advantages + disadvantages .txt

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Author:
toricazaly
ID:
220188
Filename:
advantages + disadvantages .txt
Updated:
2013-05-18 18:36:03
Tags:
Business
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Description:
UNIT 1
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The flashcards below were created by user toricazaly on FreezingBlue Flashcards. What would you like to do?


  1. Overdraft
    • Allows the business to continue operating when the businesses cash flow is negative
    • very quick and easy to arrange
    • High interest rates would add to the total cost - expensive in the long term
    • can be removed at short notice
  2. Bank loan
    • The length of the loan can match the length or the need for it
    • The interest is fixed for the period of the loan
    • May be secured against personal assets or business assets
    • The length of the loan may run longer than the life of the asset which means the business is paying for something they no longer need
  3. Permanent employment
    • Creates a committed and reliable workforce
    • More security so easier to train
    • Right to be paid holiday - may cost the business a lot of money
    • Likely to be set hours so not very flexible
  4. Temporary employment
    • Based on an hourly or daily rate
    • Flexible - good for seasonal contracts
    • Able to leave without notice
    • Communication is hard if there is constant change
  5. A business plan
    • Clear vision for the future - supports requests for funding
    • Helps develop an understanding - identifies a main course of action
    • Its time consuming and costly
    • Inflexible - doesnt take into account unpredictable changes eg the recession
  6. Niche Market
    • A business might be dependent on one product in a mark where customer needs and technologies are changing
    • Niches may be short lived if a new more efficient entrant is attracted by potential profits
  7. Qualitative market research
    Helps see if there was a need for the product
  8. Quantitative market research
    Aids planning and allows the business to produce a cash flow forecast
  9. Operating as a sole trader
    • Financial records are straight forward - less paper work
    • Don't need to consult with people - can be flexible
    • responsible for running the business and for debts
    • Limited ability to raise capital
    • Unincorpated business with limited liabilty
  10. Operating as a partnership
    • Range of view points and expertise as each partner can work to their own strength
    • Support each other - less risk
    • If a partner runs into serious financial trouble the law enables creditors to access all assets of all the partners
    • Unincorporated - unlimited liability¬†
  11. When in a Partnership using Personal Savings to set up the business
    • There is no cost to using this money - no interest
    • A entrepreneur putting own money into a business is a sign of confidence
    • Limited finance at the start which can limit the business
    • For a new business start ups are risky so the entrepreneur could lose everything
  12. Adding value
    • Differentiation from its competitors -using branding to outsell rival products¬†
    • Charging a high price - higher profit margins
  13. Market segmentation
    • Understanding a market segment helps in meeting the customers needs - increases sales
    • Its cheaper to produce a product/service that meets a specific need -increased profit margins
    • Depends upon an entrepreneurs knowledge of the market -may be limited
    • Segmentation is an approximation of behavior not everyone behaves in the same way

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