1.5 KEY TERM

Question 1

Entrepreneur

Answer 1

someone who organises business ventures, takes risks and is responsible for outcome of business

Question 2

Role of entrepreneur

Answer 2

innovate
Risk take
Organise resources
Make decision
Problem solve
Lead

Question 3

Objective

Answer 3

goal set for the business as a whole

Question 4

Sales maximisation

Answer 4

selling as much as possible

Question 5

Cost effecient

Answer 5

achieving the desired outcome at the lowest possible cost with the least resources

Question 6

Incorporated business

Answer 6

legal entity that’s seperate from the owner

(Limited liability)

Question 7

Unincorporated business

Answer 7

Legal entity not seperate from owner

(Unlimited liability)

Question 8

Legal entity

Answer 8

Organisation that has legal rights (can own properties, hire employees)

Question 9

S and L of a sole trader

Answer 9

S- full control make all decisions with no approval

-keep all profits after tax

L- unlimited liabilities so responsible for all debts and personal assets may be at risk

-limited expertise, may not have skills to innovate

Question 10

S and L of a partnership

Answer 10

S- shared work load reduces pressure

0better decision making as 2 goods viewpoints

L- unlimited liabilities, personal assets risked

-risk of disagreement which can slow deciding making

Question 11

Limited liability

Answer 11

Protects shareholders
-if business in debt protected their personal assets as can only lose investments

Question 12

Limited company

Answer 12

Business has seperate legal entitiy from owners (shareholders)

(Limited liability)

Question 13

S and L of limited company

Answer 13

S- limited liability so shareholder only liable for amount invested

-easier to raise capital as can just sell shares

L- profits shared amongst shareholder

-complex legal documents are required (must reigister with companies house in uk)

Question 14

Private limited company

Answer 14

ownership is divided into shares that are held privately by a small group

-shares cannot be sold publicly

(Limited liability)

Question 15

S and L of private limited companies

Answer 15

S- limited liabilkity

-shares kept private and you can choose who invests

L- complex legal documents (register with companies house)

-limited capital and shares cant publicly be sold

Question 16

Public limited company

Answer 16

shares can be sold to public on stock exchange

-allowing bus to raise large amount of capital from investors

Question 17

S and L of public limited company

Answer 17

S- limited liability

-easier to raise finance

L- complex to set up

-loss of control is shareholder purchase more than 50%

Question 18

Franchising

Answer 18

franchisee allows franchisee to use its brand, product and services in exchange for a fee

Question 19

S and L of franchising

Answer 19

S- lower failure risk as using an established brand

-brand recognition attracts customers easier than a new business

L- a portion of the profit must be paid to franchisor

-reputation risk, if problems with other franchisees can affect your franchise

Question 20

Trade off

Answer 20

bus chooses one option at the expense of another because resources are limited

Question 21

Opportunity cost

Answer 21

the cost of the next best alternative bus develops when they’ve made a choice

(Cafe choose between buy new coffee machine to inc sales instead of advertising) OC= additional profit it could have made from advertising

Question 22

Business leader

Answer 22

someone who guides, motivates and directs group of people to achieve goals

(Better than entrepreneur as they start up, manage and own their business)

Question 23

What makes a good business leader

Answer 23

delegating tasks to people

Trusting employees

Listening to others for ideas

Being open minded and accetpting suggestions