- Explain what is meant by the term opportunity cost: The loss of other alternatives, when one other alternative is chosen.
- Identify 3 sectors of economic activity: extraction of raw materials (primary), manufacturing (secondary), and services (tertiary)
- Define the term added value: The enhancement a company gives its product or service before offering the product to customers
- Explain different methods a business can use to add value: Building a brand (reputation of high quality, branded products), delivering excellent service, product features and benefits
- Give two characteristics of a business that operates in the public sector: Usually large businesses, owned and ran by the government, paid for through taxes
- State a characteristic of a business that operates in the private sector: Aren’t owned by the government
- Identify ways used to measure the size of a business: Number of employees, number of outlets(shops), total revenue, profit, capital employed, market value.
- outline different ways in which a company can achieve economies of scale: Purchasing economies- when large businesses often receive a discount because they are buying in bulk. Marketing economies- from spreading the fixed cost of promotion over a larger level of output. Administrative economies- from spreading the fixed cost of management staff and IT systems over a larger level of output. Research and development economies- from spreading the fixed costs of developing new or improved products over a larger level of output.
- What is a limited company: A limited company is a company owned by shareholders
- What is limited liability: investors can only lose money they have invested, unlike sole traders that have unlimited liability, which means they may have to uses their own personal savings to pay debt.
- What is the difference between a private limited company and a public limited company: shares from a public limited company can be bought on the stock exchange by the general public, shares from a private limited company cannot be bought by the public, selling of shares can only be authorised by the board of directors & shareholders.
- reasons why a private limited company may become a plc: Shares in a private company cannot be offered for sale to general public, Restricts availability of finance, especially if business wants to expand, it is also easier to raise money…
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