Untitled Quiz
80 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is production?

The process of creating goods and services using factors of production (land, labor, capital, and enterprise).

Which of the following is NOT a factor of production?

  • Technology (correct)
  • Labor
  • Land
  • Capital

    • What is the definition of labor?

    The physical and mental human effort involved in producing goods and services.

    Wages are the payment for labor?

    <p>True</p> Signup and view all the answers

    What is enterprise?

    <p>The willingness and ability to bear uncertain risks and make decisions in a business or organization.</p> Signup and view all the answers

    Capital refers to man-made resources used for production.

    <p>True</p> Signup and view all the answers

    Which of the following is an example of working capital?

    <p>Inventory of raw materials</p> Signup and view all the answers

    What is fixed capital?

    <p>Assets already used and used regularly in the production process, such as machinery and buildings.</p> Signup and view all the answers

    Entrepreneurs are not responsible for economic risks.

    <p>False</p> Signup and view all the answers

    What is opportunity cost?

    <p>The value of the best alternative forgone when making a decision.</p> Signup and view all the answers

    Division of labor increases efficiency and productivity.

    <p>True</p> Signup and view all the answers

    What is NOT a disadvantage of division of labor?

    <p>Slower production speed</p> Signup and view all the answers

    Define added value.

    <p>The difference between the selling price of a product and the cost of buying materials and components.</p> Signup and view all the answers

    Which of the following is NOT a way to increase added value?

    <p>Buy expensive materials and sell at a low price.</p> Signup and view all the answers

    Privatization involves transferring an industry from the public sector to the private sector.

    <p>True</p> Signup and view all the answers

    What is NOT a potential disadvantage of privatization?

    <p>Increased government control.</p> Signup and view all the answers

    Entrepreneurs must be able to solve problems, learn continuously, and believe in their abilities.

    <p>True</p> Signup and view all the answers

    What is the main purpose of a business plan?

    <p>To outline the details of a business, including its goals, strategies, products, services, target market, and financial projections.</p> Signup and view all the answers

    Government support can help increase competition and benefit society by supporting startups.

    <p>True</p> Signup and view all the answers

    Which of the following is NOT a typical government support for startups?

    <p>Granting high-interest rate loans.</p> Signup and view all the answers

    What are the main factors considered when determining the size of a firm?

    <p>These factors include number of employees, value of output, value of sales, and capital employed.</p> Signup and view all the answers

    Capital-intensive firms typically employ a larger workforce than labor-intensive firms.

    <p>False</p> Signup and view all the answers

    What are the two main types of intensive firms based on their primary input?

    <p>The two main types of intensive firms are capital-intensive firms and labor-intensive firms.</p> Signup and view all the answers

    A firm with a low output level will always employ fewer people than a firm with a high output level.

    <p>False</p> Signup and view all the answers

    What is the meaning of 'value of output'?

    <p>The total worth of the items or services produced by a firm.</p> Signup and view all the answers

    Value of sales is always a reliable indicator of a business's profitability.

    <p>False</p> Signup and view all the answers

    Define 'value of capital employed.'

    <p>The total amount of capital invested into a business, including both financial capital and machinery.</p> Signup and view all the answers

    Which of the following is NOT a benefit of business expansion?

    <p>Reduced competition in the market.</p> Signup and view all the answers

    Growth of firms can only occur through international growth.

    <p>False</p> Signup and view all the answers

    Describe the difference between internal growth and external growth for businesses.

    <p>Internal growth involves increasing a firm's size through means such as mergers or acquisitions, while external growth involves expanding into new markets or forming partnerships.</p> Signup and view all the answers

    Horizontal mergers are more common between businesses in different stages of production.

    <p>False</p> Signup and view all the answers

    Which of the following is NOT a benefit of horizontal mergers?

    <p>Creation of new markets.</p> Signup and view all the answers

    Vertical integration involves a business combining with another business operating in a different stage of production.

    <p>True</p> Signup and view all the answers

    Explain vertical backwards integration and provide an example.

    <p>Vertical backwards integration occurs when a company merges or acquires a supplier of its essential resources. For example, a car manufacturer might merge with a steel producer to control its supply of materials.</p> Signup and view all the answers

    Which of the following is NOT a benefit of conglomerate mergers?

    <p>Increased control over all aspects of production.</p> Signup and view all the answers

    Horizontal integration occurs when a business partners with a company that purchases the products it sells.

    <p>True</p> Signup and view all the answers

    What is the marketing mix?

    <p>A combination of marketing strategies used to market a product or service, often referred to as the '4 Ps': product, price, placement, and promotion.</p> Signup and view all the answers

    Packaging is considered as part of the product and promotion marketing.

    <p>True</p> Signup and view all the answers

    Which of the following is NOT a type of product?

    <p>Government goods</p> Signup and view all the answers

    The type of product or service a business offers has no impact on its marketing strategy.

    <p>False</p> Signup and view all the answers

    Producing the right product at the right price is irrelevant to the marketing mix.

    <p>False</p> Signup and view all the answers

    What are the key factors that contribute to a product being considered 'right'?

    <p>A product is considered 'right' when it satisfies customer wants and needs, offers the right quality, is priced competitively, allows for profit generation, and reinforces the brand's image.</p> Signup and view all the answers

    Which of the following is NOT a benefit of developing new products?

    <p>Reduced competition</p> Signup and view all the answers

    The cost of market research and analysis is negligibly small for developing new products.

    <p>False</p> Signup and view all the answers

    Define 'brand loyalty' and its significance.

    <p>Brand loyalty occurs when consumers continually choose a particular brand over competitors. High brand loyalty is a key factor contributing to a business's success as it ensures repeat purchases and strengthens brand image.</p> Signup and view all the answers

    Brand awareness is when consumers consistently mistake a brand for its product.

    <p>True</p> Signup and view all the answers

    What is packaging and its primary purpose?

    <p>Packaging is the physical container or wrapping used for a product. Its primary purpose is to protect the product, ensure its safe handling and transportation, and enhance its appeal to consumers.</p> Signup and view all the answers

    Which of the following is NOT a benefit of packaging?

    <p>Increased production costs</p> Signup and view all the answers

    The product life cycle is the same for all products.

    <p>False</p> Signup and view all the answers

    The exact stage of a product within the product life cycle can be easily determined and does not require careful monitoring.

    <p>False</p> Signup and view all the answers

    The product life cycle is not influenced by technological advancements.

    <p>False</p> Signup and view all the answers

    Explain the development stage of the product life cycle.

    <p>In the development stage, a new product is conceptualized, designed, and tested, ensuring that it meets market needs and functionality requirements.</p> Signup and view all the answers

    During the introduction stage, high spending on promotion is crucial to create awareness for a new product.

    <p>True</p> Signup and view all the answers

    Why do sales increase rapidly during the growth stage of the product life cycle?

    <p>Sales increase rapidly during the growth stage because the product was successfully introduced at the right time, and marketing strategies are effectively driving customer adoption and brand awareness.</p> Signup and view all the answers

    The maturity stage of a product is typically characterized by slow sales growth due to intense competition.

    <p>True</p> Signup and view all the answers

    What is NOT a typical characteristic of the saturation stage of the product life cycle?

    <p>New competitors enter the market.</p> Signup and view all the answers

    During the decline stage, sales of the product decline because it has lost consumer appeal.

    <p>True</p> Signup and view all the answers

    Advertising is always essential regardless of a product's stage within the product life cycle.

    <p>False</p> Signup and view all the answers

    Describe the purpose of extension strategies and when they are typically employed.

    <p>Extension strategies are used to prolong the lifecycle of a product, particularly during the maturity and saturation stages. They aim to reinvigorate consumer interest and extend the time a product remains competitive in the market.</p> Signup and view all the answers

    Which of the following is NOT a common extension strategy?

    <p>Developing completely new products.</p> Signup and view all the answers

    Penetration pricing involves setting a higher price than competitors to enter a new market.

    <p>False</p> Signup and view all the answers

    Penetration pricing aims to encourage customers to switch to a new product because of its lower price.

    <p>True</p> Signup and view all the answers

    Penetration pricing is typically used for short-term profit maximization.

    <p>False</p> Signup and view all the answers

    Which of the following is NOT a potential benefit of penetration pricing?

    <p>Increases profit per unit.</p> Signup and view all the answers

    Price skimming is only used for existing products, never for new ones.

    <p>False</p> Signup and view all the answers

    Price skimming aims to attract price-sensitive customers.

    <p>False</p> Signup and view all the answers

    Explain the purpose of promotional pricing.

    <p>Promotional pricing involves offering a product at a significantly lower price for a limited period, creating a sense of urgency for customers and attracting price-sensitive buyers.</p> Signup and view all the answers

    Promotional pricing is always effective in the long term for building brand loyalty.

    <p>False</p> Signup and view all the answers

    Psychological pricing is based on the idea that certain prices have a psychological impact on consumers and influence their buying decisions.

    <p>True</p> Signup and view all the answers

    Dynamic pricing involves offering the same product at different prices to diverse customer segments, catering to their differing price sensitivities and demand.

    <p>True</p> Signup and view all the answers

    What are the four Ps of marketing?

    <p>The four Ps of marketing are product, price, place, and promotion.</p> Signup and view all the answers

    Explain the role of packaging within the four Ps of marketing.

    <p>Packaging is a key aspect of the 'product' within the four Ps of marketing. It encompasses the physical container or wrapping of a product, influencing its perception, protecting its contents during transport, and conveying essential product information to consumers.</p> Signup and view all the answers

    A product's lifecycle has a fixed duration that remains constant across markets.

    <p>False</p> Signup and view all the answers

    Which stage of the product life cycle is characterized by high spending on promotion?

    <p>Introduction stage</p> Signup and view all the answers

    The growth stage of the product life cycle usually features a decrease in sales due to competitors.

    <p>False</p> Signup and view all the answers

    Persuasive advertising is primarily used in the maturity stage to differentiate a product from competitors.

    <p>False</p> Signup and view all the answers

    The decline stage of the product life cycle is characterized by reduced advertising spending.

    <p>True</p> Signup and view all the answers

    What is the main objective of penetration pricing?

    <p>Penetration pricing aims to gain market share and attract new customers by offering a product at a lower price than competitors.</p> Signup and view all the answers

    Penetration pricing is typically associated with long-term profit maximization.

    <p>True</p> Signup and view all the answers

    Price skimming is a pricing strategy that focuses on maximizing profits per unit early in the product life cycle.

    <p>True</p> Signup and view all the answers

    Study Notes

    Production

    • Production is the creation of goods and services
    • Factors of production include:
      • Labour: physical and mental effort
      • Land: natural resources, renewable/non-renewable
      • Capital: man-made resources for production
      • Enterprise: willingness to take risks and make decisions in business

    Working capital vs Fixed capital

    • Working Capital: goods not yet used (on shelves)
    • Fixed capital: goods used regularly (e.g. machinery)

    Enterprise

    • Willingness and ability to bear uncertain risks and make business decisions.

    Economic Problem & Opportunity Cost

    • Choosing how to use limited resources wisely.
    • Opportunity cost is the next best alternative forgone when a choice is made.

    Specialisation

    • Division of labour: breaking down a production process into different tasks.
    • Advantages:
      • Increased efficiency and output
      • Less time wasted
    • Disadvantages:
      • Could be boring for workers
      • If one worker is absent, it can impact output.

    Added Value

    • Added value is the difference between the selling price and cost of inputs.

    Ways to increase added value

    • Raising selling price, while input costs remain the same.
    • Lowering input costs while maintaining selling prices.

    Privatization

    • Transferring ownership and management of industries from public to private sector.
    • Cons:
      • May not consider all costs and benefits to society
      • Can lead to monopolies
      • Lower quality and higher prices if there is a lack of competition.
    • Pros:
      • Easier to raise funds
      • Products may satisfy consumer needs more easily
      • Businesses are more efficient

    Business Plans

    • Description of the business
    • Products and services offered
    • Target market (who you sell to)
    • Competitors
    • Business location
    • How to reach customers (distribution plan)

    Government Support

    • Governments offer support to entrepreneurs to increase competition, output, and benefit society.
    • Support can include training, low-cost premises, low-interest loans, and grants.

    Size of Firms

    • Size of a business can be measured by:
      • Number of employees
      • Output value
      • Revenue
      • Capital employed

    Capital intensive firms

    • Employ fewer people
    • High output levels
    • Examples include Tesla and Honda

    Labour intensive firms

    • Opposite of capital intensive, employing a lot of people.

    Business Expansion

    • Pros:
      • Higher profits
      • More prestige
      • Economies of scale
      • Larger market share
    • Methods of growth
      • International growth (enlarging existing plants or opening new ones)

    Product Life Cycle

    • Stages a product goes through from introduction to decline:
      • Development: testing/prototyping
      • Introduction: launch to wider market, high promotion
      • Growth: rapid sales increase
      • Maturity: slower sales increase, competitive pricing
      • Saturation: high competition, no new competitors
      • Decline: sales fall, low demand

    Product Life Cycle: Extension Strategies

    • Ways to extend the product life cycle
      • Introduce new variations (small changes in design, color, packaging)
      • Selling into new markets
      • Advertising campaigns
      • Improvements to old products
      • Selling through multiple retail outlets

    Marketing Mix: Price

    • Setting prices for products which considers:
      • Brand image
      • Competitors
      • Market Share
    • Methods of Pricing:
      • Cost plus pricing: costs plus a profit margin
      • Competitive pricing: pricing in line with competitors
      • Penetration pricing: lower prices to enter market
      • Price skimming: high prices initially for a new product
      • Promotional pricing: temporary low prices

    Marketing Mix: Promotion

    • Raising customer awareness.
    • Methods:
      • Advertising (above the line): widely broadcast media (TV, radio etc.)
      • Sales promotion (below the line): short-term incentives (coupons, discounts)

    Marketing Mix: Other Elements

    • Product: what the business sells
    • Price: amount of money charged
    • Place: where the product is sold
    • Promotion: how the product is advertised

    Types of advertising

    • Persuasive: trying to convince consumer that they need the product
    • Informative: providing information
    • Sales promotion: incentives for buyers to purchase (promotions)

    Marketing Budget

    • Financial plan for marketing a product or range over a period of time.
    • A consideration for firms which spend less money

    Social Media Marketing

    • Creating and sharing content across social media to achieve marketing goals.

    Viral Marketing

    • Encouraging consumers to share info about the product online.

    E-Commerce (electronic commerce)

    • Buying and selling goods/services online

    Forms of Working Capital

    • Additional working capital
    • Working capital - finance needed for daily costs.
    • No business can be run without sufficient working capital.
    • Includes cash, debtors, inventory

    Statement of Financial Position

    • Summarize the value/worth of the business at a given time.
    • It shows the business's assets and liabilities.

    Assets

    • Items of value owned by the business.
    • Types
      • Current assets: used within one year (cash, inventory, accounts receivable)
      • Non-current assets: used over a year (equipment, buildings)

    Liabilities

    • Debts owed by the business
    • Types
      • Current liabilities: debts payable within a year (accounts payable, loans)
      • Non current liabilities: debts payable over more than one year. (long-term loans)
      • Shareholder's equity= amount invested by shareholders + retained profit

    Profitability Ratios

    • Measures of profitability
    • Includes:
      • Gross profit margin
      • Net profit margin
      • Return on capital employed

    Liquidity Ratios

    • Measures of liquidity.
    • Includes
      • Current ratio
      • Acid test ratio

    Business Cycles

    • The fluctuation in a country’s total output (GDP).
    • Stages
      • Growth: rising GDP
      • Boom: high spending
      • Recession: decrease in spending
      • Slump: low demand, many businesses close downs

    Government Economic Policies

    • Fiscal Policy: Changes in taxation and government spending.
    • Monetary Policy: Changes in the level of interest rates, controlled by central banks.
    • Supply-side policies: Aim to improve training, increase competition, and improve efficiency overall.

    Environmental and Ethical Issues

    • Social Responsibility: Impacts of a business decision
    • Environmental Responsibilities: Consideration for the environment (recycling, renewable sources)
    • Ethical Issues: Doing the right thing

    Protectionism

    Policies that protect businesses from foreign competition.

    • Includes:
      • Tariffs (taxes on imported goods)
      • import quotas (limits on the number of imports)

    Multinational Corporations (MNCs)

    • Businesses that operate in more than one country.
    • Benefits:
      • Lower production costs
      • Access to new markets
      • Global reach
    • Drawbacks:
      • Reduced local business
      • Repatriation of profits

    Exchange Rates

    • The price of one currency in relation to another.
    • Exchange rates can affect the competitiveness of a company or country.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    IGCSE Business Notes PDF

    More Like This

    Untitled Quiz
    6 questions

    Untitled Quiz

    AdoredHealing avatar
    AdoredHealing
    Untitled Quiz
    37 questions

    Untitled Quiz

    WellReceivedSquirrel7948 avatar
    WellReceivedSquirrel7948
    Untitled Quiz
    55 questions

    Untitled Quiz

    StatuesquePrimrose avatar
    StatuesquePrimrose
    Untitled Quiz
    48 questions

    Untitled Quiz

    StraightforwardStatueOfLiberty avatar
    StraightforwardStatueOfLiberty
    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser