limited Company?

The business is seperate legal entity to the owner


What are the advantages of being a limited company?.

  • Shareholders are protected
  • Easier to raise finance
  • Stable form of structure - business continues if shareholders change
  • Can pay less tax


What are the disadvantages of being a limited company?

  • Greater admin costs
  • Public disclosure of company's information
  • Directors legal duties
  • Have to follow more expensive rules e.g. producing audited accounts


What is incorporation?

Creating a separate legal identity for the organisation


What are non-for-profit organisations?

Trade in order to benefit the community


What are social enterprises?

Trades in goods and services for a social purpose i.e. surplus goes towards social aims


What do political influences include?

  • Services
  • Infrastructure
  • Tax policy
  • Regulation
  • The UK in the EU
  • Change of government
  • Terrorism and violence


What do economic influences include?

  • Growth rate
  • Inflation
  • Labour costs
  • Business cycle
  • Unemployment and employment rates
  • Exchange rates
  • The stock market


What do social influences include?

  • Demography
  • Education
  • Cultural norms
  • Income distribution


What do technological influences include?

  • Online/digital developments on sales/marketing
  • Robotics/automation on processes such as manufacturing
  • Development of new products which might make others obselete
  • Payment methods


What do legal influences include?

  • Regional laws
  • Law enforcement
  • Court system


What do environmental influences include?

  • Resource management
  • Energy availibilty
  • Workforce health
  • Climate change


What are public limited companies?

A company whos securties are traded on the stock exchange and can be brought and sold by anyone


What is the private sector?

Part of the national economy that is not under direct state control