Bussiness Studies Business and People

What is a sole trader?
They are owned and controlled by one person. They are unincorporated. They have unlimited liability. They can employ others. E.g hairdressing, window cleaning.
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What does incorporated mean?
Legally the business and the owner are not the same.
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What is unlimited liability?
The owner has full responsibility for the business this includes; debts of the business. They have to pay the debts using their own money meaning their personal possessions are at risk if the owner/s can’t pay they may be made bankrupt
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What are the advantages of being a sole trader?
Owner can make all decisions. Owners can keep all profits. Business accounts can be kept private,
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What are the disadvantages of being a sole trader?
Unlimited liability. Money can be hard to obtain. Costs are usually higher therefore prices are usually higher. Expanding the business is hard. Ill health can be fatal to the business. Owners have to work long hours, holidays will be hard to take.
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What is a partnership?
A business owned by 2 or more people max 20, they can have a deed of partnership. They are unincorporated. They have unlimited liability e.g accountants.
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What is a sleeping partner?
Someone that invests money into the business but doesn’t play an active role in the running of the business. They have limited liability
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What is limited liability?
When liability is limited to the amount a shareholder invested. This means that their own possessions are not at risk.
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What is a deed of partnership?
It is a legal document that states the rules of the business e.g how the partners are, how much they put into the business, how they profits should be shared and procedure that should take place if a partner dies or leaves the partnership
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What are the advantages of being in a partnership?
Money put into the business can be shared. Share responsibility and expertise, accounts can be kept private. Easy to set up.
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What are the cons of being in a partnership?
Unlimited liability. Legal costs of drawing up a deed of partnership. Possible arguments. Problems if partner leaves.
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Name two types of businesses that are incorporated?
Private and limited companies
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What legal documents must a business complete to become unincorporated and where must they get them from?
The articles of association and memorandum of association they can get them from companies house.
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What is the articles of association?
It is a document that contains rules for shareholder meeting, a list of directors & their jobs. The voting rights of the shareholders and details of how accounts will be record.
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What is a memorandum of association?
It is a document that must contain the company name, the main business address, what the business does a statement of limited liability. Number of shares to be sold.
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What are the stages of a company becoming incorated?
Send the 2 docs to the registrar of companies  certificate of incorporation  shares issued.
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What is a private limited company?
A company owned by at least 2 shareholders. Shares are sold to family and friends who invest into the business. They receive dividends in return. Limited liability. Shareholders vote 4 a board of director who run the business.
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What are shareholders?
People and institutions that buy shares in a company and are therefore owners (One share = one vote for a director)
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What is a dividend?
A sum of money paid regular by a company to its shareholders out of its profits. Extra- Profit will be shares according to how many shares the person has
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What are the pros of being a LTD?
Private limited company: raise funds by selling shares. Limited lability. Can employ specialists. Death/illness doesn’t affect the company, shares can be sold to people you can trust.
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What are the con of being an LTD?
Shares can’t be sold on the stock market. Accounts are not private they are available to authorities. Expensive to set up. Have to share profits though dividends. Not all decisions are made by managers.
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What is insolvency?
If a business runs out of funds and cant trade/pay its debts. This may cause it to fail.
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How can a private limited company raise more funds?
By becoming a PLC.
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What is a public limited company?
A company that sells shares on the LSE. Shareholders have limited liability. Shareholders vote for a board of directors. Accounts must be published and made available to anyone that wants to see them.
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What are the pros of being a PLC?
Gain money by selling shares. Frim is bigger so it is easier to negotiate with suppliers. Shareholders have limited liability. Can employ specialists. Not effected by death/ illness. Shares can be given to workers to motivate them.
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What are the disadvantages of becoming a PLC?
Firm could be taken over. Accounts are not private - are available to anyone. Expensive to set up. Have to share profits by paying dividends. Not all decisions are made by owners; S.H. interested in getting quick cash and not the lgte health of b
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What sector are public limited companies in?
The private sector as if it was in the public sector that would mean that it was run by the government.
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What are the differences between LTDs and PLCs?
Ltds- shares are issued to friends and family, accounts available to authorities, they are small. Plc- shares issued on the stock exchange. Accounts are available to anyone. Usually large.
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What are the similarities between LTDs and PLCs?
They are both private sector, they must have more than one owner, profits go to shareholders; dividends.
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What is the difference between an aim and objective?
Aim-long term goals a business can work towards. Objectives shorter-term targets that can be measured
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What is a mission statement?
A statement of the values and ambitions of a business that defines how it operates.
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What are the 3 main objectives of a business?
Survival, profit maximisation, sales objectives (sell 12 units or increasing revenue).
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What are 3 other objectives?
Expansion, providing charitable public services, being more environmentally friendly.
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What acronym can be used to remember the objectives will be use full to a business?
S.M.A.R.T. S- Specific, M- measureable, A-achievable, R-realistic, T- time related
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What are stakeholders?
Stakeholders are individuals, groups or organisations that are affected by the activity of the business. E.g. costumers, competitors
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What can cause conflict in a business?
Different stake holder want different things from a business e.g workers-better pay, owners-bigger profits. Objectives need to change as the business changes and it they are met
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What can objectives be used to do?
They can be used to help manage a business and measure its progress.
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What is AGM?
Annual general meeting. Directors and shareholders of every incorporated firm are required by law to gather at a meeting which must be held every calendar year. Here owners can judge how well the business is doing and elect directors.
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What is franchising?
Buying into an existing business and acquiring the right to use an existing business idea e.g allowing a small business to use their name. KFC
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What is primary production?
Extracts raw materials e.g farming, fishing and forestry.
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What is secondary sector?
Make the raw materials into goods e.g use steel to make a car
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What is Tertiary sector?
Businesses that provide a service. This sector is needed throughout the chain of production to support the secondary and primary sectors. This is known as interdependence.
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What is interdependence?
Each type of business depends upon others for survival e.g Cadbury’s is dependent on farmers for cocoa.
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What is the chain of production?
The stages that a product goes through before it reaches the final consumer.
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If the business need natal resources where would the best lcaion be ?
He closer to natural resources reduces the costs of transportation. Aslo the transportation links.
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Factors that businesses should consider when choosing a location (6)
Demographics-age, income, disposable income, crime rate, competition, space, costs, visibility, space. Governmental help. If it is bulk increasing then is needs to be close to the market.
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How can the government help firms in terms of location?
If there are a lot of people unemployed in the area the government might give firms money to locate in certain locations.
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What are the benefits of Eu Trade?
No tariffs/ closer distance minimising costs. More money can be spent on expanding the business
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What is A.C.A.S?What does A.C.A.S do?
Advisory, Conciliation- act as a communicator between parties and Arbitration-BOTH parties accept recommendations service.The process which enables information to be passed from one person/ group to another.
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What is the difference between verbal communication /non-verbal communication?
Communication between two or more people that is spoken.Written word / pictures / gestures / expressions
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Why is it important for business to use ICT?
It can improve customer services and provides extra services such as online ordering and text updates- cabs. Social networking sites can be used to attract more customers.
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Give examples of external communication.
Text, letters, internet, email, telephone
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Give examples of internal communication.
Email, notices, memo, reports, briefing, face to face.
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What are some barriers to communication?
If one partner is rude then costumers may not be happy and not repeat a purchase. Clarity of a message from the business may not be clear this may lead to lower sales. Language, time zone, typos, fail of technology – internet not working.
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What is a stake holder?
People/ groups who have an interest in the activities of a business.
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What is an internal stake holder?
Owners and employees direct interest in a business. Work for the business inside the business daily.
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What is an external stake holder?
Don’t work for the business. Outside of the business
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Why do stake holder’s conflict?
They all want different things e.g owners want more profits, costumers want lower prices
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Why is recruitment important?
To insure that the right person for the job is selected. Preferably passionate, academically strong, able to learn quickly.
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What are the advantages of recruiting from outside the business
You can have a variety of skill and people, people wouldn’t get annoyed that they didn’t get promoted.
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What impact can the right people have on the businesses performance?
It can grow the firm’s assets. Able to reach a greater capacity. Maximise profits
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What can businesses do to ensure they have the right people?
Employ people with the qualification that they need. Ask people their hobbies and interests
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What is recruitment?
The process in which businesses finds new employees.
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Why might a business need to recruit?
The business is trying to expand, staff might have left, and business may need new skills.
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What is a job description?
Shows what skills and qualifications and tasks are needed.
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What does a person specification show?
Shows the type of person that the business needs to recruit.
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How can a firm advertise a job?
Website, window, job centres, internet, newspaper, job agencies.
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What should the advert for a job say?
Job title, location, brief description, qualification/ experience required, salary, address, and contact dets.
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How can a firm select the right candidate?
Interviews, aptitude tests, numeracy tests.
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What is the contract of employment?
A legal document that states; job title, rate of pay and method, normal hours of work, holiday entitlements, pension arrangements.
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What do recruitment agencies do?
Look at applicants and see which ones suit the job description and make a shrtlist which they then send to the firm how choses the ones they want to interview and then the agency arranges an interview with them.
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What are the advantages of using a recruitment agency?
Saves time. Saves money. Reach wider audience.
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What are the disadvantages of using a recruitment agency?
Might not get a successful candidate- waste money. You might not acc like the candidate-wasted money. Some agencies cost a lot of money to book .
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How can a CV be used to shortlist candidates.
A CV will list the qualifications the candidate has so it will be easy to see if they are qualified to do the job.
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How can a letter of application be used to shortlist candidates.
This will explain why the candidate wants the job and what skill/qualities/experience which (1) they will bring to the business
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Why is it important to motivate workers?
To persuade them to work harder or more efficiently-increase profits.
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What motivates workers?
People you work with. Passion. Support family.
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Why do people work?
To make money. To make new friends. To have job security, for a sense of achievement.
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What is Maslow’s hierarchy of needs?
Physiological needs- heath, food. Safety-removal from danger. Social needs- belonging having friends, self-esteem, achieving individual potential.
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What methods can be used for Physiological needs?
Ensure pay covers cost of living, places within the building they can sleep, providing them with free healthy snacks.
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What methods can be used for Safety?
Ensuring health and safety training. Making sure there is security guards
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What methods can be used for Social needs?
Social events- Christmas celebrations. Celebration it they meet targets. Fund nights out for people in the same department.
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What methods can be used for Self esteem?
Raises, awards, plaque on door, parking space with name
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What methods can be used for achieving individual potential?
Employees can get training and providing them with access to it
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What is job rotation?
Letting a worker do different jobs on a regular basis - maintain interest in the work.
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What is job enrichment?
Giving an employee more responsibly.
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What is job enlargement?
Gives workers more tasks of the same skill level may need more training – higher pay
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What are the different types of leader?
Laissez-Faire – worker do want they want. Gives workers opps ^stress. Democratic- listens to workers views, good for skilled workers. Autocratic- bossy, good when quick decisions are needed, can demotivate
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List some employment rights.
Join a trade union, safety, comfortable working conditions, breaks, minimum wage, redundancy payments, not be unfairly dismissed.
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What are examples of discrimination acts?
Equal pay- men women, race discrimination, disability discrimination, age discrimination.
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What should someone do it they believe that their rights have been breached?
Employment tribunals rule on whether a law has been broken.
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What is industrial relations?
The relationship between employees and their employers.
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What is industrial dispute?
When relations break down.
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What is a trade union?
It is an organisation the represents employees]
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What is industrial action?
When one side uses tactics to try and force an agreement
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What are employer represented by?
Employers’ associations
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Types of industrial action by the union.
Withdraw goodwill, go-slow, work- to- rule, un-official strike- crease work without T.U agreement.
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Types of industrial action by the employer.
Withdraw privileges (stop bonuses), sack, suspension- laid off with no pay, lockouts- prevent worker from entering the work place.
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What is collective bargaining?
Try to improve conditions for every one
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What are the advantages and disadvantages of employing on a seasonal basis?
Only use and pay workers during busy periods therefore save money on wage costs. D- Have to train new workers every year which is costly especially as they are only there for a short period.
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What does footloose mean?
A business whose location is not influenced strongly by access either to materials or Markets and which can therefore operate within a very wide range of locations.
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What are the advantages of Franchising
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What are the advantages of Franchising
Rapid means of expanision, you can set up the business risk free
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Other cards in this set

Card 2


What does incorporated mean?


Legally the business and the owner are not the same.

Card 3


What is unlimited liability?


Preview of the front of card 3

Card 4


What are the advantages of being a sole trader?


Preview of the front of card 4

Card 5


What are the disadvantages of being a sole trader?


Preview of the front of card 5
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