BUSINESS PAPER 1

• what is meant by the term unlimited liability?


  Owners are personally responsible for all debts and obligations of the business, therefore they may result in loosing personal possession's in order to pay off depts
• what are private limited companies?

  Companies with limited liability and a restricted number of shareholders.
• what is meant by the term limited liability?

  Owners are not personally responsible for the debts of the business.
• an owner who has unlimited liability has....

  100% control of decision making, keeps 100% of profits
• what are 3 types of ownership?

  sole trader, partnership, LTD
• what are advantages of being a sole trader?

  makes all decisions, keeps all profits, quick and easy to set up
• what are disadvantages of being a sole trader?

  Unlimited liability, pressure, no one to cover when ill or take time off
• what are sole traders?

  Individuals running their own business.
• who tends to have unlimited liability?

  sole traders
• advantages of partnership?


  Shared responsibility and decision-making
• disadvantages of being in a partnership?

  profits are shared, may disagree on things, decisions made by one partner may affect all partners
• advantages of a private limited company?

  owners have limited liability
• disadvantages of private limited companies?

  financial information is published, shareholders may disagree on things
• what is a franchise?

  replication of another existing business
• what is a franchisor?


  original businesses that accepts franchisees to sell its product or service
• what does a franchisee get when they buy a franchise?

  training, established brand name, advertising, promotion, equipment, access to goods and services
• what are benefits of running a franchisee?


  brand and reputation is already established, higher chances of survival, expensive marketing costs are covered, access to tried and tested products
• what are drawbacks to running a franchisee?

  owner has little freedom with decision making, franchisee has to pay a royalty to the franchisor, cost of initial investment can be high, restrictions on location
• what can business location effect?

  materials, transport, competitors, market, labours
• what impact does e-commerce have on business location?


  removes significance o location for many businesses because the place where they trade is virtual
• what are the 4p's in the marketing mix?

  price, product, place, promotion
• what is the importance of product in the marketing mix?

  Product differentiation from competitors products
• what is the importance place plays in the marketing mix?

  businesses have to consider whether online or through retail stores they can sell their products
• what is the importance of promotion?

  Increase sales as workers are motivated to perform better
• what types of promotion are there?


  Advertising, personal selling, sales promotion, public relations, direct marketing.
• what is the importance of price?

  price of product must reflect the value customers place on the product
• how may businesses respond to changing needs?

  changing price, advertisement, adapting product to incorporate new trends and technology
• what is a business plan?


  A written document that outlines a company's goals and how it plans to achieve them.
• what is the purpose of a business plan?

  to convince a bank to loan the business money, identify needs of customers, provide owners with a plan of action that will minimize risk
• who may use a business plan?

  owners, partners and employees, investors, lenders
• what are the contents of business planning?

  business idea, aims and obj, market research, financial forecasts, sources of finance, location, production, marketing mix
• what is stakeholder conflict?

  Disagreement between individuals or groups with an interest in a company's actions.
• examples of stakeholders?

  managers, pressure groups, customers, community, government, suppliers, owners
• what is a stakeholder?

  A stakeholder is a person or group with an interest or concern in a particular project, organization, or system.
• how does business planning benefit a business?

  reduces risk with unforeseen problems and poor decision making, therefore increases the likelihood of success
• what is revenue?

  Income or money generated from the sale of goods or services.
• what is the equation for revenue?

  Revenue = Price x Quantity
• how does differentiation help a business?

  Competitive advantage over rivals
• what is product differentiation?

  The process of distinguishing a product or service from others in the market.
• what are different ways to compete?

  lower prices, better customer service, high quality, wide product range