Business Ctec > Unit 1 > Flashcards

Unit 1 Flashcards

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1
Q

Primary activity

A

Involves the extraction and harvesting of raw materials from the earth or sea.

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2
Q

Secondary activity

A

Involves manufacturing and construction. This sector takes raw materials and turns them into finished goods or components.

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3
Q

Tertiary activity

A

Involves providing a service to consumers or other businesses. This sector does not produce and physical goods.

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4
Q

Private sector

A

Businesses owned, financed, and controlled by private individuals. The main objective is typically to make a profit. They range from sole traders to huge pubic limited companies.

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5
Q

Public sector

A

Organizations owned and controlled by the government. They are funded by taxation and aim to provide essential services to the public, often free at the point of use.

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6
Q

Third sector

A

Organizations set up for social benefit,
to help a cause, or to support a community, rather than to make a profit for private owners. Any surplus (profit) is reinvested to achieve the organization’s social aims.

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7
Q

Sole trader Advantages

A

Easy and cheap to set up
Owner keeps all profits
Full control of business decisions
Financial affairs are private

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8
Q

Sole trader Disadvantages

A

Unlimited liability
Long hours
Hard to raise finance
Owner has all the responsibility

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9
Q

Partnership Advantages

A

Can raise more capital
Shared workload
Wider range of skills
Financial affairs are private

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10
Q

Partnership Disadvantages

A

Unlimited liability
Profits must be shared
Risk of disagreements
Business ends if one partner leaves

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11
Q

Private limited company Advantages

A

Limited liability
separate legal entity
Easier to raise finance

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12
Q

Private limited company Disadvantages

A

More complex and expensive to set up
Financial accounts must be shared
Shares cannot be sold to the public
Owners may lose some control

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13
Q

Public limited company Advantages

A

Limited liability
Can raise large amounts of money by selling shares
High profile can make it easier to get loans
Business continuity

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14
Q

Public limited company Disadvantages

A

Very complex and expensive to set up
Financial accounts must be published
Risk of hostile takeover
original owners likely to lose control

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15
Q

Registered Charity Advantages

A

Benefits from tax advantages
Can raise funds from public via donations
Has limited liability
Any surplus made is used for the charitable cause

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16
Q

Registered Charity Disadvantages

A

Must meet a strict charitable status test
Complex legal requirements
Financial accounts are not private
Often relies heavily on volunteers

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17
Q

Community interest company Advantages

A

Set up to benefit society
Limited liability
Any profit is reinvested in the business to help the community
Resources are locked for community benefit

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18
Q

Community interest company Disadvantages

A

Complex legal and administrative requirements
Financial accounts are not private
Must pay tax on income
No dividends paid to owners

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19
Q

Survival

A

A key objective for new businesses in their first year, or for any business during a crisis

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20
Q

Break-even

A

To make a revenue to cover total costs

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21
Q

Increase revenue

A

To generate more income from sales

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22
Q

Reduce costs

A

To lower expenses to improve profitability

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23
Q

Make profit

A

The classic private-sector objective (total revenue - total costs)

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24
Q

Physical expansion

A

Eg. Opening new branches, factories or offices

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25
Increase market share
To gain a larger percentages of the total market's sales, taking business from competitors
26
Increase Provision
Eg. A charity aiming to help more people or open new centers
27
Reputation objectives
To be known for positive attributes
28
Being enterprising
Objectives that motivate an entrepreneur
29
Finance
Manages all the money in the business
30
Sales
Responsible for selling the business's products/services
31
Human resources
Manages the people in the business
32
Operations
Makes the product or provides the service
33
Customer services
Responsible for biasing with customers
34
Business support services
Provides administrative and technological support to all other departments
35
Research and development
Responsible for developing new products and services in response to research findings
36
Purchasing
Responsible for sourcing and providing all the materials and services a business needs
37
What are the consequences of poor interrelationships
Eg. Stock shortages, customer complaints, and demotivates customer services staff
38
Hierarchical structure
The organization of job roles by rank or status
39
Flat structure
A hierarchy with few levels of management
40
Tall structure
A hierarchy with many levels of management
41
Centralized structure
Decisions are made by a few senior managers at the top of the hierarchy. Provides consistency but can be slow.
42
Decentralized structure
The authority to make decisions is delegated to people lower down the hierarchy. Motivates staff and responds quickly to local needs, but can cause inconsistency
43
Matrix structure
A flexible structure where teams from different functional areas are created to work on specific projects. An employee may report to two managers, which can cause conflict.
44
Divison of work
In large businesses, tasks are sub-divided and distributed to functional areas
45
Chain of command
The formal line of authority that shows who is in charge of whom
46
Span of control
The number of employees a manager is directly responsible for
47
Delegation
The passing down of authority (but not responsibility) to do a task to a subordinate
48
Empowerment
Enabling workers to make their own decisions and work autonomously
49
Accountability, Authority, Responsibility
Authority can be delegated, but responsibility and accountability cannot
50
Tall structure advantages
Narrow span of control allow for tight supervision Clear chain of command Clear promotion pathway for staff
51
Tall structure disadvantages
Long chain of command communication is slow Business is slow to change and less responsive Expensive due to many managers
52
Flat structure advantages
Short chain of command Communication is fast and responsive More delegation and empowerment
53
Flat structure disadvantages
Managers may be overworked due to wide spans of control Less direct supervision of staff Fewer promotion opportunities
54
Division of work
How a business is split
55
Chain of command
Whom reports to whom
56
Span of control
How man subordinates each manager has
57
Status of job roles
The different levels of hierarchy 1.CEO-Top of the hierarchy 2.Directors-Responsible from specific function 3.Managers-Responsible for a department or team 4.Supervisors-Monitor and regulate the work of operatives 5.Assistants/Operatives-At the bottom of the hierarchy, carry out the core tasks
58
Fixed costs
Costs that do not change with the output Eg. Rent
59
Variable costs
Costs that change directly with the output Eg. Raw materials
60
Total costs
Fixed costs + Total variable costs
61
Revenue
The income a business receives from sales Selling price x Quantity sold
62
Profit/Loss
The difference between revenue and costs Total revenue - Total costs
63
Cash inflow
Money coming into the business
64
Cash outflow
Money going out of the business
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Net cash flow
Cash inflow - Cash outflow
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Opening balance
The cash the business has at the start of the month
67
Closing balance
Opening balance + Net cash flow A negative balance shown in brackets
68
Break even point (BEP)
The level of sales where total revenue equals total costs. The business is neither making a profit or a loss
69
Margin of safety
The amount by which a business's current sales are above the break even point. The `cushion' before the business is making a loss
70
Profit formula
Total revenue - total costs
71
Contribution per unit formula
Selling price - Variable cost per unit
72
Break even formula
Fixed costs/Contribution per unit
73
Income statement
A document showing a business's revenue, costs, and profit or loss over a period of time. It shows performance
74
Statement of financial position
A document showing what a business is worth at a single point in time. It lists: Assets-What the business owns Liabilities-What the business owes Equity- How the business is financed
75
Cashflow forecast
A forecast in a prediction of future cash inflows and outflows. It helps plan and see if it will need an overdraft
76
Cashflow statement
A statement shows the actual cash inflows and outflows that have already happened.
77
Stakeholder
A stakeholder is any person or group who is affected by, or has an interest in, the activities of a business
78
Owners/Shareholders
Want high profits, high dividends, and a rising share price
79
Managers
Want job security, high salaries, status, and business growth
80
Employees
Want good pay, good working conditions, job security, and training/promotion opportunities
81
Trade unions
Want to protect workers' rights, ensure fair pay, and safe working conditions
82
Customers
Want high-quality goods, low prices, and good customer services
83
Suppliers
Want to be paid on time and receive regular, loyal orders
84
Lenders
Want loans to be paid on time with intrest
85
Potential investors
Want to see high profits and growth potential
86
Local community
Want jobs , but minimal noise, pollution, and traffic
87
Government
Wants the business to pay tax's., create jobs, and follow laws
88
Pressure groups
Want to influence the business to behave ethically or environmentally friendly
89
How do employees/trade unions influence the business
Can go on strike, refuse to work overtime, or "work to rule"
90
How do Customers influence the business
They can boycott the business or post negative reviews online
91
How do Pressure groups influence the business
Can organize protests, run negative media campaigns, or lobby the government
92
How do Local community influence the business
Can complain to local council or press
93
How do Local government influence the business
They can deny planning permission for expansion
94
How do Shareholders influence the business
They can vote to remove directors at an Annual General Meeting (AGM)
95
Stakeholders conflict
Stakeholder conflict occurs when different stakeholder groups have different, competing objectives. A business cannot always satisfy everyone.
96
Consequences of not listening to stakeholders
Ignoring customers- Leads to poor reputation, loss of customers and reduced sales revenue Ignoring employees- Leads to a demotivated workforce, strikes, high staff absence, and difficulty recruiting new staff. Ignoring suppliers- May cause suppliers to refuse to supply the business or demand cash payment upfront, harming cash flow Ignoring the local community- Leads to protests, bad publicity, and the local government denying planning permission
97
What is a Social factor
Factors relating to population and lifestyles Eg. Healthy eating
98
What is a Technological factor
Factors relating to advances in technology Eg. Automation
99
What is a Economic factor
Factors that relating to the economy
100
Economic factors
Interest rates- The cost of borrowing money Exchange rates- The value of one currency against another Inflation- A general increase in prices Unemployment- The number of people without a job Taxation- Money paid to the government
101
What is a Environmental factor
Factors relating to the planet Eg. Energy management
102
What is a Political factor
Factors relating to government policy Eg. A change of government
103
What is a Legal facator
Factors relating to the law. Businesses must comply with them. Eg. Consumer rights act
104
Consumer rights act (2015)
Goods must be of satisfactory quality, as described, and fit for purpose
105
Health and safety at work act (1974)
Employers must keep the workplace safe for employees and visitors
106
National minimum wage act
Sets the legal minimum hourly pay rate, which varies by age
107
Data protection act (2018/ GDPR)
Governs how business store and use personal data
108
Copyright, designs and patents act (1988)
Protects original work from being copied
109
Planning permission
Must be obtained from the local council before making significant changes to land or property
110
What is a Ethical factor
Factors concerned with doing what is morally right Eg. Buying fairtrade products
111
What is a Competitive factor
Factors relating to rival businesses Eg. A rival starting a price war
112
Business Ctec
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