1.1 what is a business

Question 1

a business aims to

Answer 1

meet the needs and wants of individuals or organisations through any of the following of the following activities:
- producing crops extracting raw materials from earth
- creating a product
- providing a service

Question 2

resource inputs processed to generate the desired output

Answer 2

• human (the right quality and quantity of people required to make a product or provide the service
• physical (the right quality and quantity of materials, machinery and land space required to make the product or service
• financial (the right quantity of cash and other forms of finance required to make the profit or service)
• enterprise (the least tangible input but crucially important for a business. It is the business idea and determination to turn that idea into a functioning and ideally, a thriving business)

Question 3

production processes to add value can take many forms

Answer 3

• capital-intensive processes use a large proportion of land or machinery relative to other inputs, especially labour
• labour intensive processes use a large proportion of labour relative to other inputs, especially in relation to land or machinery

Question 4

primary sector

Answer 4

part of the economy engaged in extraction (such as minerals or oil) or production of raw materials (farming, fishing, forestry, raising livestock, and quarrying)

Question 5

secondary sector

Answer 5

part of the economy engaged in the production of finished goods (ie the manufacturing sector of the economy)

Question 6

tertiary sector

Answer 6

the part of the economy engaged in the delivery of services, such as banking, healthcare, and restaurants

Question 7

quaternary sector

Answer 7

the part of the economy engaged in the production, processing and transmission of information

Question 8

chain of production

Answer 8

is the steps through the different sectors that have to occur in order to raw materials into a consumer good that is marketed

Question 9

reasons for starting up a business or an enterprise

Answer 9

• rewards
• independence
• necessity
• challenge
• interest
• finding a gap
• sharing an idea

Question 10

steps for start ups

Answer 10

1. Organising the basics
2. Researching the market
3. Planning the business
4. Establishing legal requirements
5. Raising the finance
6. Testing the market

Question 11

two features that are common to all successful start ups

Answer 11

• the business idea
• planning

Question 12

what does the business idea refer to

Answer 12

to the fundamental activity that the business will do, whether it is something basic (such as cleaning) or something more sophisticated (manufacturing)
can be market driven - determined by the needs or product - or service driven, which means that in some sense the business must convince others that the product or service is worth purchasing

Question 13

reasons why start ups fail

Answer 13

• organization (poor location, unreliable supplies, business structures failed)
• market research (poor market research, inappropriate target market, test was too optimistic, weak channels of communication)
• business plan (plan did not convince, goals were too vague or contradictory)
• legal requirements (labour laws were not addressed, difficult registration, tax obligations not addressed)
• finance (accounts not kept properly, raising start up capital was too difficult, raising medium term to long term finance was difficult
• the market (launch failed, pilot was inconclusive, product failed to inspire)