1.1 - Intro

Question 1

Role of business

Answer 1

Combine human, physical and financial resources (inputs) to create goods and services that satisfy needs and wants

Question 2

What are consumer goods and types

Answer 2

Consumer goods: products sold to general public

Consumer durables: long life products
Consumer non-durables: not long life products

Question 3

What is output of a business

Answer 3

Goods (tangible) and services (intangible)

Question 4

What are capital goods

Answer 4

physical products bought by other businesses to produce other goods and services

Question 5

Main business functions

Answer 5

Human resources: manages personnel
Finance and accounts: manages money, accurate reporting and meeting legal requirements
Marketing: identifying and satisfying needs and wants, 4Ps
Operations: responsible for turning raw materials into finished goods

Question 6

Main economic sectors

Answer 6

Primary sector: extracting/production of raw materials

Secondary sector: manufacturing/processing raw materials into products

Tertiary sector: any business that provides a service

Quaternary sector: service sector on knowledge based activities, e.g. R&D

Question 7

How do sectors shift as country develops (starting from primary)

Answer 7

Employment shifts from primary to secondary sector as there is little value added in primary production

Question 8

What is the chain of production

Answer 8

All the businesses involved in the making of goods+services, from producing the material to selling the product

All
Goods+services
material
product

all 4 sectors are interdependent, they rely on each other

Question 9

What is sectoral chage

Answer 9

refers to a shift in the relative share of national output and employment that is attributed to each business sector over time

shift
GDP
employment
sector

As countries develop: primary –> secondary –> tertiary+quaternary

Question 10

Industrialisation and why it happens

Answer 10

Shift from primary sector to secondary sector in a country

Could be due to automation in the primary sector

Question 11

Deindustrialisation

Answer 11

Secondary to tertiary

Question 12

Reasons for secondary to tertiary changes

Answer 12

• Could be due to mechanisation in the secondary sector
• higher income = more demand for services
• more leisure time due to higher living standards
• customer service = competitive advantage

Question 13

What is entrepreneurship and intrapreneurship

Answer 13

• entrepreneur: an individual with talent, perseverance and willingness to take risk to start their own new business

risk
start
new business

• intrapreneur: an individual employed by a large organisation who demonstrates entrepreneur like thinking in the development of new products

employed
entrepreneur
new products

Question 14

Reasons for starting a business (5)

Answer 14

• earn a income
• job security
• unfilled market niche (so think that can make profit)
• control/make decision
• want to turn hobby into business

Question 15

Common steps in setting up a business

Answer 15

1) organise the basics, idea, name, suppliers, evaluate good/service by market research
2) prepare business plan
3) decide on legal structure and register business
4) raising finance
5) Testing the market, pilot test (small number of people could buy only) + marketing

Question 16

Problems a new business can face

Answer 16

• lack of finance
• hiring poor staff
• strong competitors
• poor location
• external influences (eg recession)

Question 17

What does a business plan show

Answer 17

• How to achieve aims+objectives
• description of business idea
• market research
• key personnel
• the finance (e.g. balance sheets)
• operations

Can help secure loans