business paper 1 - business activity

what is a reward of starting a business?

profit, independence, personal fulfilment and changing customer habits.

what are the potential risks when starting a business?

financial loss, health problems or strained relationships.

what does a business plan include?

details about the product or service, how the business will be marketed and financed, information about market research, who will run the business and competitors.

what are the advantages of having a business plan?

reduces risk of the business failing, better use of resources and helps secure finance such as loans.

what does SMART stand for?

specific, measurable, achievable, realistic timely.

what are the disadvantages of making a business plan?

can be time consuming, difficult and the market trends may change.

what are the 4 types of business ownership?

sole trader, partnership, public limited company (Plc) and private limited company (Ltd).

what are the advantages and disadvantages of being a sole trader?

ad: no sharing profit, full control, easy to set up

dis: unlimited liability, harder to raise funds, stress due to workloads.

what are the advantages and disadvantages of being a partnership?

ad: shared debt, shared responsibility, easy to set up.

dis: possible conflict, unlimited liability, slower decision making

what are the advantages and disadvantages of being a private limited company?

ad: limited liability, shareholders are chosen, no risk of takeovers

dis: limited owners, admin workload, dividend payments

what are the advantages and disadvantages of being a public limited company?

ad:easier access to finance, easy access to shareholders, limited liability

dis: can be taken over, dividend payments

what are the 6 stakeholders and what categories do they go in?

internal: owners and employees

external: customers, suppliers, government and local community.

what are the 2 types of business growth?

organic and external

what are the 4 types of external growth?

horizontal, diversification, backwards vertical and forwards vertical

what are the 4 main ways to grow organically?

gaining new customers, increasing output, developing new products and increasing market share

what is the difference between a merger and a takeover?

a merger is when 2 businesses agree to become one but a takeover is when one business takes a controlling interest in another (buys over 50% of shares)