1.1 Introduction to business management

Question 1

Business plan

Answer 1

document hat sets out the business idea, its goal and objectives and other details of how the business will operate (marketing, operations and finance)
crucial part of an attempt to raise external sources of finance

Question 2

Businesses

Answer 2

organisations involved in the production of goods and/or the provision of services

Question 3

Consumers

Answer 3

the people or organisations who actually use a product

Question 4

Customers

Answer 4

the people or organisations that buy the product

Question 5

Entrepreneurs

Answer 5

owners or operators of an organisation who manage, organise and plan the other three factors of production
they are risk takers who exploit business opportunities in return for profits

Question 6

Intrapreneurship

Answer 6

the act of behaving as an entrepreneur but as an employee within a large business organisation. Intrapreneurs work in an entrepreneurial capacity, with authority to create innovative products or new processes for the organisation

Question 7

Needs

Answer 7

the basic necessities that a person must have to survive

Question 8

Primary sector

Answer 8

businesses involved in the cultivation or extraction of natural resources, e.g. farming, mining

Question 9

Product

Answer 9

refer to both goods and services. Goods are physical products, e.g. cars, books and food.

Question 10

Quaternary sector

Answer 10

a subcategory of the tertiary sector, where businesses are involved in intellectual, knowledge-based activities that generate and share information, e.g. information communications technology and research organisations

Question 11

Secondary sector

Answer 11

the section of the economy where business activity is concerned with the construction and manufacturing of product

Question 12

Sectoral change

Answer 12

a shift in the share of GPD and employment that is attributed to business sectors

Question 13

Tertiary sector

Answer 13

the section of the economy where business activity is concerned with the provision of services to customers

Question 14

Wants

Answer 14

people’s desires

Question 15

Factors of production

Answer 15

Land - natural resources
Labour - physical and mental efforts of people in production
Capital - all non-natural (manufactured) resources used in the production of other products, e.g. tools, machinery
Entrepreneurship - the management, organisation and planning of the other factor of production

Question 16

Reasons for starting up a business

Answer 16

Growth 
Earnings
Transference and inheritance
Challenge 
Autonomy 
Security 
Hobbies

Question 17

Step in the process of starting up a business

Answer 17

Write a business plan
Obtain start-up capital
Obtain business registration 
Open a business bank account 
Marketing

Question 18

Examples of start-up costs for a new business

Answer 18

Premises, e.g. purchase costs, mortgage deposit

Buildings, e.g. alterations,, fixtures and fittings and insurance costs

Capital equipment, e.g. office furniture, telephones, computers

Legal and professional fees, e.g. licenses, permits and copyright permission

Marketing costs, e.g. market research, advertising and promotional campaigns

Human resources, e.g. recruitment, induction and training costs

Question 19

Reasons of sectoral change

Answer 19

higher income
greater leaser time
greater focus on customer services