Chapter 3 Business Planning

Question 1

Planning

Answer 1

Planning is the process of formulating objectives and determining how to achieve them.

Question 2

Resource

Answer 2

A resource is any person or product that will help in the production of a good or service.

Question 3

Human Resources

Answer 3

Human resources are the employees who provide their time, energy, skills and effort.

Question 4

Physical resources

Answer 4

Physical resources refer to equipment such as a computer, cash register, machinery, motor vehicle, of ce equipment and stock.

Question 5

Asset

Answer 5

An asset is any item of value owned by the business.

Question 6

Establishment cost

Answer 6

Establishment costs include those costs involved in setting up the business.

Question 7

Operating cost

Answer 7

Operating costs include those costs involved in the ordinary day-to-day running of the business.

Question 8

Equity

Answer 8

Equity is the funds contributed by the owner(s) of a business to commence and build the business.

Question 9

Debt

Answer 9

Debt is the funds provided by sources outside the business, which must be paid back over time, with interest.

Question 10

Working Capital

Answer 10

Working capital is the funds available for the short-term nancial commitments of a business.

Question 11

Bank overdraft

Answer 11

With a bank overdraft, the bank allows a business or individual to overdraw their account up to an agreed limit for a speci ed time, to help overcome a temporary cash shortfall.

Question 12

Mortgage

Answer 12

A mortgage is a loan secured by the property of the borrower (the business).

Question 13

Leasing

Answer 13

Leasing is a way of nancing the purchase of assets without a large initial capital outlay.

Question 14

Lessee

Answer 14

The lessee is the person or business to whom a lease is granted.

Question 15

Lessor

Answer 15

A lessor is the owner of an asset that is leased under an agreement to the lessee.

Question 16

Marketing

Answer 16

Marketing is ‘the process of planning and executing the conception, pricing, promotion and distribution
of ideas, goods and services to create exchanges that satisfy individual and organisational objectives’ (American Marketing Association).

Question 17

Marketing objectives

Answer 17

A marketing objective is a statement of what is to be achieved through the marketing activities.

Question 18

Target market

Answer 18

The target market is the group of customers to which the business intends to sell its product.

Question 19

Marketing strategies

Answer 19

Marketing strategies are actions undertaken to achieve the business’s marketing objectives.

Question 20

Marketing mix

Answer 20

Marketing mix refers to the combination of the four elements of marketing, the four Ps — product, price, promotion and place — that make up the marketing strategy.

Question 21

Marketing management

Answer 21

Marketing management is the process of monitoring and modifying the marketing plan.

Question 22

Enlightened self interest

Answer 22

Enlightened self-interest is the belief that a business ultimately helps itself when it helps to solve society’s problems.

Question 23

Triple bottom line

Answer 23

Triple bottom line refers to the economic, environmental and social performance of a business.

Question 24

business plan

Answer 24

A business plan is a written statement of the business’s goals and objectives, and the steps to be taken to achieve them.