Questions and Answers
What is human capital?
The skills, attitudes, and abilities that people bring to their jobs.
What are some benefits of a salary payment system?
What is job enlargement?
Capital expenditure refers to money spent on __________.
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What is cash flow in business?
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Match the advantages and disadvantages of multinational companies on host countries:
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What is one advantage of low labor turnover?
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What is microfinance?
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What is share capital?
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A __________ organization has many layers of management.
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A __________ organizational structure has fewer layers of management.
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Decision trees are visual and straightforward.
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What is a conglomerate?
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What is an advantage of a market-oriented approach to marketing?
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Which of the following is a limitation of CSR?
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What is overtrading?
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What is a key benefit of a public limited company?
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A sole trader has full control over the business.
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What is a disadvantage of joining a franchise?
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Primary market research allows for __________ contact with customers.
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What is a limitation of secondary market research?
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Media articles always provide an unbiased view.
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What does human capital refer to?
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Match the following job-related terms with their definitions:
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Which of the following is a benefit of a salary payment system?
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What is a disadvantage of low labour turnover?
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Multinational companies always harm local businesses.
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Which of these is considered a financial term?
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What is microfinance?
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What does share capital represent?
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Selling assets helps to improve cash flow.
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Which of the following describes a tall organizational structure?
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What is a conglomerate?
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What does CSR stand for?
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What is one benefit of primary market research?
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A public limited company has more control for its management than a private limited company.
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Match the following business structures with their characteristics:
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A partnership between businesses to achieve goals is called a ______.
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Study Notes
Sources of Finance
- Microfinance: Offers small loans and financial services to individuals without access to traditional banks.
- Leasing: Involves renting an asset with the option to purchase at the end of the lease period.
- Share Capital: Funds raised by selling shares of the company, giving investors partial ownership.
- Sale of Assets: Involves selling company-owned items to generate cash, impacting resource availability.
Benefits and Limitations of Financial Sources
-
Sale of Assets:
- Benefits: Provides immediate cash flow; aids in debt reduction.
- Limitations: Loss of potential resources; may disrupt operations.
-
Loans:
- Benefits: Immediate funds for investments, enables large purchases.
- Limitations: Requires repayment with interest; potential for high costs due to interest rates.
Organizational Structures
- Tall Structure: Features many management layers and a clear hierarchy for decision-making.
- Flat Structure: Characterized by fewer management layers, promoting wider communication among employees.
Decision-Making Tools
-
Decision Trees:
- Benefits: Simple visualization of outcomes; applicable for various decision scenarios.
- Limitations: Complexity increases with more options; may favor branches with more options.
Business Growth Strategies
- Conglomerate: Company owning various unrelated businesses.
- Internal Growth: Expansion through enhancing own operations rather than acquisitions.
- External Growth: Achieved through mergers or acquisitions.
- Multinational Company: Operates in multiple countries worldwide.
- Franchising: Allows others to operate businesses under a company’s brand for fees.
- Joint Venture: Collaboration between businesses sharing risks and benefits.
- Strategic Alliance: Partnerships to achieve shared goals, often through specific projects.
Marketing Approaches
- Product-Oriented: Focus on product quality and innovation, potentially ignoring customer needs.
- Market-Oriented: Aligns products with consumer preferences, enhancing adaptability and sales.
Corporate Social Responsibility (CSR)
- Benefits: Improves reputation; fosters customer loyalty; enhances public image.
- Limitations: Can be expensive; complicated management and reporting.
Factors Affecting Cash Flow
- Overtrading: Leads to cash shortages due to excessive inventory and costs.
- Purchasing Fixed Assets: Reduces liquidity by tying up cash in equipment or property.
- Giving Credit: Delays cash receipt, potentially causing cash flow issues.
- Sale of Assets: Generating cash instantly to alleviate financial pressure.
Business Structures
- Private Limited Company: Offers limited liability and control with fewer shareholders but faces growth capital limitations and significant regulatory requirements.
- Public Limited Company: Allows easy share trading and increased visibility but involves regulatory complexities and potential loss of control.
- Sole Trader: Provides full control and easy setup but entails personal financial risk and difficulty in raising substantial funds.
Franchising
- Benefits: Leverages established brands, reduces failure risk, and offers known business models.
- Limitations: Upfront fees and shared brand reputation risks.
Market Segmentation
- Benefits: Tailors products/services to specific groups for increased sales and targeted marketing.
- Limitations: Can be costly and time-consuming to analyze and segment accurately.
Market Research
-
Primary Research:
- Benefits: Direct insights; current data.
- Limitations: Time-intensive; costly.
-
Secondary Research:
- Benefits: Cost-effective; quick access to existing data.
- Limitations: Quality control issues; potential outdated information.
-
Online Sources:
- Benefits: Easy access; often free.
- Limitations: Varying reliability of information.
-
Media Articles:
- Benefits: Provides current insights; reflects public opinion.
- Limitations: Possible bias; lacks detailed data.
Marketing Strategy Elements
- Process: Refers to the methods and policies involved in product delivery.
- Physical Evidence: Visual elements customers notice, shaping their impressions of the brand.
- People: Human capital encompasses the skills and abilities employees bring to their roles.
Wage Payment Systems
-
Time Rate (Wages) System:
- Benefits: Ensures income security; opportunities for overtime.
- Limitations: May reduce employee motivation; could lead to slower work pace.### Salary Payment System
- Stable Income: Fixed monthly salary aids employees in budgeting and financial planning.
- No Extra Pay for Extra Work: Longer hours often do not result in additional pay, potentially leading to employee dissatisfaction.
- No Overtime Worries: Fixed salary provides peace of mind regarding hourly wage calculations.
- Less Flexibility: Employees may feel restricted in their work hours, as they are expected to complete tasks regardless of time taken.
Job Design Terminology
- Job Enlargement: Involves assigning additional tasks of equal responsibility to an employee, enhancing their role without increasing responsibility.
- Job Enrichment: Enhances job scope by adding challenging tasks, making roles more engaging for employees.
- Job Rotation: Systematically moves employees among various tasks or jobs within the organization to diversify skills.
Financial Terminology
- Capital Expenditure: Investment in long-term assets such as buildings and significant equipment.
- Revenue Expenditure: Covers daily operational costs, including salaries, utilities, and other recurring expenses.
- Cashflow: Reflects the movement of money entering and exiting a business, critical for financial health.
- Profit: Represents residual income after all operational expenses have been deducted from revenue.
- Investment: Allocation of funds towards acquiring assets or improving business operations with the expectation of future returns.
Impact of Multinational Companies on Host Countries
-
Advantages:
- Job Creation: Multinational companies generate employment opportunities in host countries.
- Technology Transfer: Introduction of advanced technologies enhances local industry capabilities.
- Global Market Access: Facilitates local products entering international markets, increasing their competitiveness.
-
Disadvantages:
- Market Disruption: Local businesses may struggle to compete effectively, leading to potential market exit.
- Cultural Impacts: The influx of multinational entities may lead to significant shifts in local culture and practices.
- Environmental Concerns: Operations of multinationals may result in environmental degradation in host regions.
Low Labour Turnover
-
Advantages:
- Cost Efficiency: Reduced expenses on recruiting and training new employees.
- Expertise Retention: Long-term staff possess extensive knowledge and understanding of their roles.
- Strong Relationships: Longevity in the workforce fosters collaboration and teamwork.
-
Disadvantages:
- Innovation Stagnation: A static workforce may hinder the introduction of fresh ideas and perspectives.
- Difficult Replacements: Losing key long-term employees can create challenges in finding suitable replacements.
- Talent Gap: Potential missed opportunities to harness new skills and knowledge from younger professionals.
Sources of Finance
- Microfinance: Offers small loans and financial services to individuals without access to traditional banks.
- Leasing: Involves renting an asset with the option to purchase at the end of the lease period.
- Share Capital: Funds raised by selling shares of the company, giving investors partial ownership.
- Sale of Assets: Involves selling company-owned items to generate cash, impacting resource availability.
Benefits and Limitations of Financial Sources
-
Sale of Assets:
- Benefits: Provides immediate cash flow; aids in debt reduction.
- Limitations: Loss of potential resources; may disrupt operations.
-
Loans:
- Benefits: Immediate funds for investments, enables large purchases.
- Limitations: Requires repayment with interest; potential for high costs due to interest rates.
Organizational Structures
- Tall Structure: Features many management layers and a clear hierarchy for decision-making.
- Flat Structure: Characterized by fewer management layers, promoting wider communication among employees.
Decision-Making Tools
-
Decision Trees:
- Benefits: Simple visualization of outcomes; applicable for various decision scenarios.
- Limitations: Complexity increases with more options; may favor branches with more options.
Business Growth Strategies
- Conglomerate: Company owning various unrelated businesses.
- Internal Growth: Expansion through enhancing own operations rather than acquisitions.
- External Growth: Achieved through mergers or acquisitions.
- Multinational Company: Operates in multiple countries worldwide.
- Franchising: Allows others to operate businesses under a company’s brand for fees.
- Joint Venture: Collaboration between businesses sharing risks and benefits.
- Strategic Alliance: Partnerships to achieve shared goals, often through specific projects.
Marketing Approaches
- Product-Oriented: Focus on product quality and innovation, potentially ignoring customer needs.
- Market-Oriented: Aligns products with consumer preferences, enhancing adaptability and sales.
Corporate Social Responsibility (CSR)
- Benefits: Improves reputation; fosters customer loyalty; enhances public image.
- Limitations: Can be expensive; complicated management and reporting.
Factors Affecting Cash Flow
- Overtrading: Leads to cash shortages due to excessive inventory and costs.
- Purchasing Fixed Assets: Reduces liquidity by tying up cash in equipment or property.
- Giving Credit: Delays cash receipt, potentially causing cash flow issues.
- Sale of Assets: Generating cash instantly to alleviate financial pressure.
Business Structures
- Private Limited Company: Offers limited liability and control with fewer shareholders but faces growth capital limitations and significant regulatory requirements.
- Public Limited Company: Allows easy share trading and increased visibility but involves regulatory complexities and potential loss of control.
- Sole Trader: Provides full control and easy setup but entails personal financial risk and difficulty in raising substantial funds.
Franchising
- Benefits: Leverages established brands, reduces failure risk, and offers known business models.
- Limitations: Upfront fees and shared brand reputation risks.
Market Segmentation
- Benefits: Tailors products/services to specific groups for increased sales and targeted marketing.
- Limitations: Can be costly and time-consuming to analyze and segment accurately.
Market Research
-
Primary Research:
- Benefits: Direct insights; current data.
- Limitations: Time-intensive; costly.
-
Secondary Research:
- Benefits: Cost-effective; quick access to existing data.
- Limitations: Quality control issues; potential outdated information.
-
Online Sources:
- Benefits: Easy access; often free.
- Limitations: Varying reliability of information.
-
Media Articles:
- Benefits: Provides current insights; reflects public opinion.
- Limitations: Possible bias; lacks detailed data.
Marketing Strategy Elements
- Process: Refers to the methods and policies involved in product delivery.
- Physical Evidence: Visual elements customers notice, shaping their impressions of the brand.
- People: Human capital encompasses the skills and abilities employees bring to their roles.
Wage Payment Systems
-
Time Rate (Wages) System:
- Benefits: Ensures income security; opportunities for overtime.
- Limitations: May reduce employee motivation; could lead to slower work pace.### Salary Payment System
- Stable Income: Fixed monthly salary aids employees in budgeting and financial planning.
- No Extra Pay for Extra Work: Longer hours often do not result in additional pay, potentially leading to employee dissatisfaction.
- No Overtime Worries: Fixed salary provides peace of mind regarding hourly wage calculations.
- Less Flexibility: Employees may feel restricted in their work hours, as they are expected to complete tasks regardless of time taken.
Job Design Terminology
- Job Enlargement: Involves assigning additional tasks of equal responsibility to an employee, enhancing their role without increasing responsibility.
- Job Enrichment: Enhances job scope by adding challenging tasks, making roles more engaging for employees.
- Job Rotation: Systematically moves employees among various tasks or jobs within the organization to diversify skills.
Financial Terminology
- Capital Expenditure: Investment in long-term assets such as buildings and significant equipment.
- Revenue Expenditure: Covers daily operational costs, including salaries, utilities, and other recurring expenses.
- Cashflow: Reflects the movement of money entering and exiting a business, critical for financial health.
- Profit: Represents residual income after all operational expenses have been deducted from revenue.
- Investment: Allocation of funds towards acquiring assets or improving business operations with the expectation of future returns.
Impact of Multinational Companies on Host Countries
-
Advantages:
- Job Creation: Multinational companies generate employment opportunities in host countries.
- Technology Transfer: Introduction of advanced technologies enhances local industry capabilities.
- Global Market Access: Facilitates local products entering international markets, increasing their competitiveness.
-
Disadvantages:
- Market Disruption: Local businesses may struggle to compete effectively, leading to potential market exit.
- Cultural Impacts: The influx of multinational entities may lead to significant shifts in local culture and practices.
- Environmental Concerns: Operations of multinationals may result in environmental degradation in host regions.
Low Labour Turnover
-
Advantages:
- Cost Efficiency: Reduced expenses on recruiting and training new employees.
- Expertise Retention: Long-term staff possess extensive knowledge and understanding of their roles.
- Strong Relationships: Longevity in the workforce fosters collaboration and teamwork.
-
Disadvantages:
- Innovation Stagnation: A static workforce may hinder the introduction of fresh ideas and perspectives.
- Difficult Replacements: Losing key long-term employees can create challenges in finding suitable replacements.
- Talent Gap: Potential missed opportunities to harness new skills and knowledge from younger professionals.
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Description
This quiz helped me with my mock for the IB Exams contains all you need to know for Paper 1
This quiz covers key concepts from the IB Business Management syllabus, focusing on sources of finance. It includes definitions and explanations for terms like microfinance and leasing.
