Business notes

• Unincorporated business


  A business that does not have a separate legal identity from its owners, who are legally liable for any debt the business might accrue
• Limited liability business


  A business whereby shareholders or directors are legally responsible only for the value of their shares
• Public limited company (PLC)


  Shares are sold to the public on the Stock market, owned by shareholders, harder to share shares to the public
• Private limited company (LTD)


  Owned by shareholders, limited number of personal shareholders
• Entrepreneur


  A person who organises, plans and takes risk for the new business
• Advantages of entrepreneurship


  • Independence - able to choose how to use time and money, able to put own ideas into practice, able to make use of personal interests and skills, may be profitable and successful if the business grows
• Reasons to support startups

  • To reduce unemployment, to increase competition, to increase output, to benefit society, can grow further
• Disadvantages of entrepreneurship


  • Risk - many new entrepreneurs' businesses fail, especially if there is poor planning, Capital - entrepreneurs have to put their own money into the business, Opportunity cost - lost income from not being an employee of another business
• Business plan


  A document containing the business objectives and important details about the operations, finance and owner's of the new business
• Primary sector


  Extracts and uses the resources of the earth to produce raw materials used by other businesses
• Secondary sector


  Manufactures goods using the raw material (primary sector)
• Tertiary sector


  Provides services to consumers and other sectors of the industry
• Business sizes


  Can be measured in many ways
• Ways to measure business size

  • Number of people employed
  • Value of output
  • Value of sales
  • Value of capital employed
• Number of people employed

  • Easy to calculate and compare with other businesses
• Value of output


  Common way of comparing business size in the same industry
• Value of sales


  Often used for comparing the size of retailers
• Value of capital employed

  The total value of capital invested in the business
• Define ‘opportunity cost’


  Something is given up in order to do something else.
• What is meant by the term ‘private sector’? 


  Part of the economy that is run by the company for profit and is not state controlled.
• Why may a business fail ?

  • Poor management
  • poor cash management
  • poor business planning
  • competition
• Franchise 


  A system whereby entrepreneurs buy the right to use the company name and logo and production of an existing building
• advantages of a franchise

  1. less chance of business failure
  2. franchisor pays for the promotion of the brand
  3. the franchisor checks the quality of supplies
• Disadvantage of a franchise

  1. franchise is expensive
  2. strict controls of what needs to be done
  3. local promotions will need to be paid for
• objectives 


  A statement of a specific target to be achieved.
• What does SMART stand for

  Specific

  Measurable

  Achiveable

  Relevant

  Time bound
• What is motivation 


  encouraging employees to work harder and more efficiently at their job
• Types of motivation 


  Financial

  non financial
• Tall organisational structure


  One that has many horizontal layers of management from the top to bottom
• Flat organisational structure


  A company with few or no hierarchical levels between employees
• Examples ‘Flat organisational’ structure


  • Netflix
  • Google
  • Nike
  • Amazon
• Organisational and management key terms

  • Structure
  • Delayering
  • Advantages
  • Disadvantages
• Organisational structure


  The formal internal framework of a business that shows how it is managed and organised
• Organisational structure


  • Shows the functional departments - finance, marketing, operations, human resources, research and development
• Delayering


  Reducing the hierarchy or size of the organisational structure by removing one or more layers/levels, often middle layers
• Test notes include definition, calculation, list, 2 mark question, 4 mark question, knowledge x2, application x2, 6 mark question, with knowledge and application x2 —> development of knowledge.
• Test notes also include figures such as sales/revenue and number of sales