BUSINESS IGCSE EDEXCEL UNIT 1 FLASHCARDS (copy)

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IGCSE Edexcel Business Studies unit 1 - business activity and influences on business

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70 Terms

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business

organisation that produces goods and services

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goods

physical products

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services

non-physical products

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output

amount of goods or work produced by a person, machine or factory

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consumer goods

goods and services sold to consumers rather than businesses

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producer goods

goods and services produced by one business for another

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private sector

business organisations owned by individuals or groups of individuals

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public sector

owned by central or local government

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stakeholder

an individual or group with an interest in the operation of a business

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entrepreneur

person who takes risks and sets up businesses

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objectives

goals or targets set by a business

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financial objectives

  1. survival

  2. profit

  3. increase market share

  4. financial security

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non-financial objectives

  1. social objectives

  2. personal satisfaction

  3. challenge

  4. independence and control

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profit satisficing

making enough profit to satisfy the needs of the business owner

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dividends

share of the profit paid to the shareholders of a company

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large business

business that employs more than 250 people

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small business

business that employs fewer than 50 people

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revenue

money from the sale of goods and services

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unincorporated

business where there is no legal difference between the owner and the business

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incorporated

business that has a separate legal identity from that of its owners

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sole trader

business owned by a single person

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unlimited liability

owner of a business is personally liable for all business debts

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advantages of a sole trader

  1. owner keeps all profit

  2. independence

  3. simple to set up

  4. may qualify for government help

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disadvantages of a sole trader

  1. unlimited liability

  2. struggle to raise finance

  3. no continuity

  4. too small to exploit economies of scale

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partnership

business owned by between 2 and 20 people

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deed of partnership

binding legal document that states formal rights of partners

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advantages of partnerships

  1. easy to set up

  2. specialisation

  3. more capital raised

  4. financial information not published

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disadvantages of partnerships

  1. unlimited liability

  2. profit shared

  3. partners may fall out

  4. legally binding

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limited partnership

partnership where some partners contribute capital and enjoy a share of profit but do not take part in running the business

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limited liability

business owner is only liable for the original amount invested in the business

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franchise

structure in which a business allows another operator to trade under their name

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advantages to franchisee

  1. less risk

  2. back-up support

  3. predictable set-up costs

  4. national marketing

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disadvantages to franchisee

  1. profit shared with franchisor

  2. strict contracts

  3. lack of independence

  4. can be expensive

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advantages to franchisor

  1. fast method of growth

  2. cheap method of growth

  3. franchisees take some risk

  4. franchisees more motivated

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disadvantages to franchisor

  1. potential profit shared

  2. reputation may be damaged

  3. cost of support may be high

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social enterprise

business that aims to improve human or environmental wellbeing

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venture capitalists

specialist investors who provide money for business purposes

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limited companies

business organisations that have a separate legal identity from that of their owners

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limited liability

shareholders are legally responsible for the debts of a company according to how many shares they own

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advantages of private limited companies

  1. limited liability

  2. more capital

  3. control cannot be lost

  4. continuity

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disadvantages of private limited companies

  1. financial information is made public

  2. profit shared

  3. shares take time to transfer

  4. cannot raise huge amounts of money

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public limited company

a limited company who’s shares are freely sold and traded, with a minimum share capital of £50 000

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advantages of public limited companies

  1. large amounts of capital raised

  2. limited liability

  3. exploit economies of scale

  4. shares can be bought and sold easily

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disadvantages of public limited companies

  1. expensive set up costs

  2. control can be lost

  3. financial information made public

  4. managers may take control

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multinational company

large business with production in at least 2 countries

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features of a multinational company

  1. huge assets

  2. experienced executives and managers

  3. powerful advertising

  4. highly advanced technology

  5. high influential economically and politically

  6. exploit huge economies of scale

  7. ownership and control entered in host country

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productivity

rate at which goods are produced and the amount produced

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public corporations

business organisations owned and controlled by the government

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features of public corporations

  1. state owned

  2. created by law

  3. incorporation

  4. state funded

  5. public services

  6. public accountability

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natural monopoly

market where it is more efficient to have just one organisation meeting total market demand

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reasons for public ownership of businesses

  1. avoid wasteful duplication

  2. maintain control of strategic industries

  3. save jobs

  4. fill gaps left by private sector

  5. serve unprofitable regions

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reasons against public ownership of businesses

  1. cost to government

  2. inefficiency

  3. political interference

  4. difficult to control

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privatisation

transfer of public sector resources to the private sector

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factors affecting location

  1. proximity to market

  2. proximity to labour

  3. proximity to materials

  4. proximity to competitors

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trade bloc

group of countries situated in the same region that join together and enjoy trade free of barriers

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globalisation

growing integration of world’s economies

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features of globalisation

  1. goods and services are traded freely across international borders

  2. people are free to live and work in any country

  3. high levels of interdependence

  4. capital can flow freely between different countries

  5. free exchange of technology and intellectual property

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intellectual property

people’s knowledge or creative ideas that have commercial value and are protectable under different forms of copyright

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saturate

to offer so much of a product for sale that there is more than people want to buy

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visible trade

trade in physical goods

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invisible trade

trade in services

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exports

goods and services sold overseas

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imports

goods and services bought from overseas

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exchange rate

value of one currency in terms of another

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fiscal policy

using changes in taxation and government expenditure to manage economy

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external factors

PEST - political, economical, social, technological

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measures of success of a business

  1. revenue

  2. profit

  3. growth

  4. marketshare

  5. customer satisfaction

  6. employee satisfaction

  7. shareholder satisfaction

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overtrading

taking on more work than a business can afford to fund effectively

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inventory

stocks of goods

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reasons for business failure

  1. cash-flow problems

  2. lack of finance

  3. not competitive

  4. failure to adapt to changes in the market