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. 

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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
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What do charities or public sector businesses have to do?
They need to earn enough to cover their costs - surplus is reinvested.
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What are the three main reasons businesses are started up?
For financial reasons, personal reasons and to help others.
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What does enterprise involve?
Seeing new business opportunities and taking advantage of them. It is also helping a business to expand.
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What is profit essential to do for a new enterprise?
To cover borrowing costs
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What are the particular qualities of a good entrepreneur?
Forethought, initiative, determination. decisiveness, networking skills, leadership and the ability to adapt
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What is business liability?
Liability is the legal responsibility to pay money owed by your business.
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What is unlimited liability?
Unlimited liability means there is no limit to what can be taken from you if it is owed.
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What is limited liability?
Limited liability means you are not entirely responsible for the debt of your business.
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What is being incorporated?
When a business has their own legal identity and can sue or own assets in their own right.
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What is being unincorporated?
The business is not legally separate from it's business.
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What are the advantages of a Sole Trader?
It is easy to set up, you are your own boss and you have total control.
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What are the disadvantages of a Sole Trader?
You have to work long hours, you are unincorporated and have unlimited liability.
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What are the advantages of a Partnership?
Shared workload, more available capital and equal profits (unless deed of partnership says otherwise).
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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.
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What is a Memorandum of Association?
A document that tells the world who the business is and where it is based.
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What is a Article of Association?
A document that sets out how a business will be run.
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What are the advantages of a Private Limited Company (LTD)?
They have limited liability, is incorporated and more credibility as a business.
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What are the disadvantages of a Private Limited Company (LTD)?
More paper, business is obliged to publish accounts regularly and contracting is expensive.
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What are the advantages of a Public Limited Company (PLC)?
Easier to raise capital, easier to expand, has limited liability and is incorporated.
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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.
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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.
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Why does a business need to keep records?
Shows the business is being run right. This prevents fraud. It also ensures tax is paid.
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What is VAT?
Value Added Tax. A tax added to products/services.
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What is Income Tax?
A tax taken off personal income.
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What is National Insurance?
Insurance paid into by employees and the employer.
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What is Corporation Tax?
A tax that depends on a business' profit.
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What are Internal Stakeholders?
Stakeholders inside the firm/business. In a limited company the owners they are the shareholders.
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Who are External Stakeholders?
Customers, suppliers, the government and local community.
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What can the shareholders do?
Sack the directors or sell business.
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What is a centralised organisation?
An organisation where all major decisions are made by a small group.
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What are the advantages of a centralised organisation?
Managers can be experienced and uniform policies throughout the business.
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What are the disadvantages of a centralised organisation?
They business reacts slowly and decisions are slow.
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What is a decentralised organisation?
Where the authority to make most decisions is shared.
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What are the advantages of a decentralised organisation?
Employees can apply their expert knowledge of their sector, and these decisions can be made quickly.
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What are the disadvantages of a decentralised organisation?
Inconsistencies between sectors can develop and the overall business needs may not be seen.
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What can happen if senior managers become too powerful?
They could 'lose touch' and make poor decisions.
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What are the three ways you can organise a business?
By function, product or region/nation.
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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.
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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.
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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.
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What is a franchise?
The right to sell another firm's product.
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What are branded franchises?
Where the franchisee buys the right to trade under the name of the franchisor?
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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).
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What are the drawbacks of being a franchisee?
Limited control of the business (cannot decide what to sell etc.)
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What are the benefits of being a franchisor?
Able to increase market share without increasing size of their own firm.
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What are the drawbacks of being a franchisor?
Little control over how the franchise is run.
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How do co-operatives work?
Like a limited liability partnership.
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What are producer/worker co-operatives?
Co-operatives owned and controlled by their workforce.
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What are retail co-operatives?
Co-operatives owned and controlled by their customers.
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What is the main benefit to a co-operative?
There should be no conflict between the stakeholders - they are the same people.
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What is a key problem for a co-operative?
The only large, easily-available sources of finance are the owners' capital and retained profit.
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What is a public corporation?
A corporation owned and funded by the government.
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Who runs a public corporation?
A board of trustees appointed by the government.
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What is the main source of funding for a public corporation?
A government grant, paid for by the licence fee.
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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
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