easy to set up, get to be your own boss, get to decide what happens to profits
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disadvantages of a sole trader
work long hours, unincorporated, unlimited liability, hard to raise money
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advantages of partnerships
more owners -more ideas, more skills + expertise, people share the work, more capital so business grows faster
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disadvantages of partnerships
partners are legally responsible for each others actions, most have unlimited liability, disagreements are common, profits are shared
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what limited companies owned by
shareholders
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what are the two types of limited companies
private and public
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private limited companies
shares can only be sold if all shareholders agree, often family members, have ‘Ltd’ after their name
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Ltd. advantages
limited liability, easier to get a loan or mortgage
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Ltd. disadvantages
more expensive, legally obliged to publish accounts every year
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franchising advantages
recognition, trust, less risk of failing, easier to get a loan, provided with training, management and accounting
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franchising disadvantages
limited freedom, franchisee has to pay a lot to startup, then make regular payments
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what influences location
location of raw materials, labour supply, competition, using the internet, location of the market
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factors that affect the marketing mix
technology, customer needs, competition
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who are business plans made for
the owner and financial backers
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what is a business plan
an outline of what a business will do and how it aims to do it
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what does a business plan help with
makes owner think carefully about what the business will do, the organisation and resources required, convince financial backers, reduce risk, prioritising objectives
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what should a business plan contain
how the business will be run, the idea, USP, aims and objectives, target market, marketing mix, location, finance
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who are stakeholders
owners, employees, suppliers, local communities, customers, government, pressure groups
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what is e-commerce
buying and selling online
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who has to be paid the National Minimum Wage
22 and under
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who has to be paid the National Living Wage
23+
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which act states that recruitment procedures can’t discriminate against people
Equality act 2010
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What do businesses have to do to be safe
risks are properly controlled, risk assessments, staff have training
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pros and cons of health and safety legislation
fewer accidents, more productive, less time off work, expensive, have to pay compensation is anyone is injured
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what does the Consumers Rights Act cover
how goods and services can be sold
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what are the three criteria of the Consumers Rights Act
the product should be fit for its purpose, it should match its description, it should be of satisfactory quality. If these are not followed, the customer can ask for money back, repair or replacement.
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how do consumer laws affect businesses
if they break it, they are faced with costs and inconvenience, they could end up in court, harm their reputation, have to train staff properly.
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what does unemployment mean for the economy
the economy produces less output than if everyone was employed, everyone suffers
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how does unemployment help businesses
lower wages, fill jobs easily, gov could give grants to firms who open and provide jobs
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how does unemployment cause issues for businesses
less disposable income, lack of demand
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what do tax rates determine
the percentage of a businesses profits have to be paid to the government
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how does income tax affect spending
if it falls, they have more disposable income, consumer spending increases
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what is inflation
the increase in price of goods and services
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how does inflation impact businesses
consumer spending, cost of labour, global competition
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methods of internal growth
targeting new markets (selling to new people) and developing new products
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external growth is…
faster but more risky
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methods of external growth
merger or a takeover
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4 ways to merge/take over other firms
join with a supplier, join with a competitor, join with a customer, join with and unrelated firm
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downsides of mergers and takeovers
less than half are successful, lack of motivation, clashing management, cost-cutting, tension
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what is an economy of scale
when a business expands and the average costs or a product are cheaper
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why do economies of scale happen
larger firms need more supplies so buy them in bulk, they can afford to buy and operate more advanced machinery
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diseconomies of scale
areas where the growth can lead to increase in average unit costs
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larger business funds
retained profit, fixed assets, loan capital, share capital
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why do business objectives change
new legislation, changes in market conditions, changes in tech, performance, internal changes
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what is globalisation
the process by which businesses and countries around the world become more connected
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how globalisation impacts businesses
imports, exports, business location, multinationals
Studied by 15 people
