Unit 1 mock revision

• opportunity cost

  The next best alternative forgone
• Business defintion and why someone whould start a business

  • They turn inputs into goods and services that are in demand from customers to produce a good to —Provide a service to benefit Society -to fill a gap in the market -to fulfil a business opportunity
• Objectives

  • to guide decision makers to provide a measureable target helps people judge whether or not the business has been successful assist in raising for finance coordination-all employees make clecisions with the same goals in mind
• Deed of partnership


  an agreement between partners which sets out the rules of the partnership
• Value of a business/net worth


  business assests - what it owes
• Why do businesses expand?

  • common business aim big companies are more well known -Safe from hostile takeovers -benefit from economies of scale
• Key elements of a partnership agreement

  • Amount of money to be invested by each partner
  • How profits will be split between partners
  • How decisions (e.g. new partners) will be made
  • Roles/specialities of each partner
• Purpose of Setting objectives

  To guide decision-makers

  To provide a measurable target

  To assist in raising finance

  Coordination
• Main sections of the business plan

  Type of business

  Target market

  Resources required

  Staff required

  Financial forecasts

  Details about the entrepreneur
• Why would someone make a business plan/the advantages of a business plan?

  To raise finance

  To set objectives

  To organise the business

  Allows entrepreneurs to think analytically about their business using data
• Ways to measure the size of a business

  Quantity of sales

  Value of sales

  Number of employees

  Value of business
• Net worth

  The value of a business

  businesses assets minus what it owes
• Advantages of growth

  Economies of scale

  Advertising and publicity, can afford to spend more on it, lead to more sales

  Attracting the best employees, they have more promotional opportunities and training, attract more talented employees.
• Technical economies of scale

  Improve machinery makes more products in the same amount of time.