1 - Business Activity

• Define business

  A business is an organisation that provides goods and services
• What is the main aim of a business?

  To make profit
• Describe a competitive business environment

  Where there are many businesses producing similar goods and products
• Describe a dynamic business environment

  Where competitors are constantly producing new products
• What does interdependent mean?

  Relying on other businesses for materials and customers
• What are consumer goods?

  Goods used by a final user, mostly likely a customer
• What are producer goods?

  Goods brought by other businesses to produce other goods
• What are durable goods?

  Goods that are used multiple times and not brought frequently
• What are non-durable goods?

  Goods that are consumed immediately or last less than three years
• What are personal services?

  Services provided for an individual
• What are commercial services?

  Services provided for businesses
• The private sector includes...

  organisations owned by individuals
• The public sector includes...

  organisations owned by the government
• Resources needed to produce goods/services

  Raw materials, machinery, skilled workers and site/land
• How is business planning important?

  helps show what skills and capital a business has and decide how these can be used most effectively
• What is a business plan?

  a document outlining a business' goals and strategies to success
• Aims of a business plan include..

  raising finance, developing strategies, plans for future growth
• How business planning is essential...

  secures finance, shows future visions for business, considers risks and opportunities, ensures business has necessary resources
• How is a business plan a decision-making tool?

  analyses factors needed to run so entrepreneur can make sensible decisions
• How does a business plan help seek finance?

  investigates any possible financial issues and ways to overcome financial issues
• How is a business plan a management tool?

  helps show owner the aims that they should work towards
• What is included in a business plan?

  business description, market research, finance, production methods, HR, idea/product
• What does a business description include?

  its name, type of ownership, type of goods/services offering
• What does market research include?

  target customers, competitors
• What does finance in a business plan include?

  how much it will all cost/ financial projections
• Idea/product in a business plan?

  what product or service is being offered
• Drawbacks of business planning?

  uncertainity, change, lack of experience
• What is unlimited liability?

  when personal possessions of business owners are at risk
• What two business have unlimited liability?

  sole traders and partnerships
• What is a sole trader?

  individual who sets up a business on their own
• Benefits of being a sole trader?

  independant decisions, all profits kept, personal services can be provided, easy and cheap to set up
• Drawbacks of being a sole trader?

  unlimited liability, heavy workload and responsibilities, limited finance when being set up
• What is a partenership?

  businesses owned by two or more people
• Many entrepreneurs forming a partnership agree to a Deed of Partnership
• What is a Deed of Partnership?

  document setting out the rules of the partnership such as how profits and ownership is distributed
• Benefits of partnerships?

  shared expertise, able to raise more capital
• Drawbacks of partnerships?

  unlimited liability, may have disagreements, limited finance, share of profit may cause conflict
• What is limited liability?

  when there is a limit to amount of assets that can be lost and not losing personal possessions
• What are limited liability businesses?

  business that are owned by at least 2 shareholders, private/public limited companies
• A private limited company is...

  a business that cannot advertise their shares (Ltd)