business term 1

• What are corporate objectives?

  Targets decided for the company as a whole.
• What are the 5 corporate objectives?

  • Profit
  • Survival
  • Growth
  • Cash-flow
  • Social objectives
• What does profit mean in a corporate context?

  It is when total revenue is greater than total cost.
• How can profit be used by a company?

  It can be reinvested back into the business for growth, advertising, hiring, or opening new stores.
• What is the definition of survival in a business context?


  It means to break even, where total revenue equals total cost.
• What can lead to a company's inability to survive?

  Bankruptcy or insolvency.
• What are social objectives in a business context?

  They are goals set by non-profit charities that aim to do good.
• What does cash-flow determine for a business?

  It determines the ability to generate positive cash-flow and meet financial obligations.
• What does growth refer to in a corporate context?

  It refers to increased sales, profit, market share, and demand.
• Who is a shareholder?

  A person that owns shares of the company.
• What do shareholders want from their investment?

  Dividends, growth, high dividend yield, and capital gains.
• What is the role of shareholders in a company?

  They participate in decision-making at the annual general meeting (AGM).
• What happens to existing shareholders' control when a rights issue occurs?

  Their percentage share in the company's profit and control decreases.
• What are the influences on share price?

  • Political factors: government policies and stability
  • Economic factors: state of the economy
  • Social factors: consumer behavior and demographics
  • Technological factors: operational methods
  • Environmental factors: climate change and pollution
  • Legal factors: legislation affecting business
• What is the definition of ordinary share capital?

  It is the sum of all shares in a company.
• What is market capitalization?

  It is the value of share capital calculated as share price multiplied by the number of shares.
• How do you calculate market capitalization?

  Market capitalization = share price x number of shares (ordinary share).
• What are the differences between private limited companies (LTD) and public limited companies (PLC)?

  • **Private Limited Company (LTD)**:
  • Choose their shareholders
  • Shares are not available to the public
  • **Public Limited Company (PLC)**:
  • Anyone can buy shares
  • Shares are listed on the stock exchange
• What is limited liability?


  Owners are financially liable only up to their investment in the company.
• What is unlimited liability?


  Owners have unlimited financial liability, risking personal assets.
• What is the difference between dividends and capital gains?

  Dividends are a percentage of profit, while capital gains are the difference between the purchase price and current value of shares.
• What are the stages of the production process?

  1. Primary: raw materials
  2. Secondary: manufacturing (turning materials into products)
  3. Tertiary: selling directly to customers
• What are external factors that can affect a business?

  Political, economic, social, technological, environmental, and legal factors.
• What are the advantages and disadvantages of being a sole trader?

  Advantages:

  • Easy to set up
  • Retain all profit
  • Make all decisions
  • Low startup cost

  
  

  Disadvantages:

  • Difficult to raise finance
  • Unlimited liability
  • Heavy workload
• What are the advantages and disadvantages of partnerships?

  Advantages:

  • Shared workload
  • Multiple skills
  • More equity available

  
  

  Disadvantages:

  • Unlimited liability
  • Profit is shared
  • Potential for disagreements
• What are the advantages and disadvantages of private limited companies (LTD)?

  Advantages:

  • Limited liability
  • Reliable
  • Improved safety

  
  

  Disadvantages:

  • Loss of control
  • Higher setup costs
  • Increased legal responsibilities
• What are the advantages and disadvantages of public limited companies (PLC)?

  **Advantages:*

  • Limited liability
  • Enhanced company profile

  
  

  Disadvantages:

  • Loss of control
  • Higher setup costs
  • Increased regulations
• What are marketing objectives?

  • Targets set for the marketing department
  • Help meet the overall goals of the organization
  • Example: Boost market share from 9% to 12% in 2 years
• What does SMART stand for in target setting?

  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Time-bound
• What is an example of a sales value target?

  Increase the number of BMW series 3 cars sold in the UK from £100k to £400k over the next 12 months.
• What is an example of a sales volume target?

  Increase the number of BMW series 3 cars sold in the UK from 250k to 400k over 12 months.
• Why is it important to increase sales volume in car manufacturing?

  It spreads high fixed costs across a greater number of units, lowering unit cost and increasing profit margin.
• What is market share?

  It is how much a company owns of an industry.
• What is market size?

  It refers to the industry as a whole, e.g., £100 billion.
• What is a share?

  A portion of the company that you sell for money.
• What is an example of a share percentage in a company?

  3% of BMW equals £50 million.