business studies - full syllabus

Sole Trader

A business owned by one person who has unlimited liability.

Advantage of Sole Trader - Easy Setup

Because the business is easy to set up, leading to quick start-up with little legal paperwork, therefore the owner can begin trading without delay.

Advantage of Sole Trader - Profit Retention

Because the owner keeps all profits, leading to strong personal incentive to work hard, therefore motivation is high and decisions are focused.

Disadvantage of Sole Trader - Unlimited Liability

Because the owner has unlimited liability, leading to personal assets being at risk if debts can't be paid, therefore financial failure could be very serious.

Disadvantage of Sole Trader - Limited Finance

Because finance is limited to the owner's savings and borrowings, leading to restricted capital for growth, therefore expansion may be difficult.

Partnership

A business owned by two or more people who share profits and responsibilities.

Advantage of Partnership - Capital Pooling

Because partners can pool their capital, leading to more funds available than a sole trader, therefore the business can grow more easily.

Advantage of Partnership - Shared Responsibilities

Because partners can share responsibilities and expertise, leading to better decision-making, therefore the business is less dependent on one person.

Disadvantage of Partnership - Disagreements

Because disagreements may occur between partners, leading to conflicts and slower decision-making, therefore efficiency may be reduced.

Disadvantage of Partnership - Unlimited Liability

Because liability is usually unlimited, leading to partners' personal assets being at risk, therefore failure could be financially damaging.

Private Limited Company (Ltd)

A business structure where shares are owned privately and shareholders have limited liability.

Advantage of Ltd - Limited Liability

Because shareholders have limited liability, leading to their personal assets being protected, therefore investors are more willing to buy shares.

Advantage of Ltd - Capital Access

Because shares can be sold to family and friends, leading to easier access to capital, therefore growth is possible compared to sole trader/partnership.

Disadvantage of Ltd - Limited Share Sales

Because shares cannot be sold to the public, leading to limited sources of finance, therefore expansion opportunities may be restricted.

Disadvantage of Ltd - Financial Transparency

Because financial accounts must be published, leading to less privacy than unincorporated businesses, therefore competitors may see business performance.

Public Limited Company (Plc)

A business structure where shares can be sold to the general public and shareholders have limited liability.

Advantage of Plc - Capital Raising

Because shares can be sold to the general public, leading to much larger amounts of capital being raised, therefore major expansion and economies of scale become possible.

Advantage of Plc - Higher Status

Because Plcs often have higher status, leading to greater trust from banks and suppliers, therefore it is easier to borrow and attract investment.

Disadvantage of Plc - Risk of Takeover

Because anyone can buy shares, leading to risk of takeover, therefore original owners may lose control.

Disadvantage of Plc - Complex Regulations

Because legal requirements are more complex and expensive, leading to higher costs and stricter regulations, therefore management time and money are used up.

Training

The process of enhancing employees' skills and knowledge.

Advantage of Training - Skill Development

Because employees gain new skills, leading to higher quality work and productivity, therefore the business becomes more competitive.

Advantage of Training - Job Satisfaction

Because training increases job satisfaction, leading to greater employee motivation, therefore labour turnover may fall.

Disadvantage of Training - Costs

Because training costs time and money, leading to higher expenses for the business, therefore profits may be reduced in the short term.

Disadvantage of Training - Employee Turnover

Because trained workers may leave the business, leading to competitors benefiting from their skills, therefore the investment in training may be wasted.

Democratic Leadership

A leadership style where employees are involved in decision-making.

Advantage of Democratic Leadership - Employee Involvement

Because workers are involved in decision-making, leading to higher motivation and commitment, therefore productivity and loyalty increase.

Advantage of Democratic Leadership - Quality Decisions

Because staff ideas are considered, leading to better-quality decisions, therefore the business may innovate more.

Disadvantage 1 of Decision-Making

Because decision-making takes longer, leading to delays in action, therefore opportunities may be missed.

Disadvantage 2 of Decision-Making

Because some workers may not have useful ideas, leading to unproductive discussions, therefore management time is wasted.

Mass Market Advantage 1

Because the business sells to a wide customer base, leading to higher sales volumes, therefore revenue and market share can grow.

Mass Market Advantage 2

Because production is on a large scale, leading to economies of scale, therefore unit costs fall and profitability may increase.

Mass Market Disadvantage 1

Because there is strong competition, leading to heavy spending on promotion, therefore marketing costs rise.

Mass Market Disadvantage 2

Because products must appeal to many people, leading to less focus on specific needs, therefore some customers may not be satisfied.

Niche Market Advantage 1

Because products are tailored to a small group, leading to less direct competition, therefore the business can charge higher prices.

Niche Market Advantage 2

Because customers value the unique product, leading to brand loyalty, therefore repeat sales are more likely.

Niche Market Disadvantage 1

Because the target market is small, leading to limited potential sales, therefore growth opportunities are restricted.

Niche Market Disadvantage 2

Because the business relies on one segment, leading to higher risk if demand falls, therefore survival may be threatened.

Primary Research Advantage 1

Because it is original data, leading to information directly relevant to the business, therefore decisions are more reliable.

Primary Research Advantage 2

Because it is up to date, leading to accurate reflection of current customer needs, therefore products can be designed to meet them.

Primary Research Disadvantage 1

Because it is expensive to collect, leading to higher costs, therefore profits may fall.

Primary Research Disadvantage 2

Because it takes time to carry out, leading to delays in getting results, therefore decisions may be slowed down.

Secondary Research Advantage 1

Because the data already exists, leading to quick access, therefore decisions can be made faster.

Secondary Research Advantage 2

Because it is usually cheaper, leading to lower research costs, therefore more money can be used elsewhere.

Secondary Research Disadvantage 1

Because it may be outdated, leading to decisions based on old information, therefore mistakes may occur.

Secondary Research Disadvantage 2

Because it was collected for another purpose, leading to less relevance to the business, therefore its usefulness is limited.

Job Production Advantage 1

Because each product is customised, leading to higher quality, therefore customer satisfaction improves.

Job Production Advantage 2

Because workers do varied tasks, leading to higher motivation, therefore productivity and loyalty may increase.

Job Production Disadvantage 1

Because production is slow, leading to fewer products made, therefore unit costs are higher.

Job Production Disadvantage 2

Because it is labour-intensive, leading to expensive wages, therefore prices may be high and demand may fall.

Flow Production Advantage 1

Because output is continuous, leading to large quantities produced, therefore the business benefits from economies of scale.

Flow Production Advantage 2

Because machines handle most work, leading to low labour costs per unit, therefore efficiency increases.

Flow Production Disadvantage 1

Because machinery is expensive, leading to high start-up costs, therefore only large businesses can afford it.

Flow Production Disadvantage 2

Because work is repetitive, leading to worker boredom, therefore mistakes or low motivation may occur.

Just-In-Time (JIT) Advantage 1

Because stock is ordered only when needed, leading to lower storage costs, therefore working capital is freed up.

Advantage 2 (Stock Levels)

Because stock levels are low, leading to less risk of waste from damage or out-of-date goods, therefore efficiency improves.

Disadvantage 1 (Production Reliance)

Because production relies on reliable suppliers, leading to risk of disruption if deliveries are late, therefore customer orders may not be met.

Disadvantage 2 (Buffer Stock)

Because there is little or no buffer stock, leading to less flexibility for sudden increases in demand, therefore sales may be lost.

Retained Profit Advantage 1

Because it does not need to be repaid, leading to no interest charges, therefore it is a cheap and safe source of finance.

Retained Profit Advantage 2

Because it is raised internally, leading to quick access, therefore the business can use it immediately.

Retained Profit Disadvantage 1

Because it depends on profit being made, leading to limited availability, therefore expansion may be restricted.

Retained Profit Disadvantage 2

Because using it leaves less money for reinvestment, leading to slower future growth, therefore the business may miss opportunities.

Bank Loan Advantage 1

Because large sums can be borrowed, leading to the purchase of expensive assets, therefore expansion becomes possible.

Bank Loan Advantage 2

Because loans are usually long-term, leading to smaller monthly repayments, therefore cash flow is easier to manage.

Bank Loan Disadvantage 1

Because interest must be paid, leading to higher fixed costs, therefore profits may fall.

Bank Loan Disadvantage 2

Because banks often need collateral, leading to risk of losing assets if unpaid, therefore the business may be exposed.

Leasing Advantage 1

Because the business can use the asset without paying the full cost, leading to easier access to equipment, therefore production can start quickly.

Leasing Advantage 2

Because maintenance is often handled by the leasing company, leading to fewer repair costs, therefore cash flow is smoother.

Leasing Disadvantage 1

Because leasing payments continue, leading to higher long-term costs, therefore it may be more expensive than buying.

Leasing Disadvantage 2

Because the business never owns the asset, leading to no resale value, therefore total costs are sunk.

Globalisation Advantage 1

Because firms can sell in more countries, leading to larger markets, therefore revenue potential increases.

Globalisation Advantage 2

Because production can be located abroad, leading to cheaper costs, therefore profits may rise.

Globalisation Disadvantage 1

Because competition increases from foreign businesses, leading to pressure on prices, therefore profit margins may shrink.

Globalisation Disadvantage 2

Because the business may rely on overseas suppliers, leading to disruption risks, therefore production could stop.

Exchange Rate Appreciation Advantage 1

Because imports become cheaper, leading to lower raw material costs, therefore profit margins can increase.

Exchange Rate Appreciation Advantage 2

Because foreign holidays and goods are cheaper, leading to higher consumer spending power, therefore domestic sales may rise.

Exchange Rate Appreciation Disadvantage 1

Because exports become more expensive, leading to fewer overseas sales, therefore revenue may fall.

Exchange Rate Appreciation Disadvantage 2

Because firms may lose foreign customers, leading to market share decline, therefore competitiveness abroad is reduced.

Government Legislation Advantage 1

Because workers are protected, leading to fewer accidents, therefore absenteeism and compensation costs fall.

Government Legislation Advantage 2

Because customers are safer, leading to better reputation, therefore demand may increase.

Government Legislation Disadvantage 1

Because following rules costs money, leading to higher expenses, therefore profits are reduced.

Government Legislation Disadvantage 2

Because it takes management time to comply, leading to less focus on other activities, therefore efficiency may fall.