Business Topic 4 Making the business effective

What type of liability means owners are fully responsible for all business debts?

Unlimited liability

Which business structures typically have unlimited liability?

Sole traders and partnerships

In a limited liability company, shareholders can lose more than their original investment to pay off business debts. True or false?

False

What is a major disadvantage of being a sole trader?

Unlimited liability

What are 3 advantages of a partnership^?

Shared responsibilities, Increased access to finance, More skills available

Who usually buys shares in a Private Limited Company (Ltd)?

Friends and Family

What is one characteristic of sole trader?

Single owner

What is one characteristic of a partnership?

Two or more people

What is one characteristic of a private limited company?

The shares are sold privately

What is one attribute of a franchise?

It uses established branding

What are the ongoing fees paid by a franchisee to a franchisor called?

Royalties

Is a franchise a legal form of a business ownership?

False

What is the fixed sum paid at the start of a franchise called?

Initial lump sum

What are three advantages of owning a franchise?

Centralised advertising, training provided, exclusive location with no competition

What does 'proximity to market' refer to?

Distance to customers

What does locating new raw materials help a business to minimize?

Transportation costs

Why might a business choose to locate near competitors?

Shared customer base

E-commerce businesses usually find high street locations more critical than traditional retailers.

False

What are the '4Ps' of the marketing mix?

Product, Price, Place, Promotion

Which element of the marketing mix involves generating customer awareness?

Promotion

In the design mix, what is the function of: Function, Aesthetic, Cost

Function - How it works, Aesthetics - How it looks, Cost - Manufacturing expense

What can a strong brand help a business to do regarding price?

Charge higher prices

Does a business plan guarantees the success of a new business.

False

Who uses a business plan to decide if a business is worth the financial risk?

Lenders and investors

What is a major advantage of a business plan?

It increases investors confidence and likelihood to invest

What is the term for when a construction company like Carillion closes and assets are sold?

Liquidation

In an Ltd, who usually makes the day-to-day decisions?

Managing Director or CEO

What is the journey that a product makes from business to customer known as?

Distribution

In a competitive market with many substitutes, what might a business do to its price?

Lower it

Can stores charge more because they add value through location?

Yes

How does a remote-based company gain a competitive advantage?

Reduced office expenses

During a recession, how do consumers typically behave regarding price?

Become more price-sensitive

What technology allows businesses to adjust prices in real-time based on demand?

Dynamic pricing

What is the main document used to obtain finance at start-up?

Business plan

What is typically included in a business plan?

Target market, Cash-Flow forecast, Business aims

What is the primary aim of producing a business plan?

Reduce risk

What is a disadvantage of a Private Limited Company regarding setup?

Time-consuming and expensive

Do partnerships share profits equally regardless of individual contribution?

Yes

What does a franchisor provide to ensure quality and consistency?

Training and supplies

What happens if a franchisee fails to meet quality standards?

Rights can be removed

What’s more cheaper to set up, sole trader or Private Limited Company

Sole trader

What factor might a law firm prioritise when choosing a location?

Accessible office location

What is the benefit of using data analytics in pricing?

Analyse competitors' strategies

What is the purpose of the 4ps?

The 4Ps work together to satisfy the needs and wants of a target market

What is a disadvantage of a partnership regarding decision-making?

Potential for disputes

Which marketing mix element is most affected by the rise of e-commerce?

Place