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Questions and Answers
What is the primary aim of business activity?
What is the primary aim of business activity?
Which of the following best describes the concept of adding value in business?
Which of the following best describes the concept of adding value in business?
Which of the following is NOT considered a factor of production?
Which of the following is NOT considered a factor of production?
What role do entrepreneurs play in business activity?
What role do entrepreneurs play in business activity?
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In what way do businesses typically aim to make a profit?
In what way do businesses typically aim to make a profit?
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What does the term 'capital' refer to in the context of factors of production?
What does the term 'capital' refer to in the context of factors of production?
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How do businesses affect the standard of living in society?
How do businesses affect the standard of living in society?
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Which factor of production includes both renewable and non-renewable resources?
Which factor of production includes both renewable and non-renewable resources?
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What is the primary purpose of adding value in a business?
What is the primary purpose of adding value in a business?
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What does the term 'economic problem' refer to?
What does the term 'economic problem' refer to?
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What does opportunity cost represent?
What does opportunity cost represent?
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Which of the following is NOT a reason why businesses can fail?
Which of the following is NOT a reason why businesses can fail?
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What can lead to cash flow problems in a business?
What can lead to cash flow problems in a business?
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How can businesses adapt to a dynamic business environment?
How can businesses adapt to a dynamic business environment?
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What type of record-keeping can serve as a backup system for businesses?
What type of record-keeping can serve as a backup system for businesses?
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Why is understanding customer needs important for businesses?
Why is understanding customer needs important for businesses?
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What often happens to new businesses in their first year of operation?
What often happens to new businesses in their first year of operation?
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Which factor does NOT contribute to a business's success?
Which factor does NOT contribute to a business's success?
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What is a key consequence of insufficient goods relative to demands?
What is a key consequence of insufficient goods relative to demands?
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Which change is NOT typically seen in a dynamic business environment?
Which change is NOT typically seen in a dynamic business environment?
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What does adding value ensure for a business?
What does adding value ensure for a business?
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Which of the following statements is true regarding new business ventures?
Which of the following statements is true regarding new business ventures?
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What is one potential benefit of establishing good relations with a bank for entrepreneurs?
What is one potential benefit of establishing good relations with a bank for entrepreneurs?
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Which quality is NOT commonly attributed to successful entrepreneurs?
Which quality is NOT commonly attributed to successful entrepreneurs?
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What is a characteristic of local businesses?
What is a characteristic of local businesses?
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What is the role of an entrepreneur when starting a new business?
What is the role of an entrepreneur when starting a new business?
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Which of the following is NOT a management skill entrepreneurs may need?
Which of the following is NOT a management skill entrepreneurs may need?
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What strategy can reduce risks for new entrepreneurs?
What strategy can reduce risks for new entrepreneurs?
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Which personal quality is essential for managing a new business according to the content?
Which personal quality is essential for managing a new business according to the content?
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In a national business, what is a defining feature?
In a national business, what is a defining feature?
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What is a common source for new business ideas mentioned in the content?
What is a common source for new business ideas mentioned in the content?
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Which of the following is related to the concept of intrapreneurship?
Which of the following is related to the concept of intrapreneurship?
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Why might some entrepreneurs opt to seek management training support?
Why might some entrepreneurs opt to seek management training support?
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What is a major barrier to entrepreneurship mentioned in the content?
What is a major barrier to entrepreneurship mentioned in the content?
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Entrepreneurs are often characterized by their ability to:
Entrepreneurs are often characterized by their ability to:
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What responsibility comes with being an entrepreneur?
What responsibility comes with being an entrepreneur?
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Which statement best describes international businesses?
Which statement best describes international businesses?
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Which of the following is a common reason for entrepreneurs to struggle with obtaining sufficient capital?
Which of the following is a common reason for entrepreneurs to struggle with obtaining sufficient capital?
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What is a key drawback of operating a new business from home?
What is a key drawback of operating a new business from home?
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Why might a newly created business need to offer a more unusual product?
Why might a newly created business need to offer a more unusual product?
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Which of the following best reduces the risk of a new business failing?
Which of the following best reduces the risk of a new business failing?
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What distinguishes business risk from business uncertainty?
What distinguishes business risk from business uncertainty?
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What is one claimed benefit of new business enterprises to the economy?
What is one claimed benefit of new business enterprises to the economy?
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How can new businesses positively impact the gross domestic product (GDP) of a country?
How can new businesses positively impact the gross domestic product (GDP) of a country?
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What role does innovation play in new business enterprises?
What role does innovation play in new business enterprises?
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What is a potential outcome when new businesses create products that meet local market needs?
What is a potential outcome when new businesses create products that meet local market needs?
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Why is it crucial for entrepreneurs to establish a customer base quickly?
Why is it crucial for entrepreneurs to establish a customer base quickly?
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What is often essential for a business to counter the risk of failure in a competitive market?
What is often essential for a business to counter the risk of failure in a competitive market?
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What challenge do new businesses face due to a lack of trading history?
What challenge do new businesses face due to a lack of trading history?
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How does the decline of one industry benefit another in an economy?
How does the decline of one industry benefit another in an economy?
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What is a recommended strategy for entrepreneurs to improve their business plans?
What is a recommended strategy for entrepreneurs to improve their business plans?
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What is one of the main benefits of expanding operations to the export market?
What is one of the main benefits of expanding operations to the export market?
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Which of the following is NOT a benefit of entrepreneurship for individuals?
Which of the following is NOT a benefit of entrepreneurship for individuals?
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What is meant by intrapreneurship?
What is meant by intrapreneurship?
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Which element is NOT typically included in a business plan?
Which element is NOT typically included in a business plan?
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A business plan can help entrepreneurs mainly by:
A business plan can help entrepreneurs mainly by:
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What can be a limitation of a detailed business plan?
What can be a limitation of a detailed business plan?
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Why is the operational plan important in a business plan?
Why is the operational plan important in a business plan?
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What motivates companies to encourage intrapreneurship among their employees?
What motivates companies to encourage intrapreneurship among their employees?
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What is a key function of the marketing strategy in a business plan?
What is a key function of the marketing strategy in a business plan?
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Which of the following best describes the role of creativity in a business?
Which of the following best describes the role of creativity in a business?
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An entrepreneur's business plan should demonstrate all EXCEPT:
An entrepreneur's business plan should demonstrate all EXCEPT:
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In the context of business plans, what does flexibility refer to?
In the context of business plans, what does flexibility refer to?
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How can entrepreneurship contribute to social cohesion?
How can entrepreneurship contribute to social cohesion?
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Study Notes
1.1 The Nature of Business Activity
- Businesses exist to satisfy customer needs, using resources to produce desirable goods and services.
- Businesses add value to raw materials throughout the production process, making the final product more valuable than the initial resources.
- Without business activity, reliance on self-sufficiency would be total, and standard of living would be significantly lower.
- Businesses identify customer needs, acquire resources, produce goods/services, and aim to profit.
- Factors of production include land (natural resources), labor (human resources), capital (manufactured resources), and enterprise (management & coordination).
Purpose of Business Activity
- Businesses use resources to create demanded products/services.
- This process increases the value of resources for the end consumer.
- This contrasts self-sufficiency, where people produce for their own needs, and a lack of modern conveniences.
The Concept of Adding Value
- Businesses aim to sell goods/services for more than their input costs.
- Added value is the difference between selling price and material costs.
- This added value covers business costs and investor expectations, ensuring profitability.
The Economic Problem
- Scarcity and wants are factors limiting the satisfaction of all human needs.
- Choices must be made because resources are not limitless and human desires exceed availability.
- This applies to all actors within an economy; consumers, businesses, governments, etc.
Opportunity Cost
- Choosing one product means forgoing other desirable products.
- Opportunity cost is the value of the next best alternative given up.
- This principle is crucial for all economic decision-making.
The Dynamic Business Environment
- Business environments continually change.
- Change includes: new competitors, updated regulations, decreased consumer spending, and technological advancements.
- Flexibility and adaptability are crucial for business success.
- Factors of success in a dynamic environment include: understanding customer needs, efficient operations, flexible decision-making, and accessible finances.
Why Some Businesses Fail
- Poor record-keeping can lead to lost opportunities and financial issues, and failure to account for important transactions.
- Lack of cash is a major cause of startup failure. Cash flow problems result from delayed payments, insufficient starting capital, and poor credit control.
Poor Management Skills
- Entrepreneurs often lack critical management skills in key areas, leading to operational problems.
- Management skills include and are not limited to: leadership, cash handling, planning/coordination, and marketing.
- Entrepreneurs can acquire these skills later in their business ventures or through external support.
Business Differences
- Local businesses are regional and do not seek national or international expansion.
- National businesses operate throughout a nation but not internationally.
- International businesses sell across borders, possibly with foreign agents and online.
- Multinational businesses are established in multiple countries, for production or sales.
1.2 The Role of Entrepreneurs and Intrapreneurs
- Entrepreneurs are essential for innovative business ventures, involving starting a new business, planning, investment, management, and risk-taking.
- Qualities of successful entrepreneurs and intrapreneurs: innovation, commitment/motivation, multi-skilling, leadership, self-confidence, and risk-taking.
Barriers to Entrepreneurship
- Common issues faced by entrepreneurs include insufficient business opportunities, lack of funding, higher operating costs, competition, and limited customer bases.
- Potential business opportunity sources include an entrepreneur's skills/hobbies, previous work experience, industry events, and small-scale market research.
Role of Enterprise in Economic Development
- Successful businesses create jobs, raise the standard of living, enhance national competitiveness, and generate exports.
- Start-ups and entrepreneurs generate job/employment growth and reduce unemployment rate. This bolsters economic growth of a country.
- Economic growth also enhances a nation's competitiveness and increases living standards.
- Entrepreneurship promotes innovation and technological change, increasing overall business competitiveness.
The Role of Intrapreneurs
- Intrapreneurs are people within existing businesses who exhibit entrepreneurial traits and qualities.
- Intrapreneurship benefits existing businesses through improvements in creativity/innovation, business practices, increased competitiveness, and retention of innovative talents.
1.3 Purpose and Key Elements of Business Plans
- Business plans are essential for securing investment for new ventures.
- Important elements within a typical business plan include: Executive Summary, Business Opportunity Description, Marketing/Sales Strategy, Management Team/Personnel, Operations, and Financial Forecasts.
- Benefits of business planning include clarity of action, improved chances of securing finance, and in-depth business self-assessment
- Limitations include the existence of uncertainty and future unknowns - forecasts are not guarantees of success. A business plan may also lead to inflexibility.
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Description
This quiz explores the fundamental concepts of business activity, focusing on how businesses satisfy customer needs by using resources to produce valuable goods and services. It covers the importance of adding value through the production process and the impact of business on the standard of living compared to self-sufficiency. Key factors of production and their roles are also examined.
