Business Activity Content

A calculated risk taker who starts a business in order to make a profit

an organisation which exists to sell goods or services

1)Food
2)Water
3)Shelter
4) clothes
5) warmth

Land , Labour, Capital, Entrepreneurship

The physical space, any natural resourses on it or in it

People are employed to transform recourses into goods or services

Physical capital (factories, buildings and machinery) and fincancial capital (the money the busines uses to buy/pay for the factors of production)

They identfy new opportunities and decide how the other 3 factors of production will be combined in order to add value to the business

1) They Create New Jobs
2) They create new ideas
3) They create wealth

1) Profit
2) Employment
3) Personal satisfaction
4) Being their own boss
5) Improving society

1) Risk taker
2) Creative
3) Hardworking
4) Confident

1) Financial loss
2) Health (Physical, Mental)
3) strained Relationships

1) Financial Gain
2) Independance
3) Self satisfaction
4) Changing Consumer habits

1) Poor Financial management
2) Poor planning
3) Poor location
4) Poor quality of goods

A statement of what a busines intends to do during a given time. It contains financial, sales and targets for a business.

1)It makes people think through all parts of the business
2) Banks use it as a basis for deciding weather to lend money to a business
3) Investors use them as a basis of weather to invest in a business
4) This also gives the entrepreneur a better understanding of whether the business is likely to succeed or not.
5) Sn entrepreneur gains a full understanding of each element of their business.

A business plan is usually made up of several sections:
the business idea – what product or service the business will provide (this is usually the first section of a business plan)
the business’ aims and objectives – using the SMART principles
target market – determined through market research
revenue forecast
projected costs and profit
cash flow forecast
sources of finance – long-term and short-term finance
location – where the business will be located
marketing mix – the four Ps (product, price, place and promotion)

A business that is owned and run by one person

it is quick and easy to set up as a sole trader
the sole trader has a lot of control over the business and its money
it gives individuals the opportunity to be their own boss and make all the business decisions
it has low set-up costs
Can keep all of the profits to himself

it has the risk of unlimited liability
it can involve long work hours and stressful conditions
there is a high level of responsibility for the owner
often the owner performs many different roles in the business

A business in which two or more persons combine their assets and skills

they are usually quick and easy to set up
there is shared decision-making by the owners
there is shared responsibility for debt by the owners
The owners can each bring useful skills to their business.
Workload is shared

partners have to be in agreement when making decisions about the business.
there is shared decision-making by the owners
there is shared responsibility for debt by the owners
have to share profits

A small or large business that only sells shares to invited shareholders

Can raise capital more easily
The business has continuity
The business is tax efficient - only has to pay pay 19% of the corporation tax on the profit earned (a sole trader typically pays 20-45% income tax on their profits.)
Separate legal identity to its owner
Limited liability
No outside controll of the company

Hard to get outside help for the company
Potential shareholders may not be willing to buy shares (hard to sell shares)
Less priacy (accounts available to all

A large business, with the legal right to sell shares to the general public to raise fincances - share prices are quoted on the national stock exchange.

the business has the ability to raise additional finance through share capital
the shareholders have limited liability
there are increased negotiation opportunities with suppliers in terms of prices because larger businesses can achieve economies of scale

it is expensive to set up, requiring a minimum of £50,000
there are more complex accounting and reporting requirements
there is a greater risk of a hostile takeover by a rival company
Shareholders can vote on wrong decisions

When the business owner or owners are only responsible for business debts up to the value of their financial investment in the business.

When the business owner or owners are personally responsible for all the debt of the business, no matter what the value.

A long term plan from which business objectives are derived

A a medium to long term target that must be achieved to acoplish the overall aim of a buisness

Survival, Growth, Efficiency, Communitry

increase share porice, Profit satisficing, Employment

a statement of an orgnisations aims. It is intended to motivate employees and those within the business.

Everyone within and outside an organisation who has an interest in the way that the organisation operates

Work within the business

Do not work within the business but are affected by its activities

- Increase share price
- Spreads risks
-Eliminates rivals
-Protection from Competition
-Innovation
-Gains economies of scale

Niche Market
Availability of finance/ capital
Less rick
Profit Satisficing
Potential diseconomies of scale

Growth from within the company itself

Two businesses agree to join together to make one larger business

one larger business buying controll over a small one

as a firms scale of production increases, their long run average costs will fall

When average costs begin to rise as a result of a business's scale of production increasing

Occurs between businesses in the same industry at the same stage of production

Allows economies of large scale production to be achieved
-Technical economies of scale - Making bettwe use of expertise technology from both busnesses, costs of production is spread
-Bulk buying economies of scale -buying raw materials in bulk and gertting disconts from suppliers

Reduces choice for consumers
Increased workload
Loss of flexibility

A business takes over or merges with another business that provides an outlet for the goods and services produced

Controll over sales
Improves Job security for the workers

May lead to higher prices or reduced choice
+ Diseconomies of scale

A merger or takeover of another business in an unrelated busniness activity

A business takes over its supplier

Controll over supply of componaents or raw materials
+Economies of scale

May lead to a reduction in the varietyof goods available for consumer or other businesses
+ Diseconomies of scale

Spreads risk
Reduces depending on one product or service
+Economies of scale

Less understanding of the new business activity
May lead to diseconomies of scale