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Flashcards by emily.mckechnie, updated more than 1 year ago
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| Question | Answer |
| What is a sole trader? | A business that is fully owned by one person. |
| Advantages of being a sole trader? | >Full control over decision making. >Get to keep all the profits. >Financial privacy |
| Disadvantages of being a sole trader? | >Unlimited Liabililty >No economies of scale >Limited capital >Lack of continuity |
| What is a Partnership? | A business that is owned by 2-20 people. |
| Advantages of a partnership? | >More effective decision making. >Increased Capital >Shared workload / Specialisation |
| Disadvantages of a partnership? | >Unlimited Liablilty >Shared profits >Lack of continuity >Conflict between partners |
| What is the document that should be made when a partnership forms? | >The partnership agreement. -It should include Name and function of the company, capital invested, profit ratio, rules of ending a partnership |
| What is a silent partner? | A partner which has invested capital in the business but isn't involved in the running of the business. |
| What is a limited company? | A company which has a seperate legal identity from its owners. |
| What is an LTD | A private limited company: ie, a limited company with shares that cannot be bought by the public. |
| What is a PLC? | A private limited company: ie, a limited company which its shares can be bought by the public. |
| Advantages of an LTD? | >Continuity >Limited Liability >More Control >Raising Capital is easier |
| Disadvantages of an LTD? | >Shared Profit >Lack of financial privacy >Limit on capital >Set up costs |
| Advantages of a PLC? | >Raising capital is easy because of shareholders >Limited Liability >Continuity |
| Disadvantages of a PLC? | >Threat of hostile takeover! :( >Lack of control >Set up costs >No financial privacy |
| What are the two documents required for a Limited company? | 1. The "Memorandum of association." >Basically the outside view of the company eg. name, function, objectives 2. The "Articles of association." >Basically the inside workings of the company eg. How board meetings will work, how profits will be split, duties of the directors |
| What is a social enterprise? | A real business who reinvests profit into the business or community rather than focusing on maximising profit for shareholders. |
| Two examples of a social enterprise? | >(Jamie Oliver's) "15" > "Divine Chocolate" |
| Examples of Internal sources of finance? | >Owners Investment >Sell of fixed assets and stock >Debt Collection >Retained profits |
| Examples of External sources of finance. | >Hire purchase (small payments until its paid off.) >issue of shares >Bank loans & overdraft >goverment grants >rent leasing >trade credit (goods now pay later) |
| Who are the internal customers? | >Owners >employees |
| Who are the external customers? | >Customers >Other businesses |
| Why is value added a good thing? | It is cheaper to keep existing customers than find new ones. (Value added=customer loyalty) |
| What is the difference between an aim and an objective? | An aim is a goal to achieve An objective is a stated measurable target to achieve that aim. |
| What are the five main business aims? | 1. Survival 2. profit maximisation 3. growth 4. Improving corperate image 5. Concern for the enviroment. |
| Alternative goals for the public sector businesses and social enterprises? | public sector= to provide a service social enterprise= reinvest profit |
| What is a stakeholder? | Someone with an interest in the business. |
| Examples of internal stakeholders | Managers and employees |
| examples of external stakeholders | customers, community, compeditors, creditors, goverment, enviroment ect |
| what are the ***TYPES*** of production. *key word* | Primary (extraction of raw materials) Secondry (construction using raw materials) Tertiary (services) |
| what are the **FACTORS** of production? | 1.Land 2. Labour 3. Capital (fixed and working) 4. Enterprise |
| what are the **METHODS** of production? | 1. Flow production 2. Batch Production 3. Job production |
| What is Flow production? | When the products are produced in a continuous process. The product is constructed on an assembly line with components added at each subsequent stage. |
| Advantages of flow production? (also known as mass production) | >Because it is capital intensive production is quicker >Can be 24/7 >economies of scale >producing on a large scale |
| Disadvantages of flow production? | >Large initial investment > one part off assembly line breaks down whole production process can be effected >lower staff motivation (work is repeditive) >products are standardised/loss of flexiblity |
| What is batch production? | When a number of similar or identical products are produced in a group. |
| Advantages of batch production? | >less costs (fewer workers) >economies of scale |
| Disadvantages of batch production? | >Down time >Storage costs >demotivation >no flexiblity |
| What is job production? | The one off (bespoke) production of a product for one specific customer. |
| Advantages of job production? | >high worker motivation >can charge more for their products >flexibility customised products |
| Disadvantages of job production? | >High cost of production >time consuming >few oppertunities to automate the production process |
| What is CAM? | Computer aided manufacturing. The use of computer based software to assist the actual manufacture of a product. |
| What is CAD? | Computer Aided Design. The use of computer technology to assist in the design and drafting of a product. |
| What are the advantages of technology? | >improved quality >increased productivity >Lower average costs >Speedier development of new products |
| What are the disadvantages of technology? | >Higher fixed costs >Retraining costs >Demotivation of workers >Redundancies |
| What is Quality assurance? | Getting the service or product "right first time" with "zero defects." It is trying to prevent faults from happening and every stage may be checked for quality. |
| Benefits of quality assurance? | >Reduces the number of faulty products. >Reduces costs through wastage. >Motivational for workers who are involved in quality. |
| What are the Quality Standards | 1. Charter Mark public sector, high quality for customers) 2. ISO 9001 (How well business management is) 3. EFQM (Higher standards for european businesses) 4. Investers in people (focuses on staff training+ motivation) |
| What is the cost of health and safety? | >Increased purchasing >Increased admin >Increased Labour |
| What are the benefits of health and safety? | >reduced staff absentee rates. >Increased staff motivation. >protection against negligence claims. |
| What is primary market research? | Original data that the company has collected themselves for a specific purpose. Adv- relevant & up to date Disadv- Time consuming & expensive |
| What is secondary market research? | The processing of data that has already been collected. Also known as desk research. adv- Cheap & quick disadv- may be irrelevant, out dated and biased. |
| Methods of Market research? | >Surveys >Focus groups >Interviews >Test Marketing |
| What are the two types of sampling? | Random (everyone has an equal chance of being selected) Quota (a specific number of people are chosen from a specific criteria) |
| What is a highly compeditive industry? | one were a large number of relatively small firms offer similar products |
| What is a highly concentrated industry? | One that is dominated by a small number of large firms. |
| What does level of competition depend on? | >The number of firms and their relative size >The extent of which products from each firm are similar >How easy it is to enter or leave the industry |
| What are the indicators of level of competition? | >Measures of market share and market competition >Measuring the entry and exit from the industry >Measuring customers switching behaviour |
| How can a company manage their competition? | >Reducing price >Improving quality >Product differentiation >Advertising |
| What is the marketing mix? | Price Product Promotion Place |
| What does price depend on? | >The type of product >Level of competition >Cost to produce the product >the price customers are willing to pay |
| What are the pricing strategies? | >Compeditive pricing >Cost plus pricing >Penetration Pricing >Predatory/destroyer pricing >Psycological Pricing |
| What are the main stages in a product life cycle? | Development Introduction Growth Saturation and Maturity Decline |
| What is the saturation point? | The point of which sales are at their peak and very few new customers can be found. |
| How can you extend the life of a product? | >product modification >repackaging >Re-branding >reducing price |
| What is advertising? | The process of drawing attention to a product, brand or company. The purpose is to inform customers and persaude them to purchase the product. |
| What are the methods of advertising? | >TV >Magazines and newspaper >Internet >Cinema >Billboards and posters >radio |
| What is a sales promotion? | A short term incentive that is used to encourage customers to purchase a good or service. |
| Examples of sales promotions. | >sales/ price reductions/ discounts >Loss leaders >Competitions >Money back/ money off coupons >free gifts |
| What is the channel of distribution? | The method used to get goods and services to a location where consumers can purchase them. |
| What are the three main channels of distribution? | 1. Manufacturer to consumer 2. Manufacturer to retailer to consumer 3. manufacturer to wholesaler to retailer to consumer |
| What does your choice of distribution channel depend on? | >Cost of channel >Speed that goods reach customer >Geographical coverage of channel >reliablity of channel |
| What is marketing? | The process involved in putting the right product, in the right place, at the right time, at the right price. |
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