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34 Cards in this Set
- Front
- Back
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What are resources? |
Resources are the people and the objects that are needed for the business to function properly. |
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What are natural resources? Give example. |
Natural resources are items used by the business that comes from the natural environment. These include water, land, raw materials etc. |
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What are labour resources? Give example. |
Labour resources refer to the people that provide their skills, effort and knowledge to the business. E.g. employees, subcontractors. |
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What are capital resources? Give example. |
Capital resources refer to the tools and machinery that are used to produce goods or perform services. E.g. harvester instead of hundreds of workers. |
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What are some natural resource considerations business need to make? |
• Environmentally friendly products • Environment and sustainability of the production process • Raw materials; where they are sourced • Energy use of location |
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What are some labour resource considerations business need to make? |
• Number of workers and skills • Legal responsibilities toward employees • Business attraction and employee retainment • Training that businesses should offer workers • Fair pay and healthy working conditions • Resolving disputes • Business location |
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What are some capital resource considerations business need to make? |
• Tools and machinery needed • Repair, maintain and replace machinery • Employee skills to operate machinery |
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What are some business locations? |
• Shopping centres • Retail shopping strips • Online presence • Home-based businesses |
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How do local councils affect the location of different types of businesses? |
Zoning areas - separate business areas from residential areas; also sets aside commercial and industrial areas. |
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What are the main activities of an online store? |
• Setting up and maintaining a good website • using online sales platforms such as Ebay • ensuring the customer can find their website through paid advertising and Search Engine Optimisation tools. |
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What is Search Engine Optimisation and how does it help an online store achieve more visibility? |
Search Engine Optimisation (SEO) refers to the strategies used to increase the number of visitors to a website by making it more visible on search engines such as Google. |
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What is the difference between equity and debt? |
Equity is your own money that you put into a business, whilst debt is money that is borrowed and that you have to pay back. |
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List the advantages and disadvantages of using equity to finance a business. |
Advantages • Does not have to be repaid, unless the owners leave the business • Cheaper than other sources of finance • Owner retains control over how finance are used Disadvantages • The owner may expect a good return on their investment, but the small amount of finance may only generate low profits and low returns. |
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List the advantages and disadvantages of using debt to finance a business. |
Advantages • Should result in increased earnings and profit Disadvantages • Must be paid back over time, with interest |
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What are the main features and the Advantages/Disadvantages of a Bank Overdraft? |
Allows a business or individual to overdraw their account up to an agreed limit, to help overcome a temporary cash shortfall. |
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What are the main features and the Advantages/Disadvantages of a Bank Bill? |
Short-term securities issued by a business and bought by a bank Advantages Receives the money immediately. |
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What are the main features and the Advantages/Disadvantages of Leasing? |
Leasing is a way of financing the purchase of assets without a large initial capital outlay. Advantages It provides long-term financing without reducing control of ownership. Permits 100 per cent financing of assets. Lease payments are a tax deduction. Repayments of the lease are fixed for a specific period so cash flow can more easily be monitored. Disadvantages Interest charges may be higher than other forms of borrowing. The business must have a regular cash flow to make the repayments for the lease. |
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What are the main features and the Advantages/Disadvantages of Trade Credit? |
A supplier provides products to a business with an agreement to charge for the goods or services later. Advantages There is no interest charge and it is easy to obtain. |
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What are the main features and the Advantages/Disadvantages of Mortgage? |
A mortgage is a loan secured by the property of the borrower. Advantages The interest payments and any fees are affordable Disadvantages Cannot be sold or used as security for further borrowing until the mortgage is repaid. |
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Five factors that a business should consider when deciding on a source of finance. |
• The Terms of Finance • The business structure • Overall Cost • Flexibility • Level of Control |
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What are the two most significant benefits and costs of buying an existing business? |
• Increased likelihood of business success if it has a good business history. • The existing image and policies may be difficult to change, especially if the business has a poor reputation. |
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In what circumstances might someone choose to start a business from scratch? |
• They see a gap in the market • Other companies aren’t catering to particular demands for product or services. |
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What are the two most significant benefits and costs of starting a new business from scratch? |
• The owner has the freedom to set up their business however they like and decide how it’s run. • There is a high risk and a measure of uncertainty. • Without previous business reputation, it could be hard to secure finance. |
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What is a franchise agreement? |
When a business sells to others the rights to distribute its products and use the business name. |
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How might operating as a franchise address some of the problems associated with starting a business from scratch? |
• Business may already have a good name and reputation. • It already has a customer base, making it easier to get a source of income and financing. |
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What do terms of finance refer to? |
The terms of finance refer to the amount of the repayments and frequency at which they must be made. |
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What is a working capital? |
Working capital is the funds available for the short-term financial commitments of a business. |
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What are the factors affecting the choice of business location? |
• Visibility • Cost • Proximity to customers and suppliers • Proximity to competitors • Complementary businesses |
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What are the factors affecting the choice of finance? |
• Terms of Finance • The business structure • Overall cost • Flexibility • Level of control |
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What is the business structure? |
• Large businesses have more opportunities for equity capital than small businesses. • Most small businesses have to raise equity from private sources or by taking on a partner. |
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What is a Business Entity? |
Any organisation that exists separately to its owner in order to produce and sell goods and services. |
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What does it mean if a business is Incorporated? |
It is a business with a separate legal existence apart from its owner/s. |
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What are Incorporated business entities and Unincorporated business entities? |
Unincorporated business entities: sole traders and partnerships, this structure is the easiest and cheapest to establish. Incorporated business entities: privately and publicly owned companies |
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What is an unlimited liability? |
Unlimited liability is a business owner personally responsible for all the debts of his or her business. |
