Business Revision Questions

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What are Customer Needs?
Are Products & Services that we need to survive.
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What are Customer Wants?
Are Products & Services that we would like but can do without.
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What are Goods?
Goods are Products.
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What are Services?
Are when a Business does something for us.
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Why do Businesses have aims?
Businesses have aims to set out what they want to achieve.
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What is a Short term aim ?
Short term aims set out what the business wants to achieve in that year.
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What is a medium term aim ?
Medium term aims set out want the business wants to achieve in years 1 to 5.
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What is a Long Term aim ?
Long term aims set out what the business wants to achieve in 5 years or more.
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Why do Businesses aims change over time ?
They change over time to make sure they are still suitable aims.
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What is SMART objectives ?
Smart objectives are Specific,Measurable , Achievable , Realistic , Timed.
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What are Mission Statements ?
Mission statements set out what kind of business it wants to be based on the business aims.
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Why do Businesses must be able to keep accurate records?
They must be able to keep accurate records so they know how much their costs are and when their debts need to be repaid by.
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What are some of the problems a business will have if it does not keep accurate records?
It will not be able to plan for the future because it will not know how much money it has or will have.
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What is a Stakeholder ?
A stakeholder is anyone who has an interest in the Business.
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What are the main stakeholders ?
The main stakeholders are consumers, employees, banks, shareholders, suppliers, government and the local community.
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What is Stakeholder conflict ?
Stakeholder conflict is when different stakeholders want different things.
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What are Public Sector businesses ?
Organisations owned by the government paid for by taxes.
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What are Private Sector businesses ?
Are owned by private individuals.
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How many sectors of industry are Businesses grouped into ?
Businesses can be grouped into 3 sectors of industry.
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What businesses are in the Primary Sector ?
Businesses that collect raw materials are in the primary sector.
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What businesses are in the Secondary Sector ?
Manufacturing businesses are in the secondary sector.
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What businesses are in the Tertiary Sector ?
Businesses that supply a service are in the tertiary sector.
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Why is the primary sector shrinking?
Ship Mines have closed, fish stocks falling in the North sea, farming is automated so less people are needed and north sea oil will soon decline
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Why is the Secondary sector shrinking ?
UK buys more and more goods from overseas. Technology means that manufacturing is done by machines and therefore less people are needed
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Why is the Tertiary Sector growing ?
U.K has become more wealthy and therefore people have more wants
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What is the chain of production ?
The chain of production links the 3 industry sectors together.
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What is a Sole Trader ?
a small business with one owner
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What are the Advantages of a Sole Trader Business?
easy to set up, owner keeps all of the profits, owner makes all of the decisions and lots of job satisfaction
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What are the Disadvantages of a Sole Trader Business ?
hard to raise finance, banks reluctant to lend money, very demanding on the owner and they have unlimited liability
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What is unlimited liability ?
means that if the business fails then the owner may be forced to sell their personal possessions
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What is a Partnership business?
A small business that is owned by a group of partners. It can have between 2 and 20.
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What is the Deed of Partnership?
Partners sign a partnership agreement which sets out who will do what and how profits will be shared
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What are the advantages of a Partnership business?
easy to set up, each partner brings their own expertise, more finance available as each partner can contribute and shared responsibility means less pressure
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What are the disadvantages of a Partnership business?
disagreements between partners often cause the partnership to fail, still can't raise large amounts of finance, each partner is responsible for the debts of the other and they have unlimited liability
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What is incorporation?
when a business incorporates they register as a company. only companies are incorporated. the business registers with the registrar of companies at companies' house and is given a certificate of incorporation.
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Where is the certificate of incorporation kept?
is kept at the companies head officde
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What is a Private Limited Company (LTD)?
a small to medium sized business. owned by shareholders and sells shares privately to family or friends. the original owners as the board of directors usually keep control. must register the company with the registrar of companies before trading
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What are the Advantages of a LTD business ?
owners of the company retain control, easier than a sole trader to raise finance as it can sell shares (in practise this is difficult), can hire specialist managers to run the business and they have limited liability
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What is Limited Liability?
owners can only loose the amount they invested in the company. personal possessions are not at risk
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What are the Disadvantages of a LTD business?
hard to raise finance as you have to sell shares privately and it is still difficult to get loans from the bank
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What is a Public Limited Company (PLC) ?
a large business. sells shares through london stock exchange. can be thousands of shareholders so directors are appointed to run the business. must register the company with the registrar of companies before trading
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What are the advantages of a PLC business ?
easy to raise finance from bank and expand, easy to sell shares, specialist managers hired to run the business, have limited liability,can hire specialist managers and can afford to but the latest equipment
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What are the disadvantages of a PLC business ?
must make its accounts public, competitors can see the accounts, complex to set up- business must have register and have a minimum of £50,000 share capital and original owners may have little influence on decisions
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What are owned by shareholders ?
companies
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Who has Control and Management in a PLC ?
shareholders appoint directors to run the business on their behalf
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Who has Control and Management in a LTD ?
shareholders are usually same people as the managers
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What is continuity ?
companies have a separate legal identity to their owners so if the owner dies the company continues to exist
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What is insolvency ?
is when a business runs out money and can not pay its debts
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What is Bankruptcy ?
a business is declared bankrupt by the court when it can not pay its debtors. usually results in the business closing and being sold (liquidated)
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What is a Franchise ?
A franchise allows a small business (franchisee) to use a well known companies name, image and products (franchiser) in return for regular fees
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What are the Benefits of a Franchise for a Franchisee ?
using a well known name, less risky to start up, keep most of the profits and selling a established successful product.
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What are the Benefits of a Franchise for the Franchiser ?
regular income and business grows without risks (franchisee responsible for debts)
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What are the Drawbacks of a Franchise for the Franchiser ?
you don't have quite as much control over each business as you actually don't own it and mistakes made by a franchisee can damage the reputation of the main business
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What are the Drawbacks of a Franchise for the Franchisee ?
must buy the franchise and must follow many of the franchisers rules
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What is a Co-operative ?
are businesses owned and run by a group of people with a shared interest in the business.
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list a advantage of a co-operative business
as the employees own the business everyone should be motivated
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list a advantage of a co-operative business
the objectives are normally more focused on the members of the co-operative
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list a advantage of a co-operative business
the workers know about the business and therefore products are better quality/ workers have better productivity
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list a disadvantage of a co-operative business
the lack of experience of running a business may hinder the business and thus less likely to succeed
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list a disadvantage of a co-operative business
the system of one member vote in some societies means a long, drawn out decision-making process
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list a disadvantage of a co-operative business
co-operatives may find it difficult to raise finance since banks are not so willing to lend them money because their main aim is not to make a profit
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list a disadvantage of a co-operative business
ideas limited, skills limited and difficulty in raising finance
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what is a social enterprise business ?
a social enterprise business is a business that is driven by a social or environmental purpose
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list a key feature of a social enterprise business
it is a business that makes a product or offers a service
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list a key feature of a social enterprise business
it wants to make a profit
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list a key feature of a social enterprise business
it reinvests any profits it makes into the good cause it supports
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list a key feature of a social enterprise business
most social enterprise owners said that "putting something back into the community" was their reason for setting up a social enterprise
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list a key feature of a social enterprise business
it can be set up to help any good cause that its owner believes is important
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list a key feature of a social enterprise business
it is not a charity and does not ask for donations
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What are charities
charities are voluntary organisations that benefit the public in a particular way
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list a key feature of charities
must be registered with the charities commision
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list a key feature of charities
it is not a business
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list a key feature of charities
set up and ran by trustees
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list a key feature of charities
must have an income of £5000 to register
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list a key feature of charities
can only be set up for certain good causes known as charitable causes
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list a key feature of charities
cannot make a profit. instead any surplus it makes must go into its charitable cause
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list a key feature of charities
relies on donations and fundraising
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What can only be set up and registered if it is a recognized charitable cause from the government?
a charity
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list a charitable cause
preventing or relief of poverty
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list a charitable cause
advancing education
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list a charitable cause
advancing religion
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list a charitable cause
advancing health and the saving of lives
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list a charitable cause
advancing amateur sport
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list a charitable cause
advancing the arts, culture, heritage or science
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list a charitable cause
advancing citizenship or community development
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What is business interdependence ?
businesses are linked in many ways and are dependent on each other in many ways
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list a example of interdependence
businesses need to get supplies from other businesses in order to make products. To do this they need to buy raw materials, usually from a local supplier
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list a example of interdependence
the business relies on the bank for access to its cash and for borrowing. it wants the bank to give it good rates of interest and an online account so it can transfer money and pay bills outside of normal working hours
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list a example of interdependence
the business relies on other external businesses such as accountants and solicitors to help it manage its money and provide good legal advice
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list a example of interdependence
the business will use delivery firms so that it gets its orders on time
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list a way we can tell a business has grown
its market share increases i.e. it gets more customers
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list a way we can tell a business has grown
its profits and sales increase
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list a way we can tell a business has grown
it recruits new employees
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list a way we can tell a business has grown
it opens in new locations
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list a way we can tell a business has grown
it launches new products
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list a way we can tell a business has grown
the company is worth more
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list a reason for why businesses need to grow
businesses need to grow to increase profits
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list a reason for why businesses need to grow
businesses need to grow to stay ahead of competition
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list a reason for why businesses need to grow
businesses need to grow to increase its market share and influence
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list a reason for why businesses need to grow
businesses need to grow to benefit from economies of scale
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what is internal growth ?
is when a business uses its own profits to expand and grow. internal growth is very slow but it is not risky as you are using your own money
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what is external growth ?
is when a business joins with another or buys another business. external growth is fast, but is risky as you have to borrow money. can be done in two ways: mergers and takeovers
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What happens in a merger ?
is when two businesses agree to join together to form a bigger business
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What happens in a takeover ?
is when one business decides to buy another. can be a friendly takeover where one business agrees to be bought for a fair price or a hostile takeover where the business tries to stop being bought
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list a benefit of mergers and takeovers
fast way of growing the business
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list a benefit of mergers and takeovers
helps the business increase its market share
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list a benefit of mergers and takeovers
helps the business gain an advantage over its customers
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list a benefit of mergers and takeovers
helps the business enter new markets if the business it buys does something different
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list a benefit of mergers and takeovers
once joined, the business can reduce costs by removing unnecessary duplication
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list a drawback of mergers and takeovers
is often expensive
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list a drawback of mergers and takeovers
borrowing the money needed is risky
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list a drawback of mergers and takeovers
it often causes problems with restructuring afterwards
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What is integration?
another name for merging is integration. happens when two businesses join together
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what are the four types of integration ?
horizontal, vertical, lateral and conglomerate
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What is horizontal integration ?
is when a firm merges with another firm that makes the same product
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What is lateral integration ?
is the joining together or firms with similar products that do not compete directly with each other
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What is vertical integration ?
is backwards integration or forwards integration
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What is backwards integration ?
happens when a firm merges with another in the same industry but further back in the chain of production.
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What is forwards integration ?
happens when a firm merges with another in the same industry but further forward in the chain of production
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What is conglomerate integration ?
is when firms making completely different products merge. A conglomerate business is a large company with a variety of businesses making many different products and services
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What do most large businesses try to become ?
multinational i.e operate in more than one country
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What is a market place ?
is anywhere products and services are bought and sold. generally speaking we want high levels of competition in all markets. low levels of competition lead to problems
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high levels of competition in the market
greater choice for customers
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high levels of competition in the market
lots of businesses competing for trade means lower selling prices and higher quality goods
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high levels of competition in the market
greater customer service as businesses are fighting for your business
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high levels of competition in the market
there is little control over market prices
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high levels of competition in the market
few barriers to new businesses entering the market
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low levels of competition in the market
large businesses control the market
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low levels of competition in the market
the price of goods is often higher
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low levels of competition in the market
many barriers to new businesses entering the market
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low levels of competition in the market
quality can suffer
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low levels of competition in the market
reduced choice for the customer
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number & size of firms in monopolistic competition in a market
many , small
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nature of product in monopolistic competition level of competition in a market
differentiated
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barriers to entry for new firms in monopolistic competition level of competition in a market
none
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number of sellers in monopolistic competition level of competition in a market
many sellers
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sellers ability to influence the market in monopolistic competition level of competition in a market
small amount
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other features in a monopolistic competition level of competition in a market
some control of price due to differentiated product
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number & size of firms in oligopoly level of competition in a market
few, large
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nature of product in oligopoly level of competition in a market
differentiated
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barriers to entry for new firms in oligopoly level of competition in a market
high
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number of sellers in oligopoly level of competition in a market
few sellers
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sellers ability to influence the market in oligopoly level of competition in a market
some
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other features of oligopoly level of competition in a market
non-price competition
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number & size of firms in monopoly level of competition in a market
one in theory
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nature of product in monopoly level of competition in a market
unique
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barriers to entry for new firms in monopoly level of competition in a market
high
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number of sellers in monopoly level of competition in a market
single sellers
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sellers ability to influence the market in monopoly level of competition in a market
large
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other features of monopoly level competition in a market
in practise a monopoly exists if one company control 25% of the market
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how to be successful in a competitive market (how to beat the competition)
improve the quality of the products you sell
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how to be successful in a competitive market (how to beat the competition)
sell the products at competitive prices
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how to be successful in a competitive market (how to beat the competition)
use advertising and promotion to persuade customers to buy your products
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how to be successful in a competitive market (how to beat the competition)
grow to become a larger company using mergers and takeovers
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how to be successful in a competitive market (how to beat the competition)
differentiate your product in some way to make it stand out from the competition
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what should a business consider before choosing a suitable location ?
is it close to customers
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what should a business consider before choosing a suitable location ?
can it get its products to its customers i.e. good road,rail and sea links
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what should a business consider before choosing a suitable location ?
can its customers get to it e.g. if it is a shop
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what should a business consider before choosing a suitable location ?
is the areas expensive to buy properties or not i.e. the costs
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what should a business consider before choosing a suitable location ?
do the people in the local area have the right skills
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what should a business consider before choosing a suitable location ?
how much competition is there locally and where is the competition
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Other cards in this set

Card 2

Front

What are Customer Wants?

Back

Are Products & Services that we would like but can do without.

Card 3

Front

What are Goods?

Back

Preview of the front of card 3

Card 4

Front

What are Services?

Back

Preview of the front of card 4

Card 5

Front

Why do Businesses have aims?

Back

Preview of the front of card 5
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