2 - Business Activities

Question 0

What is the primary sector

Answer 0

They produce or extract raw materials for other businesses to use

E.g fishing,mining and farming

Question 1

What are the reasons why a business starts

Answer 1

1. To meet the needs of a particular target market
2. To be the decision maker
3. To exploit a gap in the market
4. They get an innovative idea to do something better
5. Ambition to start a business
6. To make peoples lives better
7. To make money

Question 2

What is the secondary sector

Answer 2

Manufactures products with raw materials

E.g car manufacturer, factories

Question 3

What is the tertiary sector

Answer 3

Provides a service for its customers

E.g retail,banking,travel,entertainment and education

Question 4

What are some of the changes in the external environment that can impact business activities and their potential consequences

Answer 4

New competitors - could drive away customers and sales from their business. If the new competitor has new and different products and promotional methods

If the competitor is a much larger business and is able to offer lower prices, the original business may cease trading as they are unable to compete.

Question 5

What are the other external factors that a business cannot control
( there are 5 )

Answer 5

• interests rates
• inflation
• the amount of products imported from abroad - import and export
• unemployment level
• exchange rate

Question 6

How do changes in regulations and subsequents effect businesses

Answer 6

• Laws such as the 24hour drinking license has a positive effect on some businesses allowing more sales. However if a competitor got the license first then the other business may suffer.
• another law such as minimum wage to employees which can make it harder for some businesses to pay employees which can lead to the business making some employees redundant
• another obstacle is taxation,VAT and business rates. If VAT increases all businesses are required to pass these extra costs on the customer. This could cause a reduction of customers

Question 7

How do changes in economy effect business consequences

Answer 7

• a downturn in economy means consumers have less to spend. For example in the ‘credit crunch’.
• when the economy is good, more customers have money to spend leading to more sales and less businesses closing down

Question 8

Reasons for a business failing

( 5 examples )

Answer 8

1. Poor management
2. No demand for product or service
3. Running costs are too high
4. Too much competition
5. Not enough profit made