business

Question 1

What is Internal (Organic) Growth?

Answer 1

Business grows using its own resources, e.g., opening new stores, launching new products.

Benefits include full control and less risk, but drawbacks are slow growth and limited by resources/reputation.

Question 2

What are the benefits of External Growth?

Answer 2

Fast growth, reduces competition.

However, it can be expensive and carries a risk of culture clashes.

Question 3

Define Horizontal Integration.

Answer 3

Buying a business in the same industry and at the same stage of production. (Mergers & Takeovers)

Benefit includes increased market share and less competition, but it may face regulatory scrutiny.

Question 4

What is Vertical Integration?

Answer 4

Buying suppliers (backward) or distributors (forward).

Benefit is control over supply chain; drawback is complexity in management.

Question 5

What can cause businesses to change their aims and objectives?

Answer 5

Market conditions, growth, or new leadership.

Small businesses may focus on survival, while larger ones may focus on profit or social responsibility.

Question 6

What does Globalisation mean for businesses?

Answer 6

Businesses sell and operate internationally.

Benefits include a bigger market and lower costs, while drawbacks include exchange rate risks and cultural differences.

Question 7

How do ethical business practices affect a company?

Answer 7

Build trust and improve brand image.

However, they may increase costs and reduce short-term profits.

Question 8

What are the components of the design mix?

Answer 8

Function, aesthetics, and cost.

Question 9

List the stages of the product life cycle.

Answer 9

• Introduction
• Growth
• Maturity
• Decline

Question 10

What are Extension strategies?

Answer 10

Strategies to delay decline, e.g., new features, rebranding.

Question 11

What is Cost-plus pricing?

Answer 11

Add fixed markup to cost.

Guaranteed Profit Margin, Doesnt Consider Customer Demand

Question 12

What does Competitive pricing involve?

Answer 12

Pricing based on rivals.

Question 13

What is Penetration pricing?

Answer 13

Low price to enter market.

Attracts Customers but Product looks Low Quality

Question 14

What is Skimming pricing?

Answer 14

High price initially, lower later.

High Early Profits, Lose Customers as Price Falls

Question 15

What is Promotional pricing?

Answer 15

Temporary discounts to boost sales.

Question 16

What are some methods of promotion?

Answer 16

• Advertising
• Sponsorship
• Free samples
• Discounts
• Branding

Question 17

What is the importance of distribution in marketing?

Answer 17

Ensures product reaches target customers efficiently.

Question 18

Describe Job Production.

Answer 18

Making one-off/custom products; expensive but high quality.

Question 19

What is Batch Production?

Answer 19

Groups of similar products; flexible but slower.

Question 20

What characterizes Flow Production?

Answer 20

Continuous, mass production; cheap but less flexible.

Question 21

What is the role of good suppliers?

Answer 21

Ensure quality and timely delivery.

Question 22

What are the two main quality management strategies?

Answer 22

• Quality Control: Checking finished goods for faults
• Quality Assurance: Preventing faults during production

Question 23

What are the key steps in the sales process?

Answer 23

• Greeting
• Identifying needs
• Offering solutions
• Closing sale

Question 24

What is Gross Profit?

Answer 24

Sales revenue - cost of sales.

Question 25

Net Profit Calculation

Answer 25

Gross profit - other expenses.

Question 26

What is Gross Profit Margin?

Answer 26

(Gross profit ÷ Revenue) × 100.

Question 27

Net Profit Margin Calculation

Answer 27

(Net profit ÷ Revenue) × 100.

Question 28

How is Average Rate of Return calculated?

Answer 28

(Average annual profit ÷ initial investment) × 100.

Question 29

What factors should be used to judge business success?

Answer 29

Financial data and non-financial factors (e.g., customer satisfaction).

Question 30

What are the characteristics of a Tall organisational structure?

Answer 30

Many levels, narrow spans of control; clear chain of command.

Question 31

Describe a Flat organisational structure.

Answer 31

Few levels, wide spans of control; faster communication.

Question 32

What is a Matrix organisational structure?

Answer 32

Employees report to two managers (functional + project).

Question 33

What is the recruitment process?

Answer 33

Identify vacancy → job description → advertise → select → hire.

Question 34

What types of training exist?

Answer 34

* Induction: Introduce new staff * On-the-job: Learn while working * Off-the-job: Formal training courses

Question 35

What motivates employees financially?

Answer 35

Bonuses and pay rises.

Question 36

What are non-financial motivators?

Answer 36

Praise and flexible hours.

Question 37

Types of Business Ownership for Growing Businesses: Private Limited Companies (Ltd) Public Limited Companies (PLC)

Answer 37

Private Limited Companies (Ltd): Shares sold privately Public Limited Companies (PLC): Shares sold on the stock exchange.

Question 38

Internal is... External...

Answer 38

Internal: Retained profit, sale of assets. External: Loan capital, share capital, venture capital, crowdfunding.

Question 39

Retained profit:

Answer 39

Profit kept in the business instead of paid to owners. No interest. Might not have enough saved.

Question 40

Loan capital:

Answer 40

Borrowing money from the bank. Fixed repayments over time. Interest must be paid, risk of debt.

Question 41

Share capital

Answer 41

Selling shares to raise money. No repayments or interest. Owners may lose control (dilution).

Question 42

Venture capital:

Answer 42

Investment from outside specialists. Expertise and finance. Want a share of profits/control.

Question 43

Crowdfunding:

Answer 43

Raising money online from lots of small investors. Quick and public interest. May not raise enough; loss of business ideas.