Flashcards in Business 1 Deck (56)
What is a sole trader?
Someone who owns and runs a Buisness alone. This person has unlimited liability and therefore is responsible for all the company's debts
What is unlimited liability?
Something that a sole trader has. It means he is responsible for all the business' debts, and has to pay out of his own pocket
What is the difference between a leader and a manger?
A leader is responsible for the overall ownership and control of the business, whereas a manager has less responsibility and controls the day to day running of a business
What is added value?
Something that a company/business does to a product to give it a greater cost to purchase.
Give 5 examples of added value
Branding (i.e logo), Advertising(i.e tv advert), Adding Features(i.e lighter) , Personal Service(i.e waiter), Location (i.e centre of London is generally more expensive)
What are the 3 sectors of business?
Primary, Secondary, Tertiary
What is the primary sector?
TAKE. Get raw materials from the land, possibly to sell on to the secondary sector.
What is the secondary sector?
MAKE. Use raw materials and add value by creating a finished product, which could then be sold to the tertiary sector.
What is the tertiary sector?
SELL. Selling on the finished product to consumers, where the location or a personal service could add value.
What are opportunity costs?
Decisions, often compromises a business may make for long term success, for example working longer hours for a bigger profit.
What are the needs of a business?
Something, physical or an objective, that a business must have in order to survive, such as an income.
What are the wants of a business?
Something a business would benefit from having, but could survive without. For example, several stores.
What is the difference between a good and a service?
A good is a physical object being sold, such as a tennis racket ,a service is work, or something not physical being sold, such as tennis coaching.
What is an entrepreneur?
A person who sets up his own business. This person takes risks in order to make a profit.
What is a partnership?
A business run by two or more people, usually between 2 and 20, who join together with a 'deed of partnership'. These people have unlimited liability
Give 3 examples of a partnership
e.g a doctor, solicitor, dentist, lawyer firm. Any business with more than one person sharing ownership
What is a 'deed of partnership', and what are four things it could contain?
It is a contract signed before a business enters a partnership and could contain, percentage share of profits or losses, the amount of capital each member must provide, rules on adding new partners and how the business is brought to an end or how a partner leaves.
What is capital?
It is usually referred to as an amount of money to start a business, or company up
What is a sleeping partner?
A person in a partnership who invests in the company, but does not deal in the day to day running of the business (Think dragons den)
Name 3 advantages of entering a partnership
Easy to raise capital as it is shared, Each partner may specialise in a certain area and the business still functions if a member is away or ill. You could also say it is easy to legally set up.
Name 3 disadvantages of entering a partnership
The profits have to be shared, the business and partners have unlimited liability, and there is a risk of arguments or disagreements between the partners.
What is a gap in the market?
This is a unmet idea for consumers that a business will try to find via an innovative idea to place themselves ahead of competition and to earn more profit, (for example when innocent brought out fresh, organic smoothies before bigger brands came up with the idea)
What is limited liability?
Limited liability is a business set up as a company (for around £150 upfront costs) in which individuals in it are not liable for all the company's debts. They are liable for amount they invested in the company, but after that, although the business may still suffer losses e.g stock, assets cannot be taken from the individual.
Name 3 advantages of having a company with limited liability
Personal assets cannot be taken for individual owners/shareholders, individuals can be bolder about investing into the future of the business as they have financial security, the company has share capital which makes ownership easy to divide, and interest can easily be issued to investors.
What is a private limited company?
A small, often family run, limited business. This business will still have all the advantages of a limited company, but may struggle finding funds for an accountant to draw up accounts information which is required yearly.
What does it mean to be bankrupt?
This is when an individual cannot pay their own debts. This is after all their assets have been sold for cash, if they still cannot pay.
What are the 3 disadvantages of a limited company?
The initial costs can put smaller businesses off (around £150) and businesses may struggle finding funds as an accountant may be required to draw up account information which is required by this type of company yearly. It's privacy is also compromised as the public can view profits or losses of the previous year.
What is a public limited company (PLC)?
A limited company that floats its shares on the stock market, to raise capital quickly.
What is a 'Divorce Of Control'?
It is when a public limited company has its shares bought by others so that the owner no longer holds majority control. This process is called a takeover.