business first assessment

What is a business?

A business is an organisation that produces a good or provides a service

What do businesses do?

1. Produce goods e.g Farmers, mills

2. Provide services e.g Macdonalds, NHS

3. Distribute products e.g Hermes, Royal mail

4. Fulfilling an opportunity e.g HelloFresh, Amazon, Ebay

5. Providing goods and services for other e.g Charities: CAFOD, Fairtrade

What is a good

tangible and physical, can be seen or touched e.g cars

What is a service?

intangible and non-physical, have to be experienced e.g transport

what is a customer

someone who buys a product

what is a consumer

someone who uses the product

What are the factors of production?

Land, Labour, Capital and Enterprise

What is Land?

1. physical land where the business is located

2. Natural resources used to produce good or services

What is Labour?

Skills and number of employees employed by the business

What is capital?

the equipment used to provide the goods and services such as machinery

What is Enterprise?

Skills of the people involved in the business to identify business opportunities e g ideas

What is opportunity cost?

Measured by the next best alternative, what is given up when a choice is made.

What is the primary sector

1. organisations that are the first stage of production

2. use raw materials

What is the secondary sector

1. Involved in the second stage of production

2. process and use raw materials to manufacture products

What is the tertiary sector?

organisations that sell products or services

Name business function

Marketing
Finance
Operations
Human resources

What is marketing?

designing products, deciding where to sell it, have to promote it

what is finance

involves money, setting a budget and predicting profits

what is operations

producing the product ir providing the service e.g production method

What is human resources

looking after staff e.g how to motivate them, train them

What is an entrepreneur?

someone who is willing to take risks involved in starting a new business

What skills/qualities do entrepreneurs need?

innovative
Risk takers
Hard working and determined
Organized

What is it meant by being innovative

good a spotting an opportunity and imagining a better way of doing things

What is meant by being a risk taker

the chance if damage or loss happening as a result of making a descion

What is it meant by being hardworking and determined

word hard to launch and maintain their product or service

what is it meant by being organised

must organise people, materials and finances in order to succeed

What are examples of entrepreneur objectives

1. wanting to be their own boss

2. Want to keep 100% of the businesses profits

3. spotted an opportunity

4. want to provide a service for others

What is the dynamic nature of business

a business that is ever changing because of external factors e.g technology, customer needs, legal changes, economic changes and environment expectations

What is a sole trader

someone who sets up a business in their own, they can have employees but the business is owned by 1 person, they have unlimited liability

What are the positives of being a Sole trader?

1. Full control of decision making

2. Does not have to consult others - quicker descions

3. Keeps 100% of profits

What are the negatives of being a Sole trader?

1. 100% of responsibility- stressful

2. Lack of support- lack of ideas

3. Limited finance due to only 1 person

What is a partnership?

a business where there are two or more owners of the enterprise. The partners have unlimited liability

What is the Deed of Partnership?

a legal document drawn up by a solicitor/lawyer setting up rules for the partnership

What is the positives of a Partnership?

1. wider range of ideas

2. Responsibility is shared

3. Potential access to more money - more owners more resources

4. banks may be more willing ti lend as it is likely to be less risky

What is the negatives of a partnership?

1. may be disagreements- slower descions making

2. some partners may not take responsibility- business performance decreases

3. Share profits

what is unlimited liability

a legal obligation on the owner of a business to settle all debts of the business

there is no distinction between what the business owes and owned and what the business owner owes or owns

if the business fails and owes money, the business owner may lose personal possessions such as their house and car ti pay off debt

what is limited liability?

when shareholders of a company are not personally responsible for the debts if the company

what is a company

a business that has it's own legal identity. it can own items, owe money, sue and be sued. they are owned by shareholders

What are shareholders?

own a percentage of a company, they have unlimited liability

What is a dividend?

a portion of the companies profit

What is a private limited company

owned by shareholders usually members of the same family or friends

cannot advertise their shares publically

What are the advantages of private limited companies

- limited liability, less risky, could attract investors and potential shareholders

- hold more status than a sole trader

What are the disadvantages of LTD

-difficult to set up (lots of paperwork)

- share their financial accounts publically, less privacy, customers do not want this

- some shareholders may disagree, slow descions making

What is a PLC

public limited company where shares are sold to the general public and are sold on the Stock Exchange

What are the disadvantages of PLCs

- cannot control who buys their shares, could lose control of descion making overall

- share their financial accounts publically, less privacy

- higher chance if stakeholders disagreeing, they are from outside the business

what are the advantages of PLCs

- the more successfull the company is, the more profit it makes, this attracts more potential shareholders and they want high dividends - increase the demand for shares- prices get higher- number of shares are limited

- access to a larger number of investors/potential shareholders, share capital

- PLC hold more status than LTDs to some customers

- easier to sell shares later

what is a non profit organization?

set up to achieve objectives other than profit e.g charity

dedicated to a social cause- to help society

what is a stakeholder

any group or individual who can affect or is affected by the achievement of the organization's objectives