GCSE Business Basics (Pages 1 - 9)

This is a set of flashcards for the first nine pages of the CGP GCSE Business Studies Revision Guides. 

?
What are the objectives businesses might also try to achieve (aside from profit)?
Becoming the biggest in the market, providing high quality, maximising sales, stability and expanding
1 of 55
What do charities or public sector businesses have to do?
They need to earn enough to cover their costs - surplus is reinvested.
2 of 55
What are the three main reasons businesses are started up?
For financial reasons, personal reasons and to help others.
3 of 55
What does enterprise involve?
Seeing new business opportunities and taking advantage of them. It is also helping a business to expand.
4 of 55
What is profit essential to do for a new enterprise?
To cover borrowing costs
5 of 55
What are the particular qualities of a good entrepreneur?
Forethought, initiative, determination. decisiveness, networking skills, leadership and the ability to adapt
6 of 55
What is business liability?
Liability is the legal responsibility to pay money owed by your business.
7 of 55
What is unlimited liability?
Unlimited liability means there is no limit to what can be taken from you if it is owed.
8 of 55
What is limited liability?
Limited liability means you are not entirely responsible for the debt of your business.
9 of 55
What is being incorporated?
When a business has their own legal identity and can sue or own assets in their own right.
10 of 55
What is being unincorporated?
The business is not legally separate from it's business.
11 of 55
What are the advantages of a Sole Trader?
It is easy to set up, you are your own boss and you have total control.
12 of 55
What are the disadvantages of a Sole Trader?
You have to work long hours, you are unincorporated and have unlimited liability.
13 of 55
What are the advantages of a Partnership?
Shared workload, more available capital and equal profits (unless deed of partnership says otherwise).
14 of 55
What are the disadvantages of a Partnership?
Each partner is legally responsible for the other, more potential disagreement, you are unincorporated and have unlimited liability.
15 of 55
What is a Memorandum of Association?
A document that tells the world who the business is and where it is based.
16 of 55
What is a Article of Association?
A document that sets out how a business will be run.
17 of 55
What are the advantages of a Private Limited Company (LTD)?
They have limited liability, is incorporated and more credibility as a business.
18 of 55
What are the disadvantages of a Private Limited Company (LTD)?
More paper, business is obliged to publish accounts regularly and contracting is expensive.
19 of 55
What are the advantages of a Public Limited Company (PLC)?
Easier to raise capital, easier to expand, has limited liability and is incorporated.
20 of 55
What are the disadvantages of a Public Limited Company (PLC)?
Slow decision making, lots of paperwork, the original owners may lose control, has limited liability and is incorporated.
21 of 55
What are the two basic reasons a name is important?
Legal - the government needs to be able to contact businesses. Marketing - so customers know about the business.
22 of 55
Why does a business need to keep records?
Shows the business is being run right. This prevents fraud. It also ensures tax is paid.
23 of 55
What is VAT?
Value Added Tax. A tax added to products/services.
24 of 55
What is Income Tax?
A tax taken off personal income.
25 of 55
What is National Insurance?
Insurance paid into by employees and the employer.
26 of 55
What is Corporation Tax?
A tax that depends on a business' profit.
27 of 55
What are Internal Stakeholders?
Stakeholders inside the firm/business. In a limited company the owners they are the shareholders.
28 of 55
Who are External Stakeholders?
Customers, suppliers, the government and local community.
29 of 55
What can the shareholders do?
Sack the directors or sell business.
30 of 55
What is a centralised organisation?
An organisation where all major decisions are made by a small group.
31 of 55
What are the advantages of a centralised organisation?
Managers can be experienced and uniform policies throughout the business.
32 of 55
What are the disadvantages of a centralised organisation?
They business reacts slowly and decisions are slow.
33 of 55
What is a decentralised organisation?
Where the authority to make most decisions is shared.
34 of 55
What are the advantages of a decentralised organisation?
Employees can apply their expert knowledge of their sector, and these decisions can be made quickly.
35 of 55
What are the disadvantages of a decentralised organisation?
Inconsistencies between sectors can develop and the overall business needs may not be seen.
36 of 55
What can happen if senior managers become too powerful?
They could 'lose touch' and make poor decisions.
37 of 55
What are the three ways you can organise a business?
By function, product or region/nation.
38 of 55
What are the properties of a function-divided organisation?
It is common in limited companies, with each area doing one part. Specialisation can occur but co-operation can be difficult.
39 of 55
What are the properties of a product-divided organisation?
Common with larger businesses, with the business being split into sectors. Decisions can be made relevant, but wasteful duplication of resources can occur.
40 of 55
What are the properties of a region/nation-divided organisation?
Common in Multi National Corporations. Management is easier, but wasteful duplication of resources can occur.
41 of 55
What is a franchise?
The right to sell another firm's product.
42 of 55
What are branded franchises?
Where the franchisee buys the right to trade under the name of the franchisor?
43 of 55
What are the benefits of being a franchisee?
Less risk of the business failing (buying the right to sell an already established product) and many costs are paid by the franchisor (e.g. marketing, promotion and accounting).
44 of 55
What are the drawbacks of being a franchisee?
Limited control of the business (cannot decide what to sell etc.)
45 of 55
What are the benefits of being a franchisor?
Able to increase market share without increasing size of their own firm.
46 of 55
What are the drawbacks of being a franchisor?
Little control over how the franchise is run.
47 of 55
How do co-operatives work?
Like a limited liability partnership.
48 of 55
What are producer/worker co-operatives?
Co-operatives owned and controlled by their workforce.
49 of 55
What are retail co-operatives?
Co-operatives owned and controlled by their customers.
50 of 55
What is the main benefit to a co-operative?
There should be no conflict between the stakeholders - they are the same people.
51 of 55
What is a key problem for a co-operative?
The only large, easily-available sources of finance are the owners' capital and retained profit.
52 of 55
What is a public corporation?
A corporation owned and funded by the government.
53 of 55
Who runs a public corporation?
A board of trustees appointed by the government.
54 of 55
What is the main source of funding for a public corporation?
A government grant, paid for by the licence fee.
55 of 55

Other cards in this set

Card 2

Front

What do charities or public sector businesses have to do?

Back

They need to earn enough to cover their costs - surplus is reinvested.

Card 3

Front

What are the three main reasons businesses are started up?

Back

Preview of the front of card 3

Card 4

Front

What does enterprise involve?

Back

Preview of the front of card 4

Card 5

Front

What is profit essential to do for a new enterprise?

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all Business Basics resources »