BUSINESS STUDIES Y11

• What are the four resources that are used in the production of goods and services? Land, Labour, Capital and Enterprise
• Labour refers to people who work in an organisation or business
• Capital is money invested into a business by shareholders
• Enterprise is organising the capital, labour and the land into the correct proportions
• Land is natural resource which includes land, water, minerals etc.
• what does marketing mix mean?


  deals with the way a business that uses Product, Price, Place, Promotion.
• Price - how much it costs
• Place - where the product can be bought from
• Product - what the customer buys
• Promotion - advertising to promote sales
• Franchisee - a marketing method to set up a business. Gives the person an opportunity to sell well-known set of products but without risks attached
• franchisor - company that sells the rights to use their name
• Primary market research involves collecting information directly from consumers or potential consumers through surveys, questionnaires, interviews etc.
• Secondary market research uses existing data such as government statistics, trade publications, competitor websites, social media sites etc.
• Market research is used by businesses to find out about customers, competitors and trends.
• why do people start a business?

  • they have an idea and have spotted a gap in the market
  • they want to be their own boss
  • they have the drive/passion
  • they want to pursue a hobby or personal interest
  • they have the money
  • they want to make more money
• what is an entrepreneur?


  an individual who sets up a new business and has the skills needed to make it a success.  Someone who is willing to take risks to achieve business success.
• what does it mean to be enterprising?

    

  be able to spot a good business opportunity and to have the vision and drive to make that business succeed.  
• why does the government encourage enterprise?

  • to reduce unemployment
  • stimulate economic growth
  • people feel motivated
• characteristics of an entrepreneur?

  • creative
  • leadership qualities
  • good communication skills
  • good planning skills
  • productive
  • showing initiative
• what are some risks of risk taking?

  • loosing money- if the product doesn't become successful money will be lost and the entrepreneur could become bankrupt
  • losing time- entrepreneurs will have spent a lot of time designing an idea and planning the business. If this fails time will have been wasted
  • personal stress- entrepreneurs will worry the new idea may not be successful and become stressed working long hours
• what are the rewards of risk taking?

  making profit- if successful, a business can sell lots of products and earn large amounts of profit for the entrepreneur. Successful business may be sold for large sum of money

  becoming famous- lots of successful entrepreneurs have become household names eg. Donald trump, lord sugar and Richard Branson

  independence- some people want to make all the decisions and be their own boss. The independence is a reward to risk taking
• what is labour?


  this refers to the human resource in the business. The workers who are employed to manufacture the product or provide a service. The labour may be physical or mental.
• how do businesses start?

  • design business plan
  • decide on the product and produce a model or prototype
  • study market to see if there are already similar products available
  • research price at which any competitors are selling the product
• what are the sizes of a business?

  • micro= 1-9
  • small= 10-49
  • medium= 50-249
  • large= more than 249
• what are the features of private sector businesses?

  • owned by private individuals
  • financed by private individuals
  • controlled by private individuals
  • aim to make a profit
• what is a sole trader?

  A sole trader is their own boss, they have unlimited liability to pay of their debts and provide for the entire capital
• what are private sector forms of ownership?

  • partnership
  • sole trader
  • franchise
  • public limited company
  • private limited company
• advantages of sole trader

  • you are your own boss
  • you have maximum privacy
  • you keep all profits
  • you can make all decisions
  • start up costs are low
• what are disadvantages of sole trader?

  • hard to raise money from other sources eg. bank
  • business is very dependent on owner this might require long hours to be worked
  • normally have limited capital to set up the business
  • they are responsible for all losses in the business
• what is partnership?


  most commonly found in jobs like dentists, doctors, surgeons etc. Consists of 2 or more people and maximum of 20. They have limited liability
• advantages of partnership

  • two heads are better than one
  • more capital available for business
  • your business is easy to establish and start up costs are low
  • have greater borrowing capacity
• disadvantages of partnership

  • higher taxes
  • emotional issues
  • lack of stability
  • splitting of profits
  • risk of conflict and disagreements
• what does deed partnership state?

  • how profits and losses are to be shared
  • whether interest on capital is payable
  • how duties and responsibilities are to be shared
  • how new partners might be introduced to the firm
• what is a shareholder?


  An individual or entity that owns shares in a company and has a financial interest in its success.
• ordinary shares


  not guaranteed a dividend at the end of the year. Getting dividend depends on how successful the company has been during the year
• preference shares


  less common and safer as they are guaranted a fixed dividend out of the profits before any payment is made to ordinary shareholders
• what is limited liability?


  people who invest in the company can only lose the amount of their investment
• what is private limited company?


  a private company that its shares cannot be bought by members of the public. Instead, shares in a LTD are held by a small group of people who are able to keep control of the business.
• advantages of private limited company?

  • Larger amounts of capital available than sole traders and partnerships
  • Larger businesses can benefit from economies of scale. eg. bulk- buying
  • Limited liability-debts of the business are limited to the amount invested by the shareholders and personal assets are not at risk