Podcast
Questions and Answers
Which of the following is NOT a primary aim of a business striving to increase the value it adds?
Which of the following is NOT a primary aim of a business striving to increase the value it adds?
- Developing a unique selling proposition (USP)
- Increasing the perceived benefit of the product
- Reducing the costs of producing the product
- Expanding into entirely new and unrelated product lines (correct)
Market forces have no impact on business decisions regarding resource allocation.
Market forces have no impact on business decisions regarding resource allocation.
False (B)
What term describes the sacrifice made when choosing one business option over the next best alternative?
What term describes the sacrifice made when choosing one business option over the next best alternative?
Opportunity cost
The forces of supply and demand, which determine the price and quantity bought and sold, are known as ______.
The forces of supply and demand, which determine the price and quantity bought and sold, are known as ______.
Match the following business terms with their descriptions:
Match the following business terms with their descriptions:
A company decides to focus on improving the design and reliability of its product to stand out from competitors. What is this strategy primarily aimed at developing?
A company decides to focus on improving the design and reliability of its product to stand out from competitors. What is this strategy primarily aimed at developing?
External factors, such as political and social changes, only affect the demand for a business's products and not the costs of its inputs.
External factors, such as political and social changes, only affect the demand for a business's products and not the costs of its inputs.
List the four factors of production.
List the four factors of production.
Which of the following factors is primarily associated with the 'Social' element of PEST analysis?
Which of the following factors is primarily associated with the 'Social' element of PEST analysis?
Multinational businesses only engage in exporting products to other countries and do not establish any production bases or offices abroad.
Multinational businesses only engage in exporting products to other countries and do not establish any production bases or offices abroad.
What is the term for an individual within an existing organization who exhibits entrepreneurial qualities and drives innovation?
What is the term for an individual within an existing organization who exhibits entrepreneurial qualities and drives innovation?
A key component of a business plan that forecasts incoming and outgoing money over a specific period is a ______ forecast.
A key component of a business plan that forecasts incoming and outgoing money over a specific period is a ______ forecast.
Match each economic sector with its corresponding activity:
Match each economic sector with its corresponding activity:
Which trait is least likely to be found in a successful entrepreneur?
Which trait is least likely to be found in a successful entrepreneur?
A business plan is a static document that should never be changed once it has been created.
A business plan is a static document that should never be changed once it has been created.
What is the term for the skills needed to start a new project or business?
What is the term for the skills needed to start a new project or business?
Businesses that operate within a limited geographical area, serving customers from the immediate surroundings, are referred to as ______ businesses.
Businesses that operate within a limited geographical area, serving customers from the immediate surroundings, are referred to as ______ businesses.
Which of the following businesses primarily operates within the quaternary sector?
Which of the following businesses primarily operates within the quaternary sector?
Which of the following factors relates to the 'Technological' aspect of PEST analysis?
Which of the following factors relates to the 'Technological' aspect of PEST analysis?
Nationalization occurs when a private sector business is sold to the government.
Nationalization occurs when a private sector business is sold to the government.
International businesses establish offices or production facilities in other countries, whereas multinational do not.
International businesses establish offices or production facilities in other countries, whereas multinational do not.
What term describes goods or services, like healthcare, whose benefits individuals may not fully appreciate, leading to potential under-consumption if left to the market?
What term describes goods or services, like healthcare, whose benefits individuals may not fully appreciate, leading to potential under-consumption if left to the market?
What type of business benefits from incentives (such as subsidies) provided by other governments to locate there?
What type of business benefits from incentives (such as subsidies) provided by other governments to locate there?
Someone who can make the product, promote it, sell it and count the money is considered to be ______.
Someone who can make the product, promote it, sell it and count the money is considered to be ______.
A business owned and run by one person, who is personally responsible for all business debts, is known as a ______.
A business owned and run by one person, who is personally responsible for all business debts, is known as a ______.
What is a core disadvantage of a partnership compared to being a sole trader?
What is a core disadvantage of a partnership compared to being a sole trader?
Which sector involves the extraction and harvesting of raw materials?
Which sector involves the extraction and harvesting of raw materials?
Match the following business activities with their respective economic sectors:
Match the following business activities with their respective economic sectors:
In a partnership, if the partners do not specify how profits will be divided, the profits are divided based on each partner's initial investment.
In a partnership, if the partners do not specify how profits will be divided, the profits are divided based on each partner's initial investment.
What is the legal process called when the owners of a company complete the required documents to establish it as a separate legal entity?
What is the legal process called when the owners of a company complete the required documents to establish it as a separate legal entity?
The concept where shareholders can only lose the amount they invested in a company and their personal assets are protected is known as ______ liability.
The concept where shareholders can only lose the amount they invested in a company and their personal assets are protected is known as ______ liability.
Why is limited liability important for companies seeking to raise capital?
Why is limited liability important for companies seeking to raise capital?
A company's accounts being checked annually by independent advisors (called auditors) is optional, to protect the privacy of sole traders.
A company's accounts being checked annually by independent advisors (called auditors) is optional, to protect the privacy of sole traders.
What document in a partnership sets out the rules, including how the partnership would be dissolved if someone wanted to leave?
What document in a partnership sets out the rules, including how the partnership would be dissolved if someone wanted to leave?
Which characteristic distinguishes a private limited company ('ltd') from other types of companies?
Which characteristic distinguishes a private limited company ('ltd') from other types of companies?
In a franchise arrangement, the party who grants the rights to use their products or services is known as the ______.
In a franchise arrangement, the party who grants the rights to use their products or services is known as the ______.
Match each business sector with its corresponding characteristic:
Match each business sector with its corresponding characteristic:
Which of the following is an example of an intangible service?
Which of the following is an example of an intangible service?
Which of the following is a key characteristic that distinguishes a public limited company (plc) from a private limited company?
Which of the following is a key characteristic that distinguishes a public limited company (plc) from a private limited company?
Buying a franchise eliminates all risks associated with starting a new business due to the franchisor's support and established systems.
Buying a franchise eliminates all risks associated with starting a new business due to the franchisor's support and established systems.
What is the primary difference in profit distribution between a co-operative and a typical investor-owned business?
What is the primary difference in profit distribution between a co-operative and a typical investor-owned business?
In a franchise agreement, the business that sells the rights to use its products and systems is known as the ______.
In a franchise agreement, the business that sells the rights to use its products and systems is known as the ______.
Match the following types of co-operatives with their descriptions:
Match the following types of co-operatives with their descriptions:
Which of the following is a potential disadvantage of buying a franchise?
Which of the following is a potential disadvantage of buying a franchise?
Joint ventures always involve a complete merger of all business operations between the participating companies.
Joint ventures always involve a complete merger of all business operations between the participating companies.
Besides financial capital, what other crucial benefit might a local business bring to a joint venture with an overseas company entering a new market?
Besides financial capital, what other crucial benefit might a local business bring to a joint venture with an overseas company entering a new market?
Social enterprises are businesses driven by ______ aims, such as benefitting the community.
Social enterprises are businesses driven by ______ aims, such as benefitting the community.
Which of the following illustrates why a sole trader might transition their business into a private limited company (ltd)?
Which of the following illustrates why a sole trader might transition their business into a private limited company (ltd)?
Members of a co-operative typically have voting rights proportional to their investment or usage of the co-operative's services.
Members of a co-operative typically have voting rights proportional to their investment or usage of the co-operative's services.
Name two potential challenges that businesses might face when participating in a joint venture.
Name two potential challenges that businesses might face when participating in a joint venture.
When independent retailers form a retail co-operative, they can achieve better deals from suppliers by ______ in bulk.
When independent retailers form a retail co-operative, they can achieve better deals from suppliers by ______ in bulk.
A company is considering entering a new international market. Which of the following would be the MOST effective reason for them to form a joint venture, rather than operate alone?
A company is considering entering a new international market. Which of the following would be the MOST effective reason for them to form a joint venture, rather than operate alone?
Match the benefit with the business type:
Match the benefit with the business type:
Flashcards
Business Objectives
Business Objectives
Measurable targets (e.g., sales, profits) set by a business to be achieved within a specific time.
Transformation Process
Transformation Process
Converting inputs (resources) into outputs (goods or services).
Factors of Production
Factors of Production
Inputs used in the transformation process: land, labor, capital, and enterprise.
Adding Value
Adding Value
Signup and view all the flashcards
Unique Selling Proposition (USP)
Unique Selling Proposition (USP)
Signup and view all the flashcards
Brand
Brand
Signup and view all the flashcards
Market Forces
Market Forces
Signup and view all the flashcards
Opportunity Cost
Opportunity Cost
Signup and view all the flashcards
Political Factors (PEST)
Political Factors (PEST)
Signup and view all the flashcards
Economic Factors (PEST)
Economic Factors (PEST)
Signup and view all the flashcards
Social Factors (PEST)
Social Factors (PEST)
Signup and view all the flashcards
Technological Factors (PEST)
Technological Factors (PEST)
Signup and view all the flashcards
Local Business
Local Business
Signup and view all the flashcards
National Business
National Business
Signup and view all the flashcards
International Business
International Business
Signup and view all the flashcards
Multinational Business
Multinational Business
Signup and view all the flashcards
Entrepreneur
Entrepreneur
Signup and view all the flashcards
Enterprise
Enterprise
Signup and view all the flashcards
Intrapreneur
Intrapreneur
Signup and view all the flashcards
Business Plan
Business Plan
Signup and view all the flashcards
Primary Sector
Primary Sector
Signup and view all the flashcards
Secondary Sector
Secondary Sector
Signup and view all the flashcards
Tertiary Sector
Tertiary Sector
Signup and view all the flashcards
Intangible Services
Intangible Services
Signup and view all the flashcards
Quaternary Sector
Quaternary Sector
Signup and view all the flashcards
Private Sector
Private Sector
Signup and view all the flashcards
Public Sector
Public Sector
Signup and view all the flashcards
Nationalisation
Nationalisation
Signup and view all the flashcards
Privatisation
Privatisation
Signup and view all the flashcards
Merit Goods
Merit Goods
Signup and view all the flashcards
Sole Trader
Sole Trader
Signup and view all the flashcards
Unlimited Liability
Unlimited Liability
Signup and view all the flashcards
Partnership
Partnership
Signup and view all the flashcards
Deed (Partnership)
Deed (Partnership)
Signup and view all the flashcards
Incorporation
Incorporation
Signup and view all the flashcards
Shareholders
Shareholders
Signup and view all the flashcards
Limited Liability
Limited Liability
Signup and view all the flashcards
Auditors
Auditors
Signup and view all the flashcards
Public Limited Company (plc)
Public Limited Company (plc)
Signup and view all the flashcards
Franchise
Franchise
Signup and view all the flashcards
Franchise Fees
Franchise Fees
Signup and view all the flashcards
Advantages of Franchises
Advantages of Franchises
Signup and view all the flashcards
Disadvantages of Franchises
Disadvantages of Franchises
Signup and view all the flashcards
Franchise Cost Determinants
Franchise Cost Determinants
Signup and view all the flashcards
Co-operative
Co-operative
Signup and view all the flashcards
Employee Co-operative
Employee Co-operative
Signup and view all the flashcards
Community Co-operative
Community Co-operative
Signup and view all the flashcards
Retail Co-operative
Retail Co-operative
Signup and view all the flashcards
Joint Venture
Joint Venture
Signup and view all the flashcards
Benefits of Joint Ventures
Benefits of Joint Ventures
Signup and view all the flashcards
Challenges of Joint Ventures
Challenges of Joint Ventures
Signup and view all the flashcards
Social Enterprises
Social Enterprises
Signup and view all the flashcards
Changing Legal Structure
Changing Legal Structure
Signup and view all the flashcards
Study Notes
Business and its Environment
- Business objectives are measurable targets, like sales or profits, set by a business to be achieved within a specific time.
- The transformation process involves turning inputs into outputs.
- Factors of production: Land, labor, capital, and enterprise, all used as inputs.
- Adding value happens when outputs are more valuable than the inputs used to create them.
- Businesses can increase added value by reducing production costs or increasing the perceived benefit of the product.
- A unique selling proposition (USP) is a product feature that sets it apart from competitors, such as better quality or design.
- A brand is a name, design, or symbol that makes a product recognizable and distinguishes it from competitors.
- Market forces are supply and demand, determining a product's price and quantity.
- Increased product demand encourages businesses to produce more of it.
- Opportunity cost is the sacrifice made when choosing one option over the next best alternative.
- The business environment is dynamic and ever-changing, affecting demand, input costs, and the transformation process.
- External factors (political, economic, social, and technological – PEST) significantly influence businesses.
PEST Factors
- Political factors: Government policies, tax laws, trade tariffs, political stability, and labor regulations.
- Economic factors: Inflation, interest rates, exchange rates, economic growth, consumer spending, and unemployment rates.
- Social factors: Changing consumer preferences, demographics, cultural trends, and health awareness.
- Technological factors: Innovation, automation, digital transformation, R&D, and access to new technology.
- Businesses must be more competitive than rivals to succeed.
- Failure occurs when businesses lose their competitive edge.
Business Scale
- Local businesses serve a local market and are affected by the local customer base plus spending power.
- National businesses operate nationwide and are influenced by national laws and government decisions.
- International businesses export products to other countries, facing impacts from exchange rates and trade agreements.
- Multinational businesses have operations in multiple countries, benefiting from incentives and market proximity.
Enterprise: Entrepreneurs and Intrapreneurs
- An entrepreneur takes risks to start a new project or business, using skills like creativity.
- Traits of a successful entrepreneur include being well-rounded, resilient, innovative, results-oriented, a professional risk-taker, and totally committed.
- An intrapreneur is an entrepreneur within an existing business.
- Intrapreneurship encourages employees to think and act like entrepreneurs.
- Entrepreneurs create jobs, generate taxes, foster competition, and provide new products/services.
- Enterprise leads to innovation, new products, and economic growth in a country.
- A business plan outlines key aspects of a business idea.
- A business plan is useful for attracting potential partners, investors, or banks.
- Key elements of business plans include owner backgrounds, business overview, market analysis, promotion outline, sales estimates, financial forecasts, and HR requirements.
- Business plans should be reviewed and updated to stay relevant and competitive.
Business Structure
- Economic sectors:
- The primary sector extracts or grows resources (e.g., farming and mining).
- The secondary sector manufactures and assembles products using raw materials (e.g., car manufacturing and construction).
- The tertiary sector provides intangible services (e.g., retail, banking, insurance).
- The quaternary sector focuses on knowledge-based services (e.g., IT and Research).
- Businesses can be in the private sector (owned by individuals) or the public sector (owned by governments).
- Nationalization is when a government takes control of a private sector business. Privatization is the opposite.
- Governments typically provide public services like defense, education, and healthcare (merit goods).
- Merit goods are services whose benefits individuals may not fully appreciate.
Business Ownership
- Sole traders run a business on their own.
- Sole traders have unlimited liability.
- Unlimited liability means personal responsibility for all business actions.
- Partnerships involve multiple people running a business together.
- Partnership benefits include shared ideas, more investment, specialist skills, and coverage during absences.
- Partnership challenges include disagreements, dependence on others' actions, and unlimited liability.
- A partnership deed outlines rules for dissolution, dispute resolution, and profit division.
- Companies require documents to set up, a process called incorporation.
- A company is owned by shareholders.
- A company has its own legal identity, separate from its owners.
- Shareholders have limited liability.
- Limited liability is essential for companies raising money by selling shares.
- A company is a business with its own legal identity and limited liability.
- Shareholders are individuals/entities owning part of a company.
- Limited liability protects investors' possessions beyond their investment.
- A franchise occurs when a franchisor sells rights to a franchisee.
- Company status requires audited accounts and public disclosure, reducing privacy.
Private vs. Public Limited Companies
- Private limited companies (Ltd) have restricted share sales.
- Public limited companies (PLC) do not have share sale restrictions.
- Public companies are typically larger than private companies.
Franchises
- Franchises involve buying the right to use an existing business model.
- Franchise agreements include fees and a percentage of turnover.
- Franchise advantages include support and reduced risk.
- Franchise disadvantages include costs and brand reputation dependency.
- Franchise costs depend on turnover, profits, exclusivity, and support.
- Co-operative businesses are owned and run by their members.
- Co-operative members have one vote each.
- Co-operatives share profits among members.
- Employee co-operatives are owned equally by employees.
- Community co-operatives provide local services.
- Retail co-operatives enable independent retailers to join together.
Joint Ventures and Social Enterprises
- Joint ventures involve collaboration on a project without fully merging.
- Joint venture benefits include shared resources and expertise.
- Joint venture challenges include profit division and decision-making.
- Social enterprises have social aims and benefit the community.
- Businesses may change legal structures, such as from sole trader to private limited company, to raise funds or gain limited liability.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Explore business objectives as measurable targets and the transformation process of inputs into outputs. Learn about factors of production like land, labor, and capital. Understand how businesses add value and create a unique selling proposition to stand out from competitors.
