Business Studies

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  • Created by: elliesp
  • Created on: 26-04-16 16:41
what is an entrepreneur?
someone who is willing to set up a business and take the risks involved?
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List 3 reasons for starting a business?
to be your own boss, to take advantage of a gap in the market, to gain power and control
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what is a private limited company and how can you tell a business is one?
a business who's a private limited company is an ltd. An ltd can only sell shares to someone if all of it's shareholders agree.
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What are the advs of an ltd?
limited liability, finance from shareholders
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Disadvs of an ltd?
quite expensive to set up because of legal paperwork, have to legally publish accounts annually, decisions slow as have to confirm with all shareholders, can't sell shares on stock exchange
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what is a sole trader?
an individual who sets up and runs a business on their own.
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advs of sole trader?
keep all profits, complete control, decisions made quickly, small start up costs, no finical info published,
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disadvs of sole traders?
unlimited liability, hard to get loans, hard to grow bc can't sell shares, long hours, business ceases if owner dies/extremely ill, limited skills & ideas, no finance from partner, debts not shared
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what is a partnership?
a partnership is a business run and set up by two or more people, and the duties and profits are shared between them.
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advs of partnership?
shorter working hours, more ideas, skills and finance, cover for illness etc, hard to grow bc can't sell shares
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disadvs of partnership?
arguments about decisions, have to trust each other as your reputation is in ecahother's hands, unlimited liability, profits shared
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what is an aim?
an aim is a long term goal that the business wants to achieve
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what is an objective?
an objective is a specific, measurable short term target that the business has to achieve in order to reach it's aims
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what are some examples of business aims?
increased profits, survival, growth, market share. environmental sustainability, ethical consideration
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what is a social enterprise?
A social enterprise is a business which is set up to tackle a social or environmental need
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why is it important for a business to be ethical?
customers would be more attracted to a business that they think is morally right than one that's not.
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why is environmental sustainability good for a business?
firms who are environmentally sustainable are likely to attract more customers as people are becoming more aware we need to reduce environmental issues so would want to contribute the cause by using their business
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what are objectives used for? examples?
can be used to measure whether a business has been successful or not. E.g if a business' aim is to grow they may set a target to increase sales by 30% over 2 years.
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what is a stakeholder?
someone who has interest in the business
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what is an internal stakeholder?
someone within the business who is directly affected by the business and is interested in it.
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what is an external stakeholder?
an external stakeholder is someone outside of the business who is directly affected by the firm and who is interested in it.
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examples of internal stakeholders?
employees, owners
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examples of external stakeholders?
local community, supplier, competitors, customers, government
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what are the advantages of growth for stakeholders?
employees more motivated to work for a better business and get job security (business less likely to fail), suppliers get more orders, gov receive more tax
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what are the disadvantages of growth for stakeholders?
employees demotivated as takes a long time to receive info & lower down in hierarchy, hard for owners to ensure consistent quality and to manage due to wider span of control, gov suffer if business expands over sea, supplier suffer economies of scale
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what is a business plan?
a business plan is an outline of what a business will do and how it aims to do it
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why is a business plan important?
to convince banks it's a sound investment, makes owners think about what resources are needed and how much start up capital is needed
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name the 7 sections of a business plan.
objectives, personal details, mission statement, product description, production details, staffing requirements, finance
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what can influence location?
location of supplier, location of competitors (economies of concentration), transport links, labour supply, communication links
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what are the risks of starting a new business?
business failure, loss of earnings (employees and/or owners), shrinking market (reduced potential customers = less sales), loss of market share, personal risks (relationships or health)
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what is market research?
market research is a method of finding out what customers want by researching what they're willing to pay for certain products and getting to know their buying habits.
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what is field research?
research done yourself, the same as primary research.
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what is desk research?
to use information that someone else has already gathered, the same as secondary research.
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what does a new business have to consider when it comes to products?
as setting up a business is so expensive, products that require a lot of equipment and money aren't realistic and research should be kept to a minim to reduce costs
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why do small businesses find it easier to alter products than big businesses?
they work on a small scale, so don't buy materials in bulk and so can change the raw materials they use more easily.
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what are the advantages of a production process of a small company?
they are on a smaller scale, so production process costs less and is less disruptive
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what is demand?
the quantity of a product that customers are willing and able to buy
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why does demand rise as price falls?
because more people can afford the product or it becomes more attractive in comparison with other competitor's prices
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what does supply mean?
the quantity of products producers are willing and able to make for sale
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what is equilibrium?
where producers and customers agree on an exchange of price and quantity.
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state some advertising methods for small firms.
local radio and newspaper, posters, billboards, leaflets, business cards, junk mail
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what are indirect costs?
the general overheads of a business e.g rent.
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what are direct costs?
costs that are acossiated with a specific product e.g factory labour
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what are variable costs?
costs that will increase as the firm expands e.g raw materials, factory labour
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what is cash-flow?
the money flowing in and out of a business
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why do firms usually have poor initial cash-flow?
they have to pay their suppliers before receiving money from customers
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what is working capital?
finance for day to day running of the business
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state short term sources of finance for a small business?
trade credit, overdraft
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state long term sources of finance for a small business?
bank loans, friends/family, venture capitalists, grant, mortgages
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name 3 ways a business can get help?
chambers of commerce, government (get loans underwritten, grants), banks (give financial support, give advice about how to manage finances)
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what is net cash flow?
the difference between cash inflow and cash outflow
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what is a cash-flow forecast?
a way of predicting when the firm may face a liquidity problem, lists all the inflows and outflows of cash that may appear in budget. helps see when an overdraft etc may be needed.
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what are credit terms?
tells you how long after agreeing to buy a product the customer has to pay
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what could poor cash flow lead to?
demotivated workers due to late payment, trust issues with suppliers due to late payment, creditors get paid late causing resentment and distrust (may insist on stricter credit terms)
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list 3 reasons for poor cash-flow?
taking on too many orders, poor sales, poor business decisions
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3 ways of improving cash flow?
stricter credit terms with customers, negotiate better credit terms with suppliers, sell unsold stock
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what is a full time employee?
an employee who works a maximum of 35 hours a week
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what is a part time employee?
an employee who works less than a maximum of 35 hours a week
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advs of full time employees
become specialised as do it so often and more efficient, also have good knowledge of business, available for whole working week, loyal to company
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disadvs of full time employee
demotivated as repetitive, more expensive
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advs of part time employees
flexible with work hours, cheaper, more motivated
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disadvs of part time employees
less knowledgable about business, less loyal, less efficient,
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what are freelance workers?
temporary workers a business may bring in to help with a certain task e.g electrician
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what is the cheapest method of recruitment?
personal recommendation = saves time and money advertising new position and looking for potential employees, also likely to be a very good worker as have been recommended and likely to fit in with current workforce.
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two types of recruitment?
internal and external
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advs of internal recruitment?
cheaper, quicker, already knowledgeable about business
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disadvs of internal recruitment?
no new ideas/skills, leaves space to fill, limited candidates to chose from
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advs of external recruitment?
wide choice of candidates, variety of skills/ideas, insight into competitors business
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disadvs of external recruitment
longer, expensive, less knowledgeable,
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describe selection process of employees?
candidates asked to give C.V and application form, shortlisted, asked for reference, interviewed
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examples of financial rewards?
pension fund, commision, wage, salary, bonus
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what is a wage?
a wage is a regular payment usually based on how much work the employee has done.
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what is a salary?
fixed amount paid every month
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what is a commission?
a small amount added on top of their salary for every item they sell
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what is a bonus?
an end of year lump sum added to pay as a reward for good work
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what is a pension fund?
when a business makes payments into a pension fund as long as employees do too, encourages workers to save for retirement
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examples of non financial rewards?
training, more responsibility,
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what are fringe benefits?
any rewards which isn't part of your main income
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what is job production?
when a firm manufactures products individually so each is unique and based on customer specifications
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what is batch production?
when all products are made in mass and are all identical
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advs of batch?
cheap, quick
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disadvs of batch?
demotivated staff, lack of product differentiation won't attract customers
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advs of job?
unique to each customer so very attractive, high quality, motivated employees.
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disadvs of job?
very costly (a lot of different raw materials (don't benefit from economies of scale) and staff must be specialised), takes a long time,
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what are the advantages of using computer software?
more efficient, information accessed easily, quick, cheaper in long run (don;t pay for staff)
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disadvs of computer software?
computers crash, which can cause big problems
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what is e-commerce?
buying and selling of goods on the internet
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advs of commerce?
saves money (limited employees needed, no rent to pay), lower costs means that online shops can offer competitive prices, 24 hr sales, international market
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disadvs of commerce?
customers may want shopping experience, small market share, expensive to maintain and repair, lack of customer service so can't guarantee they'll come back.
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advs of commerce for customers ?
easy to look through large stock, easy to compare prices, 24 hour buying
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disdavs of commerce for customers?
hard to trust websites, products can't be tried, junk mail
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what is a franchise?
a franchise is when someone buys the right to sell another firm's products
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advs of a franchise
business is established and well known (less risk), benefit from wider marketing, franchisor provides training, increase market share without increase size of own firm
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disadvs of a franchise
don't have a lot of control, expensive, inherit bad reputations,
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what is quality assurance?
a firm's attempt to satisfy customers by ensuring that quality standards are agreed and met throughout the organisation.
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what do the human resources department do? what is one of the main aspects?
they look after the people that work for the firm, main aspect is to organise recruitment e.g produce job descriptions or job advertisements
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what are headhunters?
people whose job is to seek out candidates from other businesses
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what are some tests that can be carried out for recruitment?
personality test, aptitude test, group test, skills test
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what is an aptitude test?
to find out whether the person has the potential to do the job
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what are the forms of responsibility that can be given to motivate a worker?
job enrichment, job enlargement
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what is job enlargement?
adding more tasks to their job, makes them feel more valued and makes job more interesting
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what is job enrichment?
giving a worker greater responsibility/ authority in their job, e.g supervising new staff
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what are the 4 P's in the marketing mix?
price, product, promotion, place
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what does efficiency mean?
making the most products possible with the least waste possible
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in what circumstances is it ok for a business to dismiss someone?
if they're incompetent, or have shown gross misconduct under the discipline procedure
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what is meant by redundancy?
the dismissal of employees because the job no longer exists
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what is a cash flow forecast? why is it useful?
a cash flow lists all the inflows and outflows that appear in the budget and predicts when the firm may face a liquidity problem. this is useful as the firm can see when an overdraft or short term finance may be needed.
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Card 2

Front

List 3 reasons for starting a business?

Back

to be your own boss, to take advantage of a gap in the market, to gain power and control

Card 3

Front

what is a private limited company and how can you tell a business is one?

Back

Preview of the front of card 3

Card 4

Front

What are the advs of an ltd?

Back

Preview of the front of card 4

Card 5

Front

Disadvs of an ltd?

Back

Preview of the front of card 5
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