unit 1

Question 1

What are needs?

Answer 1

are essential for use to live e.g. water, food and clothing

Question 2

What are wants?

Answer 2

things we would like to have but could live without e.g. mobile phone and television

Question 3

What are goods?

Answer 3

things we can see, touch and pick up. Some goods are durable and some are non-durable

Question 4

What are services?

Answer 4

things we can’t see, pick up or touch. This means they are intangible e.g. a hairdresser

Question 5

the business cycle

Answer 5

1) people have needs and wants
2) businesses identify these needs and wants
3) businesses produces goods and services to satisfy customers
4) customers buy the goods and services

Question 6

Factors Of Production

Answer 6

Land - the natural resources
Labour - the people employed by a business
Capital - the man-made resources needed to make a product
Enterprise - combining all factors of production

Question 7

Entrepreneurs

Answer 7

Jeff bezos - Amazon
James Dyson - Dyson

Question 8

Wealth Creation

Answer 8

1) cotton harvested
2) cotton cleaned
3) indigo turns cotton blue
4) cotton weaved into denim
5) workers sew denim into jeans
6) jeans are packaged and sold

value is being added

Question 9

Sectors Of Industry

Answer 9

Primary (extract raw materials)
Secondary (manufacturing products with the raw materials)
Tertiary (selling the products)

Question 10

Sectors Of Economy

Answer 10

Private - sole traders, partnerships, private limited companies
Public - national government, local government organisations
Third - non-profit making organisations, social enterprise

Question 11

Describe A Sole Trader

Answer 11

owned and run by one person

ADVANTAGES
- easy to set up
- owner keeps all profit
- owner chooses holiday and working hours
- all decisions made by the owner

DISADVANTAGES
- cannot share workload
- raising start up capital is difficult
- unlimited liability, responsible for all debts
- difficult to obtain economy of scale

Question 12

Describe A Partnership

Answer 12

A business run and owned by 2-20 partners

ADVANTAGES
- workload shared
- varied skill set
- finances raised more easily
- suppliers see partnerships as less risky to work with

DISADVANTAGES
- shared profit
- unlimited liability
- arguments may occur
- lengthy legal process

Question 13

Describe A Private Limited Company

Answer 13

owned by shareholders and run by board of directors

ADVANTAGES
- limited liability
- finance can be raised by selling more shares
- shareholders and board of directors have varied skills

DISADVANTAGES
- lengthy legal process
- rules laid out by law
- financial accounts are published
- setting up an LTD is expensive

Question 14

Public Sector Organisation

Answer 14

• owned by the government on behalf of taxpayers
• local government organisations get funding from the government to deliver services

1) UK parliament
2) Scottish government
3) local government organisations

Question 15

Local Government Organisations

Answer 15

taxpayer money goes towards:
- schools
- medical care
- recycling

Question 16

Third Sector
(non profits and social enterprise)

Answer 16

NON PROFIT
- set up to support specific causes
- regulated by the government
- RSPCA
- youth clubs

SOCIAL ENTERPRISE
they have a main social or environmental aim other than making profit but they run like a normal business
- at least half of the profit goes to the cause

Question 17

How Businesses Ensure Customer Satisfaction

Answer 17

• provide the highest quality product
• make sure employees are trained
• have a customer care strategy
• have an after sales service

Question 18

Business Objectives

Answer 18

• survival
• profit
• provision of a service
• customer satisfaction
• enterprise
• social responsibility
• market share

Question 19

What Are The External Factors

Answer 19

Political
Economic
Social
Technological
Environmental
Competitive

Question 20

Politcal

Answer 20

• the government can issue laws which makes a business have to change (health and safety)
• change the amount of tax
• local government organisations can refuse planning permission

Question 21

Economic

Answer 21

levels of employment- when unemployment is high people are more wary of their money

recession- the amount of money being sent and the products being sold decreases

interest rates- when interest is high it’s more expensive to borrow money from the bank

Question 22

Social

Answer 22

• trends can change quickly
• growing number of working practices offered to employees

Question 23

Environmental

Answer 23

the weather (ice cream shops are more popular in summer)

• increase in recycling
• reduce carbon footprint
• environmentally friendly products
• decrease pollution

Question 24

Technological

Answer 24

• tablet computer
• wireless
• web 2.0
• cloud computing

Question 25

Competitive

Answer 25

• more choice where to purchase
• goods may be priced cheaper
• more special offers given
• higher quality service

Question 26

Internal Stakeholders

Answer 26

-owners/shareholders
-managers
-employees

Question 27

External Stakeholders

Answer 27

-banks
-suppliers
-customers
-community
-government

Question 28

How Do Internal Stakeholders Have Influence On Businesses?

Answer 28

-Owners/Shareholder - changing management, investing into the business
-Managers - hiring and firing, creating company policies, making day-to-day decisions
-employees - increase/decrease productivity, providing good/bad customer service, striking

Question 29

How Do External Stakeholders Have An Influence On A Business?

Answer 29

-Customers - whether they purchase from a business, word of mouth
-Banks - permitting or denying loans, changing interest rates, changing repayment lengths
-Government - changing tax rate, introducing laws, offering grants
-Suppliers - raising/lowering prices, changing delivery times, increasing/decreasing quality of raw materials
-Community - protesting or petitioning