What is a mission statement?
A general statement of where the business is heading, expressed to make it seem especially purposeful and motivating.
What are SMART objectives?
- Time Specific
Why do businesses set objectives?
- Managers can feel confident in making decisions
- Basis for devising the strategy
What are objectives?
Stated measurable targets of how to achieve business aims
What is profit maximisation?
Maximising turnover while reducing costs
What are satisficing objectives?
Trying to make enough profit to keep owners comfortable
What is cash flow?
The total amount of money coming and out of a business
What are variable costs?
Costs that vary with the level of output
What is a sole trader?
Only one person owns the business
What are the advantages of being a sole trader?
- Quick and easy to set up
- Owner has complete control over decision making
- Minimal paperwork
- Easy to close/shut down
- 1 person benefits financially
- No administrative costs to pay when setting up
What are the disadvnatges of being a sole trader?
- Unlimited liability
- Limitied source of finance
- The business is the owner e.g. the business suffers if the owner is ill
- Pay more tax than a company
What is unlimited liability?
The owner is responsible for the total amount of debts and obligations of that business
What is limited liability?
Shareholders of the business are legally responsible for the debts of the business only to the extent to the value of the share in the business
What is a business partnership?
Business is started and owned by more than 1 person
What are the advantages of being in a business partnership?
- Quite simple - minimal paperwork once set up
- Expertise and effort from more than one owner
- Specialist skills
- Greater potential to raise finance
What are the disadvantages of being in a business partnership?
- Unlimited liability
- A poor decison made by one owner may damage the interests of the other partners
- Harder to raise finance than a company
- Complicated to sell or close
What is a Limited Company?
The business is seperate legal entity to the owner
What are the advantages of being a limited company?.
- Shareholders are protected
- Easier to raise finance
- Stable form of structure - business continues if shareholders change
- Can pay less tax
What are the disadvantages of being a limited company?
- Greater admin costs
- Public disclosure of company's information
- Directors legal duties
- Have to follow more expensive rules e.g. producing audited accounts
What is incorporation?
Creating a separate legal identity for the organisation
What are non-for-profit organisations?
Trade in order to benefit the community
What are social enterprises?
Trades in goods and services for a social purpose i.e. surplus goes towards social aims
What do political influences include?
- Tax policy
- The UK in the EU
- Change of government
- Terrorism and violence
What do economic influences include?
- Growth rate
- Labour costs
- Business cycle
- Unemployment and employment rates
- Exchange rates
- The stock market
What do social influences include?
- Cultural norms
- Income distribution
What do technological influences include?
- Online/digital developments on sales/marketing
- Robotics/automation on processes such as manufacturing
- Development of new products which might make others obselete
- Payment methods
What do legal influences include?
- Regional laws
- Law enforcement
- Court system
What do environmental influences include?
- Resource management
- Energy availibilty
- Workforce health
- Climate change
What are public limited companies?
A company whos securties are traded on the stock exchange and can be brought and sold by anyone
What is the private sector?
Part of the national economy that is not under direct state control