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Questions and Answers
Which of the following is a benefit of a partnership compared to a sole trader?
Which of the following is a benefit of a partnership compared to a sole trader?
What is a potential drawback of a partnership, as opposed to a sole trader, when a partner leaves or passes away?
What is a potential drawback of a partnership, as opposed to a sole trader, when a partner leaves or passes away?
Which of the following is a potential disadvantage of a partnership compared to a sole trader?
Which of the following is a potential disadvantage of a partnership compared to a sole trader?
Which of the following is a common issue that arises in partnerships but not in sole traders?
Which of the following is a common issue that arises in partnerships but not in sole traders?
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What is a potential positive impact of MNCs on local businesses in the host country?
What is a potential positive impact of MNCs on local businesses in the host country?
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What is a potential negative impact of MNCs on host countries?
What is a potential negative impact of MNCs on host countries?
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How do MNCs contribute to raising the quality of life for citizens in the host country?
How do MNCs contribute to raising the quality of life for citizens in the host country?
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What is one way that MNCs can improve the operational efficiency of local businesses?
What is one way that MNCs can improve the operational efficiency of local businesses?
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What is a possible negative consequence of MNCs operating in less economically developed countries?
What is a possible negative consequence of MNCs operating in less economically developed countries?
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How can MNCs benefit local businesses in the host country?
How can MNCs benefit local businesses in the host country?
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What is one potential benefit for local workers when MNCs operate in their country?
What is one potential benefit for local workers when MNCs operate in their country?
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Which of the following is NOT a positive impact of MNCs on host countries?
Which of the following is NOT a positive impact of MNCs on host countries?
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According to the provided content, what are the key benefits of a managed, based on progress leadership style?
According to the provided content, what are the key benefits of a managed, based on progress leadership style?
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Which of the following is NOT a disadvantage of a managed, based on progress leadership style?
Which of the following is NOT a disadvantage of a managed, based on progress leadership style?
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What is the core principle behind a paternalistic leadership style?
What is the core principle behind a paternalistic leadership style?
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Which of the following is NOT an advantage of a paternalistic leadership style?
Which of the following is NOT an advantage of a paternalistic leadership style?
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What is a potential drawback of a paternalistic leadership style?
What is a potential drawback of a paternalistic leadership style?
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Which of the following statements accurately describes the potential impact of a managed, based on progress leadership style on employee morale?
Which of the following statements accurately describes the potential impact of a managed, based on progress leadership style on employee morale?
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What is a common misconception about a managed, based on progress leadership style?
What is a common misconception about a managed, based on progress leadership style?
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Which of the following statements accurately describes the nature of communication in a paternalistic leadership style?
Which of the following statements accurately describes the nature of communication in a paternalistic leadership style?
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What characterizes formative appraisal?
What characterizes formative appraisal?
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Which type of appraisal involves feedback from various colleagues and customers?
Which type of appraisal involves feedback from various colleagues and customers?
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What best describes performance-related pay (PRP)?
What best describes performance-related pay (PRP)?
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Which of the following is an example of a fringe payment?
Which of the following is an example of a fringe payment?
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How does a self-appraisal function?
How does a self-appraisal function?
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What is the primary characteristic of summative appraisal?
What is the primary characteristic of summative appraisal?
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Which financial reward is specifically based on the output produced?
Which financial reward is specifically based on the output produced?
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Which of the following describes profit-related pay?
Which of the following describes profit-related pay?
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What is the primary focus of Maslow's hierarchy of needs in the workplace?
What is the primary focus of Maslow's hierarchy of needs in the workplace?
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In situational leadership, what is the main factor that determines effective leadership style?
In situational leadership, what is the main factor that determines effective leadership style?
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Why might a leader's change in style lead to worker demotivation?
Why might a leader's change in style lead to worker demotivation?
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Which theory suggests that money is the principal motivator for workers?
Which theory suggests that money is the principal motivator for workers?
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What is a potential challenge leaders face when adopting a different leadership style?
What is a potential challenge leaders face when adopting a different leadership style?
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What is the result of differentiated piece rate compensation in a scientific management context?
What is the result of differentiated piece rate compensation in a scientific management context?
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How does good worker morale benefit the organization?
How does good worker morale benefit the organization?
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What characterizes the dynamic nature of the external business environment?
What characterizes the dynamic nature of the external business environment?
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What is the term used to describe the inefficiency that can occur when a company becomes too large to manage effectively?
What is the term used to describe the inefficiency that can occur when a company becomes too large to manage effectively?
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Which of the following is NOT a benefit of economies of scale for customers?
Which of the following is NOT a benefit of economies of scale for customers?
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What is an example of an external economy of scale?
What is an example of an external economy of scale?
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Which of the following is NOT a strategy that allows small firms to overcome the limitations of economies of scale?
Which of the following is NOT a strategy that allows small firms to overcome the limitations of economies of scale?
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What is a potential benefit of specialization for a large firm?
What is a potential benefit of specialization for a large firm?
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Which of the following is a key reason why many small businesses continue to survive and thrive despite limited economies of scale?
Which of the following is a key reason why many small businesses continue to survive and thrive despite limited economies of scale?
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What is a primary characteristic of a niche market?
What is a primary characteristic of a niche market?
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Why might a small firm choose to remain small despite the potential benefits of economies of scale?
Why might a small firm choose to remain small despite the potential benefits of economies of scale?
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Study Notes
Business Organization and Environment
- Business is any organization involved in producing goods and services
- Business activity involves transforming inputs (e.g., land, labor, capital, enterprise) into outputs (finished goods and services) to meet customer needs.
- Factors of production include:
- Land: natural resources (renewable and non-renewable)
- Labour: human effort/human resources
- Capital: manufactured resources (machinery, equipment, finance)
- Enterprise: knowledge, skills, and experiences of individuals managing the production process (entrepreneurs)
- Scarcity: limited resources and unlimited wants
- Opportunity cost: value of the next best alternative foregone when choosing an option
- Goods are tangible, while services are intangible experiences
- Services are inseparable from the provider, perishable, and heterogeneous
- Business functions include: Human resources (HR) managing the workforce, Finance & Accounts (managing finances), Marketing (meeting customer needs), Operations (producing goods & services)
Business Functions
- Human resources: Manage the workforce & employees and is responsible for dealing with recruitment, wages, communication, and motivation.
- Finance and accounts: Responsible for the organization's financial transactions and assets
Specialisation and Division of Labour
- Specialization focuses on doing what one does best
- Division of labour divides production into smaller tasks for different employees, increasing efficiency
Economic Sectors
- Primary Activities: extracting raw materials (farming, fishing, mining)
- Secondary Activities: manufacturing and construction
- Tertiary Activities: provision of services (travel, banking, retail)
- Quaternary Activities : knowledge-based activities (research, development, management consulting)
Economic Business Entities
- Private Sector – part of the economy owned and controlled by individuals and companies for profit
- Public Sector – part of the economy or a business owned and controlled by the state or government (education, healthcare, etc)
- Private Limited Company – limited liability, shares are not sold to the general public
- Public Limited Company – limited liability, shares are traded publicly
Types of Organisations
- Unincorporated businesses - Do not have a separate legal identity from its owners. Owners have unlimited liability for business debts. Examples include Sole Proprietorship and Partnerships.
- Incorporated business - a separate legal identity from its owners. Owners have limited liability for business debts. Examples include Private Limited Company and Public Limited Company.
Entrepreneurship
- Entrepreneur – individuals who plan and organize a business & take the financial risk of starting a business
Challenges and opportunities for starting a business
- Challenges: lack of finance, poor marketing, unestablished customer base, lack of knowledge and experience
- Opportunities: ambition for profits, autonomy, family ties, unfilled market opportunities, making a difference, not being able to find employment
Private and Public Sector
- Private sector is part of the economy that is owned and controlled by individuals & companies for profit
- Public sector is part of the economy that is owned and controlled by governments for their constituents e.g., education, healthcare
Business Objectives
- Objectives are clear, measurable targets for organizations, essential for achieving overall goals
- Key criteria of a successful objective is SMART (Specific, Measurable, Achievable, Relevant, Time-bound)
- Businesses use objectives such as profit, growth, and market share.
Stakeholder analysis
- A stakeholder is an individual or group that has an interest in or involvement with a business.
- Businesses need to consider both internal stakeholders (employees, managers, directors) and external stakeholders (customers, suppliers, governments, competitors, pressure groups).
- Each stakeholder group will have differing objectives and these objectives can clash with others.
Growth and Evolution
- Economies of scale - average cost of production decreases as the organization grows
- Internal economies of scale - reductions in costs due to increased output, experienced inside a company
- External economies of scale - reductions in costs due to industry-wide developments
- Diseconomies of scale – average costs of production increases as organization grows excessively, causing loss of efficiency or control, often due to bureaucracy
- Growth strategies can be internal or external – internal through organic growth, external through mergers and acquisitions
Types of Organisations
- Sole traders (unincorporated)- a business owned and run by one person.
- Partnerships (unincorporated) - two or more people who agree to run a business together; they share the profits but face unlimited liability for business debts.
- Private limited companies (incorporated)- a corporation privately owned by a few shareholders who are not permitted to sell their shares publicly.
- Public limited companies (incorporated)- a corporation, similar to a limited company, except shares are traded on the stock market. Shareholders' liability is limited to the amount invested.
Sources of Finance
- Internal sources - Retained profit - profits that are kept in the business after paying all debts and dividends to shareholders
- Internal sources - Personal funds/owners' capital - money invested by the business owners
- Internal sources - Sales of assets - selling off assets such as obsolete equipment
- External sources - Shares capital - money raised from selling shares to the public
- External sources- Bank loans - funds borrowed from banks
- External sources- Debt Factoring – the sale of accounts receivable to financial institutions
Production Planning
- Production/operations planning – ensures sufficient resources available to meet a company's production target, ensuring the organization can meet the demands of the market.
International Marketing
- The process of extending business operations to overseas markets.
- MNCs multinational companies - companies that operate in multiple countries.
Leadership and Management
- Autocratic
- Democratic
- Laissez-faire
- Situational
Motivation
- Money (Taylor)
- Motivation factors (Herzberg) - factors that motivate workers (e.g. responsibility, recognition, challenging work).
- Need for achievement /affiliation/power (McClelland)
Organizational Structure
- A hierarchical structure showing responsibility and accountability for each task/job in an organization.
- Centralized or decentralized organizational structure.
Cost and Revenue
- Cost centre - a department within an organization that incurs costs but does not generate income
- Profit centre - a department that incurs both cost and revenue
Financial Performance
- Ratio analysis – examines profitability and liquidity. Different financial ratios (e.g., gross profit margin, return on capital employed) are used to assess an organization's financial performance.
- Break-even analysis – analyzes the point at which total revenue equals total costs.
- Cash flow – tracks the movement of cash into and out of a business over a given time period.
- Income statement - summary of a business's income and outlays.
- Balance sheet - financial summary of position at a particular point in time (statement of assets, liabilities and equity)
Marketing
- Marketing audit - an organized analysis of a company's current marketing position and planning to achieve organizational goals.
- Market share - the portion of a particular market that a specific company controls.
- Segmentation – identification of distinct customer groups with shared needs and characteristics.
- Targeting – selecting particular segments to focus on.
Product strategy
- Product life cycle - development, introduction, growth, maturity, decline
- Extension strategies - methods or activities used to extend the life cycle of a product or to increase demand, such as by changing the product or its marketing, as it moves into the maturity or decline stage of the life cycle.
- Product portfolio – collection of products owned by a business at a point in time
- BCG matrix (HL) - graphic tool for evaluating a product's position in the market
- Niche or mass market approach: Niche markets focus on small, well-defined customer segments, while mass markets aim to reach the wider market.
Operations management
- Methods include: job production, batch production, flow/mass/continuous production, and mass customization.
- Production planning and quality management: quality control, quality assurance, lean production, just-in-time inventory systems.
Crisis management
- Crisis management - the process of dealing with unexpected events that threaten or impact the business.
- Contingency planning - proactive approach to create a plan to prevent crisis and /or deal with them if they occur.
Business Information Systems
- Data analytics- process of analyzing data to extract useful insights.
Recruitment
- Internal recruitment – sourcing employees from within the organisation.
- External recruitment – sourcing employees from outside the organization.
Other study points
- Understanding business functions is necessary to understand how a business works and how it interacts with the economy.
- Understanding the impact of the international environment is important because it affects most decisions made by companies.
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Description
This quiz explores key differences between partnerships and sole traders, as well as the role of multinational corporations (MNCs) in local economies. You'll assess benefits and drawbacks in both business structures, and analyze MNCs' effects on local businesses and communities. Test your knowledge on these important business concepts!
