Business Activity

what is the purpose of business activity?

to produce goods and services to satisfy customer needs and wants

what is an entrepreneur?

someone who takes risks and organises resources to start a business

give three common business objectives

profit, survival, growth, market share, customer satisfaction

what is a sole trader?

A business owned and run by one person who keeps all the profits but has unlimited liability for debts. eg. plumber, electrician

what is a private limited company (ltd)?

a company owned by shareholders; shares are not sold to the public

what are stakeholders?

individuals or groups with an interest in a business eg. customers, employees, owners

what is a business plan?

a document outlining what a business aims to achieve and how

what is organic growth?

business growth from expanding internal operations, not merging or buying other firms

what is a merger?

when two businesses agree to join together

give two factors affecting business location

cost, labour supply, competition, transport links, proximity to market

what is a mission statement and why do businesses use them?

a short written summary of a business’s purpose and values. it guides decisions, motivates employees, and communicates goals to stakeholders.

what is a franchise and why might a franchisee choose this option?

a business model where a franchisee buys the right to use an established brand. lower failure risk, proven products, support from franchisor.

what is market share and why is it important?

a business’s percentage of total sales in an industry. higher market share increases power over competitors and suppliers.

what is the difference between revenue and profit?

revenue = total income from sales.

profit = revenue – total costs.

what skills and attributes should an entrepreneur have?

resilience, adaptability, risk taking, creativity, innovation

why do businesses set objectives?

give direction, measure performance, motivate employees, help decision making

advantages of being a sole trader?

easy to set up, no boss, full control, keeps all the profits

disadvantages of being a sole trader?

unlimited liability, limited capital, heavy workload

what is limited liability?

Owner’s personal assets are protected; they only lose what they invested.

what is unlimited liability?

Owner is personally responsible for all business debts; personal assets can be used.

benefits of partnerships?

more capital, shared workload, shared expertise

what is a partnership?

a business owned by two or more people who share responsibility, profits, and losses.

drawbacks of partnerships?

unlimited liability, profits shared, potential disagreements

advantages of ltds?

limited liability, easier to raise capital, stable ownership

disadvantages of ltds?

more legal requirements, harder to transfer shares

what is a sleeping partner?

A partner who invests money but does not manage the business.

what is a plc?

A company whose shares are sold on the stock exchange; shareholders have limited liability.

advantages of plcs?

access to large capital, high public profile

disadvantages of plcs?

risk of takeover, expensive regulations, loss of control

what is a social enterprise?

an organisation that reinvests surplus into its mission instead of distributing profit.

examples of social objectives?

Helping communities, providing services, raising awareness.

who are internal stakeholders?

owners, managers, employees

who are external stakeholders?

customers, suppliers, government, community, lenders

what might employees want?

job security, fair pay, good working conditions

what might owners/shareholders want?

profit, growth, increased share value

what might customers want?

quality products, low prices, good service

why do stakeholder conflicts occur?

different groups have different priorities eg. owners want profit, customers want low prices

what are the purposes of a business plan?

to reduce risk, secure finance, guide operations

what are the main components of a business plan?

business idea, objectives, marketing plan, financial forecasts, operations, resources, staffing.

what is external growth?

growth by joining with other businesses through mergers or takeovers

what is a takeover?

when one business buys another, often gaining full control

why might a business choose a location with strong transport links?

easier distribution, customer access, and supply chain efficiency

how do aims change as a business growths?

Startup: survival, break-even

Growing firm: profit, market share

Large firm: brand recognition, expansion, sustainability

Mature firm: efficiency, CSR, diversification