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Questions and Answers

What characterizes a need in economic terms?

  • An unlimited desire for various goods and services.
  • A resource that is produced by businesses.
  • A good or service essential for living. (correct)
  • A good that is desired but not crucial for survival.

    • What does scarcity refer to in economics?

  • The efficiency of resource allocation in an economy.
  • The availability of all resources in abundance.
  • The lack of sufficient products to fulfill total wants. (correct)
  • The ability to produce more goods than are needed.

    • Which of the following best describes opportunity cost?

  • The next best alternative given up by choosing another item. (correct)
  • The most expensive alternative lost when making a decision.
  • The price difference between two goods.
  • The loss of resources in production.

    • What is the definition of division of labour?

    <p>The splitting of production processes into different tasks performed by individuals.</p> Signup and view all the answers

    Which sector is responsible for extracting and using natural resources?

    <p>Primary sector</p> Signup and view all the answers

    What does internal growth refer to in a business context?

    <p>The expansion of a business's existing operations.</p> Signup and view all the answers

    What is meant by added value in business?

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

    What is the role of an entrepreneur?

    <p>To operate and take risks for a new business venture.</p> Signup and view all the answers

    What is a takeover in a business context?

    <p>A purchase where one business integrates another.</p> Signup and view all the answers

    Which type of integration occurs when a business merges with another in the same industry at the same production stage?

    <p>Horizontal integration</p> Signup and view all the answers

    What does limited liability mean for shareholders in a company?

    <p>Their liability is limited to their investment amount.</p> Signup and view all the answers

    What is the primary difference between a private limited company and a public limited company?

    <p>Public companies can sell shares to the public and are tradable.</p> Signup and view all the answers

    Which term describes when a business merges with or acquires another business in a different industry?

    <p>Conglomerate integration</p> Signup and view all the answers

    What is the role of an Annual General Meeting (AGM) for a company?

    <p>To allow shareholders to vote on Board of Directors.</p> Signup and view all the answers

    What distinguishes an incorporated business from an unincorporated business?

    <p>Incorporated businesses have a legal status separate from owners.</p> Signup and view all the answers

    What does 'delegation' in an organisational context refer to?

    <p>The act of assigning authority to subordinates.</p> Signup and view all the answers

    What is a partnership agreement?

    <p>A legal contract outlining the relationship between business partners.</p> Signup and view all the answers

    Which leadership style involves all employees in the decision-making process?

    <p>Democratic leadership</p> Signup and view all the answers

    What is the primary purpose of an organisation chart?

    <p>To outline the internal management structure.</p> Signup and view all the answers

    What role do 'staff managers' play in an organisation?

    <p>They provide support and information to line managers.</p> Signup and view all the answers

    What does 'span of control' refer to in a managerial context?

    <p>The number of subordinates directly managed by a manager.</p> Signup and view all the answers

    What is the first step in the recruitment process?

    <p>Identifying the need for employment.</p> Signup and view all the answers

    Which of the following best describes 'hierarchy' within an organisation?

    <p>The levels of management from highest to lowest.</p> Signup and view all the answers

    Which term refers to the evaluation process for selecting candidates for a specific job?

    <p>Employee selection</p> Signup and view all the answers

    What is meant by 'market share'?

    <p>The percentage of total market sales held by one brand or business.</p> Signup and view all the answers

    Which term describes a business owned and controlled by the state?

    <p>Public corporation</p> Signup and view all the answers

    What does 'profit sharing' involve?

    <p>Distributing a portion of the business's profit to employees.</p> Signup and view all the answers

    Which of the following best describes 'motivation' in a workplace context?

    <p>The reason why employees want to work hard and effectively.</p> Signup and view all the answers

    What is 'job enrichment'?

    <p>Adding tasks that require more skill and responsibility.</p> Signup and view all the answers

    Which of the following defines 'stakeholder'?

    <p>Any person or group with an interest in the business's performance.</p> Signup and view all the answers

    What is the primary purpose of a 'social enterprise'?

    <p>To achieve social objectives while making a profit.</p> Signup and view all the answers

    Which type of payment is 'commission' based on?

    <p>The number of sales made.</p> Signup and view all the answers

    What is defined as a document outlining the requirements and qualifications for a specified job?

    <p>Job specification</p> Signup and view all the answers

    What type of recruitment involves filling a vacancy with an existing employee?

    <p>Internal recruitment</p> Signup and view all the answers

    Which training method involves new employees learning by observing experienced colleagues at work?

    <p>On-the-job training</p> Signup and view all the answers

    What characterizes full-time employment?

    <p>Working 35 hours or more a week</p> Signup and view all the answers

    Which communication type is defined as communication between members of the same organisation?

    <p>Internal communication</p> Signup and view all the answers

    What is the definition of feedback in the communication process?

    <p>The reply from the receiver indicating message understanding</p> Signup and view all the answers

    Which term refers to a message that does not require a response?

    <p>One-way communication</p> Signup and view all the answers

    What is the purpose of workforce planning?

    <p>To establish future workforce needs</p> Signup and view all the answers

    What is meant by customer loyalty?

    <p>Existing customers consistently purchasing from the same business</p> Signup and view all the answers

    Which of the following defines market research?

    <p>The process of gathering, analysing, and interpreting information about a market</p> Signup and view all the answers

    What does the term 'niche market' refer to?

    <p>A small, specialized segment within a larger market</p> Signup and view all the answers

    Which best describes primary research?

    <p>The collection of original data through direct contact</p> Signup and view all the answers

    What is the main focus of a market-oriented business?

    <p>To understand consumer wants before product development</p> Signup and view all the answers

    What does the term 'mass market' indicate?

    <p>A very large number of sales of a product</p> Signup and view all the answers

    Which statement accurately describes customer relationships?

    <p>Regular communication with customers to build loyalty</p> Signup and view all the answers

    What is a marketing budget?

    <p>A plan outlining financial resources for marketing</p> Signup and view all the answers

    Study Notes

    Business Terms and Definitions

    • A need: A good or service essential for living.
    • A want: A good or service that people would like to have, but is not essential. Wants are unlimited.
    • Economic problem: Unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity.
    • Factors of production: The resources needed to produce goods or services. These include land, labor, capital, and enterprise. They are in limited supply.
    • Scarcity: The lack of sufficient products to meet the total wants of the population.
    • Opportunity cost: The next best alternative given up by choosing another item.
    • Specialization: When people and businesses concentrate on what they are best at.
    • Division of labor: When the production process is split into different tasks, with each employee performing one task. It's a type of specialization.
    • Businesses: Businesses combine factors of production to make products that satisfy people's wants (goods and services).
    • Added value: The difference between the selling price and the cost of bought-in materials and components.

    Sectors of Industry

    • Primary sector: Extracts and uses natural resources to produce raw materials.
    • Secondary sector: Manufactures goods using raw materials from the primary sector.
    • Tertiary sector: Provides services to consumers and other sectors.
    • De-industrialisation: A decline in the importance of the secondary sector of industry in a country.
    • Mixed economy: An economy that has both private and public sectors.
    • Capital: The money invested into a business by the owners.

    Business Growth and Structure

    • Entrepreneur: A person who organizes, operates, and takes the risk for a new business venture.
    • Business plan: A document that contains business objectives, operations, finance, and owners of the new business.
    • Capital employed: The total value of capital used in the business.
    • Internal growth: When a business expands its existing operations.
    • External growth: When a business takes over or merges with another business.
    • Takeover/Acquisition: When one business buys another business.
    • Merger: When two businesses agree to join together to make one business.
    • Horizontal integration: When one business merges with another in the same industry, at the same stage of production.
    • Vertical integration: When one business merges with another in the same industry but at a different stage of production.
    • Conglomerate integration: When one business merges with or takes over a business in a different industry (known as diversification).

    Business Ownership Types

    • Sole trader: A business owned by one person.
    • Limited liability: The liability of shareholders in a company is limited to the amount they have invested.
    • Unlimited liability: The owners of a business can be held responsible for the debts of the business. Their liability is not limited to the investment they made in the business.
    • Partnership: A form of business where two or more people jointly own a business.
    • Partnership agreement: The written, legal agreement between business partners.
    • Unincorporated business: A business that does not have a separate legal identity (sole traders and partnerships).
    • Incorporated business: A business that has separate legal status from its owners.
    • Shareholders: The owners of a limited company.
    • Private limited company: A business owned by shareholders but cannot sell shares to the public.
    • Public limited company: A business owned by shareholders that can sell shares to the public.
    • Annual General Meeting (AGM): A legal requirement for all companies. Shareholders attend to elect the board of directors.
    • Dividends: Payments made to shareholders from profits.
    • Franchise: A business based on using pre-existing brand names, logos, and methods of an existing successful business.
    • Joint venture: When two or more businesses start a new project together, sharing capital, risks, and profits.
    • Public corporation: A business owned and controlled by the state (government).

    Business Objectives and Performance

    • Business objectives: The aims or targets a business works towards.
    • Profit: Total income (revenue) minus total costs.
    • Market share: The percentage of total market sales held by one brand or business.
    • Social enterprise: A social enterprise has social objectives as well as aiming to make a profit to reinvest back into the business.
    • Stakeholder: Any person or group with a direct interest in the performance and activities of a business.

    Employee Compensation and Engagement

    • Motivation: The reason why employees want to work hard and be effective for the business.
    • Wage/Salary: Payment for work. Wage is usually paid weekly, salary monthly.
    • Piece rate: Payment for each unit of output.
    • Bonus: An additional amount of payment above basic pay as a reward.
    • Commission: Payment relating to the number of sales made.
    • Profit sharing: A system where a proportion of the company's profit is paid out to employees.
    • Job satisfaction: The enjoyment derived from feeling that one has done a good job.
    • Job rotation: Employees swap around doing specific tasks for a limited time.
    • Job enrichment: Adding tasks that require more skill and/or responsibility to a job.
    • Teamworking: Using groups of employees and allocating specific tasks and responsibilities to them.
    • Training: The process of improving employee skills.
    • Promotion: Advancement to a higher job/managerial level in an organisation.

    Organisational Structure

    • Organisational structure: Levels of management and divisions of responsibilities.
    • Organisational chart: A diagram outlining the internal management structure.
    • Hierarchy: The levels of management in an organisation, from the highest to the lowest.
    • Chain of command: The structure in an organisation that allows instructions to be passed.
    • Span of control: The number of subordinates working directly under a manager.
    • Directors: Senior managers leading a department or division.
    • Line managers: Managers with direct responsibility over people in the hierarchy.
    • Supervisors: Junior managers who have direct control over employees.
    • Staff managers: Specialists who provide support to line managers.
    • Delegation: Giving subordinates the authority to perform tasks.
    • Leadership styles: Different approaches to dealing with people and making decisions, such as autocratic, democratic, or laissez-faire.
    • Autocratic leadership: The manager takes decisions and expects orders to be followed.
    • Democratic leadership: All employees are involved in decision-making.
    • Laissez-faire leadership: The manager makes broad objectives known, and employees make their own decisions.
    • Trade union: A group of employees who protect their interests.

    Employment Processes

    • Recruitment: The process from identifying the need to employ someone to the point where applications arrive.
    • Employee selection: Evaluating job candidates and choosing the best fit.
    • Job analysis: Identifying and recording responsibilities and duties.
    • Job description: Outlining responsibilities and duties of a job.
    • Job specification: A document outlining the requirements for a job.
    • Internal recruitment: Filling vacancies with existing employees.
    • External recruitment: Filling vacancies with new employees.
    • Part-time employment: Jobs typically between 1 and 30-35 hours a week.
    • Full-time employment: Jobs typically 35 hours or more a week.
    • Induction training: Introduction to a new employee to the business's activities, customs, and procedures.
    • On-the-job training: Training at the workplace, learning by observing and assisting experienced employees.
    • Off-the-job training: Training away from the workplace, usually by specialized trainers.
    • Workforce planning: Establishing the number and skills of employees needed for the business's future.
    • Dismissal: The termination of employment.

    Communication

    • Communication: The process of transferring a message from one person to another.
    • Message: The information being passed from sender to receiver.
    • Internal communication: Communication between members of the same organisation.
    • External communication: Communication between the organisation and other organisations/individuals.
    • Transmitter/sender: The person who starts the communication process.
    • Medium of communication: The method used to send the message.
    • Receiver: The person who receives the message.
    • Feedback: The receiver's response to the sender's message.
    • One-way communication: A message that does not call for a response.
    • Two-way communication: Communication where the receiver responds and there is a discussion.
    • Formal communication: Communication through established channels, using professional language.
    • Informal communication: Communication using everyday language, casually.
    • Communication barriers: Factors that prevent effective communication.

    Marketing

    • Marketing: Identifying customer wants and satisfying them profitably.
    • Customer: A person, business, or organisation that buys goods or services.
    • Customer loyalty: When existing customers continually buy from the same business.
    • Customer relationships: Communicating with customers to encourage loyalty.
    • Market share: The percentage of total market sales held by one brand or business.
    • Consumer: Someone who buys products/services for personal use.
    • Mass market: A very large number of sales of a product.
    • Niche market: A small, specialized segment of a large market.
    • Market segment: An identifiable sub-group of a whole market with similar characteristics or preferences.

    Market Research

    • Market research: Gathering, analyzing, and interpreting information about a market.
    • Product-oriented business: A business that focuses mainly on the product itself.
    • Market-oriented business: A business that conducts market research to understand customer wants before product development.
    • Marketing budget: A financial plan for marketing a product or product range.
    • Primary research: Collecting original data directly from customers.
    • Secondary research: Using existing data already collected by others.
    • Questionnaire: A series of questions used to collect data.
    • Online survey: A survey completed online by participants.
    • Interview: A one-on-one conversation used to collect data.
    • Focus group: A group discussion used to collect data on participants' opinions.
    • Sample: A group of people selected to represent the target market.
    • Random sample: Selecting participants randomly.
    • Quota sample: Selecting participants based on specific characteristics (e.g., age, gender).

    Pricing Strategies

    • Cost-plus pricing: Cost of manufacturing plus profit.
    • Competitive pricing: Pricing in line with or just below competitors' prices.
    • Penetration pricing: Setting a lower price than competitors to enter a new market.
    • Price skimming: High initial price for a new product.
    • Promotional pricing: Very low price for a limited time.
    • Dynamic pricing: Changing prices based on demand, often used online.
    • Price elastic demand: Consumers sensitive to price changes.
    • Price inelastic demand: Consumers not sensitive to price changes.

    Marketing Mix and Product Life Cycle

    • Marketing mix: All activities involved in marketing a product or service.
    • Unique selling point (USP): A special feature that differentiates a product from competitors.
    • Brand name: The unique name of a product.
    • Brand loyalty: Consumers choosing the same brand repeatedly.
    • Brand image: The identity and personality given to a product.
    • Packaging: The physical container or wrapping for a product.
    • Product life cycle: Stages a product goes through from introduction to decline.
    • Extension strategy: Keeping a product at the maturity stage of its life cycle and extending it.

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