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57 Cards in this Set
- Front
- Back
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What are the 5 basic needs |
- Clean air - Clean water - Shelter - Food - Clothing
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What are the 8 most common wants |
- Phone - Wi-Fi - Plane - Jewellery - Fashionable clothes - Car - Boat |
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What is the basic economic problem? |
wants are unlimitless but needs are limited |
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The factors of production? |
Land: natural recourses - (rent) Labour: Employees - (wages) Capital: Machinery - (Interest) Entrepreneurship: risk taker - (Profit) |
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What is opportunity cost ? |
The next best alternative foregone. Opportunity cost is allowed to make choices, these choices can be made by, individuals, Businesses and Country's |
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Name an example of opportunity cost |
An individual can either have an economic textbooks or a night out, if you choose to go out the opportunity cost are the books |
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What is specialisation ? |
When are business have different people for different jobs for example in the army. |
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Name an example for specialisation within the army |
You have specialisation in: Tanks, artillery, signals, medical, transport, infantry |
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What is value added ? |
In a business each stage of the production process is designed to add value to the finished product |
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Name an example of value added |
- A farmer grows wheat Which he then harvest (value added) - The farmer sales the wheat to a Miller (value added) - The miller grinds it to make flower (value added) - The miller than sales the flower to the baker (value added) - The baker then makes bread and sales it to the consumer (value added) |
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Name the 3 sectors |
Primary sector: raw materials Secondary sector: manufacturing Tertiary sector: selling the finished products to consumers |
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Name other ways to add value |
- Good services - Guarantees - Packaging - Brand image |
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Name the 5 Business objectives |
- Survival - Profit - Expand - Provide a service - Diversity |
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Name the importance of business objectives |
It gives a sense of direction, without business objectives the business is likely to fail |
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Aim: Survival |
Making sure that business organisation is active in the future and does not go bust |
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Aim: Profit |
This is a reward to the owners of the business organisation who are the risk takers |
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Aim: expand |
- To increase market share - To have greater production capacity - To have more retail outlets |
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Aim: providing a service |
Some business do not have profit as a key objective but to provide a service at an affordable price |
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Aim: diversity |
To increase the range of goods a business organisation sells |
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Objectives in a business organisations needs to be: |
S: specific M: measurable A: achievable R: realistic T: time restricted |
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Ways to boost profitability |
Improved levels of: - costumer service - Quality - Productivity - Efficiency - Marketing |
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What is Chain of production |
All sectors depend on each other. The reason why they rely on each other is because they are all linked |
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Name an example of the chain of production |
A transport company depends on an oil company to power the trucks. Without trucks they can't transport food to markets |
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What are local businesses ? |
These businesses are usually: - Small - Run by individuals - Often found in market places, corner shops or on the high street |
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Examples of local businesses |
- Cobbler - Key cutter - Newspaper shops - Tailor - Tea shops - Butcher - Barber
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What are national businesses ? |
These businesses usually: - operate in individual countries - recognized throughout that country
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Examples of national businesses |
- Plus (supermarket) - Jumbo (supermarket) - Mr softy (ice cream vans) - Greg's (cafe) |
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What are international businesses? |
These businesses are usually: - Multinational businesses - Very big - Is recognized world wide |
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Examples of international businesses |
- Coca cola - Starbucks - Ford - Samsung - KFC - Mc Donald's |
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What does multinational company mean ? |
This means that their company's headquarters are in one country and have many branches in other countries |
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Who do firms become multinational |
- To produce goods in countries with low cost - To produce goods nearer the market areas to reduce transport costs - To expand into different market areas to spread risk |
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Advantages of multinational operating in a country |
- Jobs are created (reduce level of unemployment) - New investment ( increases output of goods and services) - Taxes (increase funds of the government) |
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Disadvanrages of multinationals operating in a country |
- Jobs that are created are often unskilled assembly line task - Local businesses may be forced out of business - profits are often send back to a multination's home country - they can influence the government and the economy of the host country |
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Why do firms become multinational |
- To produce goods in countries with low costs - To produce goods nearer the market to reduce transport costs - To expand into different market areas to spread risk |
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Advantages of a multinational companie operating in a country |
- jobs are created (reduce level of unemployment) - New investments (more output of goods and services) - Taxes (increase the funds of the government) |
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What is the public sector ? |
These are organisations that are owned by local or national government and their profits are used in the organisation |
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What is the private sector ? |
These are businesses that are owned by private individuals that keep their profits |
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What are Municipal undertakings ? |
- they are run by the local government - they usually provide services to people in a local area - they are paid by local taxes |
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What are sole traders ? |
- They are owned by one person - don't require a lot of money to set up - easy to set up - unlimited liability |
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What does unlimited liability mean |
You must pay off of your debts using your own money and if the business cannot afford to pay off those debts they need to pay them with personal possession like a house or a car |
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Advantages of sole traders |
- easy to set up - usually small, so less money needed - owner can make all of the decision - owner can keep all the profit - business accounts can be kept private - can provide specialist services - can respond to the needs of the costumer |
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Disadvantages of sole traders |
- unlimited liability - money can be more difficult to obtain - cost are usually higher - prices are usually higher - holidays may be difficult to take - I'll health may get the business bust - owners must work long hours |
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What is a partnership ? |
- 2 to 20 people running a business which aims to make a profit - money is usually provided by partners - easy to set up - unlimited liability (except sleeping partners) |
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What is a sleeping partner ? |
A sleeping partner is someone who invested money into the partnership, but does not play an active part in the day to day running of the business. |
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What is a deed of partnership ? |
A deed of partnership is a legal document that states: - who the partners are - how much money each partner has put into the business - how profits should be shared out -how many votes each partner has in any meetings - the procedures for partners leaving or joining the business |
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Advantages of a partnership |
- easy to set up - usually small, so less money is needed - responsibility can be shared - can be run as a family business - accounts can be kept private - money comes from partners |
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Disadvantages of a partnership |
- unlimited liability - money can be difficult to obtain - legal cost of drawing up deed of partnership - possible arguments - limit of the numbers of partners - partners leave |
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What are private limited companies |
-A company owned by at least 2 shareholders -shares are sold privately to friends and family -shareholders have limited liability -shareholders vote for a board of directors -they always have LTD in it's name |
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What are dividends |
Dividends is the name given to the amount of profit each shareholder gets, the more shares you own the higher your dividend |
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What are public limited companies |
-public limited companies are bigger than private limited companies -shareholders have limited liability -shareholders vote for a board of directors -shares are sold on the London stock exchange -they need to have the words PLC -accounts must be published
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Advantages and disadvantages of public limited companies |
Advantages -can get more money by selling shares -firm is big- easier to negotiate with suppliers -limited liability -can employ specialists -shares can be given to workers to motivate them Disadvantages - firm can be taken over - accounts are not private - expensive to set up
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Advantages and disadvantages of private limited companies |
Advantages - can get money by selling shares - firm is bigger - limited liability - death/illness doesn't affect the business Disadvantaged - the stock market - expensive to set up - incorporates must be a separate legal company |
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Stakeholders |
Stakeholders show interest in business success for their own sake for example a consumer wants lower prices |
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Franchises |
Franchises are large companies that allow smaller businesses to use their name |
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Advantages and disadvantages of a franchise |
Advantages -good chance of success , since the product is already known -easier to borrow money, because of past success -problems will probably have happened before -get support from the franchisor -advertising is paid by the franchisor Disadvantaged -Franchise may be taken away from you -owner cannot make all decisions -cannot sell the franchises without permission -have to make payments to the franchisor -supplies must be bought from franchisor, which may be expensive |
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Competition policy |
This creates: - low prices - better quality - innovation - wider variety |
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Measuring success |
Measuring success can be measured in: - profit - size - product quality - social responsibility - consumer satisfaction |
