Business Plan Essentials

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Questions and Answers

What is the primary reason shareholders influence a business's actions?

To maximize shareholder value (correct)

To ensure the business follows industry regulations

To contribute to charity efforts

To protect the interests of employees

Which of the following describes outsourcing?

Delegating specific work to another company (correct)

Transferring operational control to a board

Franchising a brand to new markets

Acquiring a competitor in the same market

What is a potential risk related to leadership within a business?

Higher production costs

Increased market share

Hostile takeover risk (correct)

Improved employee satisfaction

What is a key characteristic of a franchising model?

Permission granted to use a brand in exchange for fees Signup and view all the answers

Which stakeholder group may have conflicting interests with shareholders?

Directors focused on company stability Signup and view all the answers

What is the primary focus of ethical business practices?

Operating in a way that is fair and honest Signup and view all the answers

What percentage of market share defines a monopoly?

25% Signup and view all the answers

Which of the following materials is mentioned as problematic for recycling?

Black plastic Signup and view all the answers

Why is it difficult to compete with a business that has a monopoly?

Due to their ability to dictate prices Signup and view all the answers

What is one environmental concern associated with palm oil production?

Significant deforestation Signup and view all the answers

What effect does unnecessary air travel have on the environment?

It contributes to pollution and environmental harm Signup and view all the answers

Which of the following is a competitive market characteristic?

Multiple businesses competing for customers Signup and view all the answers

How can selecting the right pricing strategy improve competitiveness?

It attracts customers through lower prices or promotions Signup and view all the answers

What is the primary role of a business plan?

To secure external funding and provide a business direction Signup and view all the answers

How do objectives change over time for a business?

They can change based on business size and ownership Signup and view all the answers

What best describes 'Opportunity Cost'?

The value of the second-choice option lost when a choice is made Signup and view all the answers

Which of the following best defines 'Entrepreneurship'?

The act of creating new business ideas and taking opportunities Signup and view all the answers

Which of these should NOT be included in a business plan according to the content?

Who will be the competitors? Signup and view all the answers

How might the aims of larger businesses differ from smaller ones?

Larger businesses aim to enhance shareholder value while smaller ones prioritize personal income Signup and view all the answers

What key question should a business plan answer for potential financial providers?

What is the business and what are its objectives? Signup and view all the answers

What is considered a 'need' in the context of businesses?

Items necessary for survival Signup and view all the answers

What does a level of employment at 97% indicate?

3% of the population is unemployed. Signup and view all the answers

Which of the following best defines consumer law?

Regulations ensuring that products and services are safe for consumers. Signup and view all the answers

What is M-Commerce?

Transactions completed on a mobile device. Signup and view all the answers

What is a Multinational Company (MNC)?

A business with divisions in multiple countries. Signup and view all the answers

What does consumer spending reflect?

The amount of money households spend on goods and services. Signup and view all the answers

What does the National Minimum/Living Wage refer to?

The legally required minimum hourly pay for employees. Signup and view all the answers

How often does the National Minimum/Living Wage tend to increase?

Once a year. Signup and view all the answers

Which of the following best describes E-Commerce?

Transactions conducted over the internet. Signup and view all the answers

What is a sleeping partner in a business context?

An investor who has limited liability and does not participate actively. Signup and view all the answers

What are economies of scale primarily concerned with?

Reducing unit costs as production increases. Signup and view all the answers

Which term best describes the industries that provide services rather than goods?

Tertiary Industry Signup and view all the answers

Purchasing economies of scale result in what benefit?

Reduced unit costs through bulk buying. Signup and view all the answers

What does entrepreneurship involve?

Identifying business opportunities and taking risks. Signup and view all the answers

Which of the following best defines a trade union?

An organization that ensures the protection of workers' rights. Signup and view all the answers

What characteristic defines a footloose business?

It can be established anywhere without specific location needs. Signup and view all the answers

Who typically takes on the role of an entrepreneur?

An individual willing to take risks to start a business. Signup and view all the answers

Study Notes

Needs vs. Wants

Needs refer to essential products required for survival; wants are non-essential items desired by individuals.
Goods are physical items that can be purchased, while services are actions performed for customers.

Business Plan Importance

A business plan serves multiple purposes including securing funding and providing direction.
Objectives within a business plan should adapt to changing circumstances and business size.

Opportunity Cost

Opportunity cost is the value of the next best alternative foregone when making a decision.
Choices can result in different financial outcomes, emphasizing the importance of strategic selection.

Enterprise & Entrepreneurship

Enterprise encompasses the initiation and management of business activities for profit.
Entrepreneurship involves creating innovative business ideas and seizing opportunities.

Business Structure and Stakeholders

Larger businesses often have different objectives compared to smaller businesses or sole traders.
Shareholders seek shareholder value while directors influence business operations.

Outsourcing and Franchising

Outsourcing involves contracting external companies to handle specific tasks or jobs.
Franchising allows other businesses to use a brand’s name in exchange for fees and a share of revenue.

Economies of Scale

Economies of scale result from increased production leading to lower unit costs.
Technical economies of scale enable organizations to utilize larger, more capital-intensive machinery.

Unit Costs and Factors of Production

Unit cost represents the expenses incurred to produce each unit of a product.
The entrepreneur, as one of the factors of production, is critical in risk-taking and resource organization.

Ethics in Business

Ethics guide businesses to operate fairly and responsibly in their practices.
Modern consumers expect ethical behavior, including minimizing environmental impacts.

Competitive Environment

A monopoly occurs when a single firm dominates over 25% market share, allowing it to set prices.
Competitive markets feature multiple businesses contesting for customers, impacting pricing strategies.

Employment and Consumer Laws

Employment rate reflects the percentage of the working population currently employed.
Consumer laws ensure products and services are safe and businesses interact honestly with customers.

Consumer Spending and E-Commerce

Consumer spending is the total expenditure by households on goods and services.
E-commerce refers to transactions conducted online, while M-commerce encompasses mobile device transactions.

Minimum Wage Regulations

The National Living Wage sets the minimum income for employees, which is updated annually.
As of 2019, the minimum rate for individuals aged 25 and over was £8.21 per hour.

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Description

Explore the fundamental elements of a business plan, distinguishing between needs, wants, goods, and services. Understand how these components contribute to securing funding and guiding business objectives towards success.