business unit six

Flashcards by beth.tripp, updated more than 1 year ago
Created by beth.tripp over 6 years ago


Geography/Business (BUSINESS) Flashcards on business unit six, created by beth.tripp on 10/11/2014.

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Question Answer
What is Economies Of Scale The reasons why average costs of each item fall as a firm expands
name 3 types of ecomonies of scale bulk buy, lower transport costs and specialisation of the workforce
what is a stakeholder A group or individual who is affected by a business.
CHAIN OF PRODUCTION layout with examples primary-secondary-tertiary logging-furniture factory-furniture village
What is unlimited liability If failure anything can be taken to repay whether personal or business assets they are both used.
What are the factors of production? land ,labour ,capital and enterprise
what does enterprise mean? Idea for starting a business or get up and go attitude.
what is expansion? means that the output ans sales increase over a period of time which indicates a successful business
what is market share? the proportion of total market sales sold by a business.
name three reasons for growth and say a benefit and a risk of each increase sales benefit-this should lead to increase profits risk-will not increase profits if prices lower in order to sell more. Increase Market share benefit-sales of business grow faster than total sales in market. risk-other firms may increase sales so share could decrease. Become secure and benefit from customer preferring to deal with large businesses benefit-large businesses are more secure than small ones risk-Large businesses can make losses and be forced out of business too
list 5 reasons for growth and explain economies of scale-bulk buy market domination-establish brand personal vanity-personal pride increase in sales diversification-selling different products
4 reasons not to expand keep control increase risk offer more personal service to avoid increased work load
what is internal/organic growth mainly the growth is a consequent of success e.g. using retained profit
what is external/inorganic growth by acquisitions and mergers which is faster than internal but more risk
when does a business become a price setter? when it expands and then becomes a bigger influence on the market price.
what is a merger when two businesses join as one to save / reduce competition e.g. Curry's and PC World
Diversify produce a range of new goods/services spreading the risk of failure.
what is a demerger breaking up a business into to or more independent parts
what is inputs? the resources or factors of production that a business uses to produce its products.
what are redundants? when resources e.g. work force are no longer needed.
what is a takeover? Taking control of another business by buying more than half of its shares.
what is an Acquisition? A business that has been taken over/bought by another company
What is a PLC Public limited Company-A business that is allowed to sell shares to anyone who wants to buy them
what is a royalty? The fee paid to a business for using its brand name.
what is meant by the term overstretched? When a business tries to grow too quickly which can result in falling of profits.
what is horizontal integration? give two examples and give three benefits of horizontal integration when firms in the same industry at the same stage in the production are bought by a firm in expansion. e.g. Vaults Wagen and Skoda or Curry's and PC World. Three benefits of horizontal integration -increases market share -reduces competition -more control over prices
state three drawbacks of horizontal integration to the businesses? give one consumer disadvantage? -difference in opinions -communication problems -different objectives and consumers have less choice
what is vertical integration? give three advantages when affirm expands by combining with an existing business in the same industry but different stage of production. advantages -controls the quality as more control -secure source in supply or distribution channels -cuts costs
give disadvantages of vertical integration -the costs and expenses associated with increase overhead and capital expenditures to provide facilities. -less economies of scale
Give an example of vertical integration -forwards in the stage of production -backwards in the stage of production forwards amazon now sets up a publishing business book writer-publisher-Amazon online shop Backwards Starbucks buys coffee bean farm coffee bean farm-owns coffee shop where it is made
give 5 internal economies purchasing economies-bulk buy production economies-lower unit costs e.g. transport in bulk 1 full lorry not 2 half financial economies-easier to raise capital through diversification marketing economies-cost of promotion is less per unit as spread over more units sold Administrative -cost of staff,managment and systems
give three external economies -better road links and infrastructure -skilled labour in the area -suppliers attracted to the area
what is a diseconomies of scale?give an example and explain ineffective communication. Coordinating large numbers of staff becomes a challenge as big businesses can develop levels of hierarchy which slow down communication or miscommunication.
what have partnership and sole trader both have? unlimited liability
what is unlimited liability? both personal and business assets are used to repay debts in the result of failure.
what is limited liability? only the business finance is used to pay not personal assets an example of a ltd. is Argos
how do the following raise finance: sole traders partners PLC Sole trader-must raise all finance themselves e.g. loans partners-all partners can contribute PLC-can sell shares.
give 2 benefits to being PLC and 2 disadvantages. two benefits -title adds prestige -can sell shares for finance two disadvantages-must have trading results audited by a register auditor and must file their annual accounts with companies house so that the public has access to them which is how suppliers check on a company before going into business.
what is meant by social costs and give three examples social costs are negatives affect on society e.g. air pollution, sound pollution and traffic/conjestion
what is a social benefit and give three examples doings by the business to benefit the community in order to gain more customers and profit e.g. employment, sponsorship and convenience.
why set ethical and environmental objectives? -reduce social costs and increase social benefits -importance of brand image -laws on environmental protection are stricter -fines and bad publicity if you don't -consumers are putting pressure on firms to be ethical
give 2 benefits and of being ethical in a business benefits-can increase long-term profit -workers are more motivated if feel valued drawbacks-
what are the two roles in stock exchange 1)help new firms to sell shares to raise capital which is the primary market. 2)to act as an intermediary to bring together those who wish to sell shares and those to buy which is the secondary market.
what is a stock exchange? where investors can buy shares from people all over the world at a stock market.
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