What is a sole trader?
Someone who owned a business by themselves
What are some advantages of being a sole trader
Large amount of flexibility
Owner gets to kee the profit
Can make all decisions
What are some disadvantages of being a sole trader
Unlimited liability
Have to do all the work
Sometimes need to work very long hours
May be difficult to raise money
What is a partnership?
Where a business is jointly owned by 2-20 people
What is a sleeping partner?
Someone who invests money but takes no part in day to day running
What is a deed of partnership
It lays out rules for running and ending of the partnership eg sharing profits
What is a private limited company
A company that is owned by shareholders who each invest a sum into the business
What is a public limited company?
A company’s shares are traded on a stock exchange and can be bought or sold by anyone
What are some advabtages of a private limited company?
Limited liability
Easier to get a loan
For someone to buy shares all the other shareholders have to agree so the owner keeps a lot of controll
What are some disadvantages of private limited companies
They’re more expensive to set up than partnerships because of all the legal papaerwork
The company is legally obliged to publish its accounts
What are some advantages of public limited companies?
Limited liability and being incorporated
Much more capital (the money that the business needs to function)which helps the company expand and diversity
What are some disadvantages of public limited companies
It can be hard to get a lot of share holders to agree on how the business runs
It's easy for someone to buy enough shares to take over
The accounts have to be made public
More shareholders means there’s more people wanting a share of the profits
What are the 4 factors of production?
Land
Labour
Capital
Enterprise
What is the land in the four factors of production
As well as the actual territory, land includes all the earths natural resources
Non renewable resources at ccoal oil natural gas
Renewable resources eg wind tidal or wood
Matériels extracted by mining eg diamond and gold
Water
Animals
What is labour in the four factors of production
Labour is the work done by the people who contribute to the production process
What is the capital on the four factors of production
Capital is the equipment, factories and schools that can help to produce goods or services
How is capital different from land in the four factors of production
Capital is different from land because capital has to be made first
What is enterprise in the four factors of production
Enterprise refers to the people (entrepreneurs) who take risks and create things from the other three factors of production
What is opportunity cost
It’s the idea that money or time spent doing one thing is likely to mean missing out on doing something else
What are some different variety of aims
Survival
Maximise profit
Growth
Increase shareholder value
Increase market share
Do what’s best socially and economically
Achieve customer satisfaction
What is survival as an aim for a business
Around 60% if new businesses close within 5 years of starting so just surviving is the main and most important short term aim of all new businesses
What is maxismise profit as a aim for a busines
The vast majority of businesses will aim to maximise profits. However, it may take a few years form anew firm to make any profit at all
What is growth as a aim for a business
Many firms aim to grow but growth can mean different things eg ur might mean increasing employees, increase the number of products sold or increasing income of sales
Some firms want to grow domestically (in the country where they were set up) others want to grow internationally
What is increase shareholder value as an aim for a business
Many firms aim is to increase shareholder value (make their shareholders more wealthy) by increasing the value of the firm eg making more profit by growing
What is increase market share as a business aim
Market share tell you what percentage of a markets total sales a particular product or company has made
It can aim to increase its market share by taking sales away from competition or by persuading new customers to enter the market and buy its products
What is doing what’s right economically and socially as a business aim
Some firms want to make sure they are acting in ways that are best for society and that society believes are morally right eg many consumers think it's wrong to test cosmetics on animals
They may also want to make sure their activities don’t cause unnecessary harm to the environment
What is achieving customer satisfaction as a business objective
Customer satisfaction measure how happy consumers are with the products provided by the firm. The firm can measure this by carrying out surmise opinion surveys, a type of market research
What are some factors that affect the objectives of a busines?
The size of a business, small busineses might be concerned of survival and growth
level of competition, if a business is in a highly competitive market it might focus on customer satisfaction so it can win customers from its rivals
The type of busines, eg not profit business are more likely to focus on social or ethical objectives rather then growth or profit
How can you work out the revenue
Multiply the sales (the number of units sold) by the price
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