Business activity

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What are the 4 factors of production?
Land, labor, enterprise, capital
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What is the basic economic problem?
There exists unlimited wants but limited resources to produce the goods and services to satisfy them.
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What does the basic economic problem lead to?
Scarcity
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What is opportunity cost?
The next best alternative lost from choosing another item or service
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Why is specialisation now very common?
1) Specialised machinery and technology are now widely available. 2) Increasing competition means that businesses have to keep costs low. 3) Most people recognise that higher living standards can result from being specialised
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What are the advantages of division of labor?
1) Workers are more skilled and therefore work faster - increasing productivity, efficiency and ultimately output. 2) Less time is wasted moving from one workbench to another.
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What are the disadvantages of division of labor?
1) Workers can become bored doing just one job over and over again - efficiency might fall, and so might quality and output. 2) If one worker is absent and no one else can do the job, the whole production line is stopped.
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What happens if value isn't added to the materials and components that a business buys?
1) Other costs cannot be paid for. 2) No profit will be made
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What is meant by the term business?
An entity that sells and/or produces services to a target buyer and whose main objective is profit.
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What are some examples of activities that are involved in the primary sector?
Farming, fishing, forestry, extraction of natural materials...
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What are some examples of activities that are involved in the secondary sector?
Building and construction, aircraft and car manufacturing, computer assembly, bread baking...
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What are some examples of activities that are involved in the tertiary sector?
Banking, transport, retail, insurance, hotels, hairdressing...
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What are the reasons for de-industrialisation?
1) Sources of some primary products, such as timber, oil and gas become depleted. 2) Most developed countries are losing competitiveness in manufacturing to the newly industrialised countries such as Brazil, India and China.
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What is the private sector?
The sector in which businesses are not owned by the government. They make their own decisions about what to produce, how it should be produced and what price should be charged for it. Main objective: profit
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What is the public sector?
Government or state-owned and controlled businesses and organisations. Some services are free. Main objective: satisfy population
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Which businesses are usually in the public sector?
Health, education, defence, public transport, water supply, electricity supply
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What are the characteristics of being an entrepreneur?
Independence, hard working, risk taking, creativity, optimistic, self-confidence, innovative, effective communicator
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Why do governments support business start ups?
Reduces unemployment, increases competition, increases output, benefits society, can grow further
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What are 4 ways that business size can be measured?
1) Number of employees 2) Value of output 3) Value of sales 4) Value of capital employed
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What are 3 external stakeholders?
Government, Community, Consumers
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What are 3 internal stakeholders?
Managers, Owners, Workers
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What is another name for conglomerate integration?
Diversification
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What are 4 problems of business growth?
1) Larger businesses are difficult to control 2) Larger businesses lead to poor communication 3) Expansion costs so much that businesses can be short of finance 4) Integrating with another business is more difficult than expected
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What are 5 reasons why business fail?
1) Poor management 2) Failure to plan for change 3) Poor financial management 4) Over-expansion 5) Risks of new business start-ups
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What are the 5 main forms of business organisation?
1) Sole traders 2) Partnerships 3) Private limited companies 4) Public limited companies 5) Co-operatives
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What is mentioned in the deed of partnership?
How the partnership will be run and the rights and duties of the members themselves. It also states how the profits will be shared, the work hours of the members and what each member is going to do.
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What are the advantages of a public limited company?
1) Can sell shares to public 2) Rapid expansion possible 3) Limited liability 4) Continuity
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What are the disadvantages of a public limited company?
1) Legal formalities 2) Disclosure of accounts and other information 3) Divorce between ownership and control 4) Expensive to go public
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What is a joint venture?
When two or more businesses agree to start a new project together sharing the capital, risks and profits.
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What are the business objectives of an owner?
Profits, business growth, low risk
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What are the business objectives for the community?
Clean environment, jobs for locals
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What are the business objectives for customers?
Safe and reliable products, good value for money, well-designed products of good quality, reliable service and maintenance
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What are the business objectives of workers?
Regular payment, job security, job that gives satisfaction, contract of employment
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What are the business objectives of a manager?
High salaries, job security, growth of the business, wider span of control
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What are the business objectives of the government?
Business success, employment, taxes
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Other cards in this set

Card 2

Front

What is the basic economic problem?

Back

There exists unlimited wants but limited resources to produce the goods and services to satisfy them.

Card 3

Front

What does the basic economic problem lead to?

Back

Preview of the front of card 3

Card 4

Front

What is opportunity cost?

Back

Preview of the front of card 4

Card 5

Front

Why is specialisation now very common?

Back

Preview of the front of card 5
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