chapter 1-5 enterprise

Question 1

SME

Answer 1

small and medium sized business
-less than 250 people
-turnover less than £50m

Question 2

primary sector

Answer 2

industries that are involved with the extraction or production of raw materials

Question 3

secondary sector

Answer 3

industry that produces finished product from raw materials

Question 4

tertiary sector

Answer 4

service sector of an economy

Question 5

business plan

Answer 5

a document that contains the objectives of a business, marketing plan, operation plans, and financial plans

Question 6

monopoly

Answer 6

-pure monopoly has 100% market share
-EU and UK consider anything with over 25% market share to be a monopoly

Question 7

oligopoly

Answer 7

many businesses but only a few dominate
-differentiated products with strong brand identity

Question 8

monopolistic competition

Answer 8

large number or small businesses
-some differentiation
-weak brand identity
-few barriers to entry
-low control over prices

Question 9

perfect competition

Answer 9

large number of similarly sized businesses
-price takers
-homogenous goods
-equal technology and all customers have the same information

Question 10

cartel

Answer 10

when businesses in an oligopoly collude together to raise prises together

Question 11

price maker

Answer 11

a firm with the power to set prices without worrying about competitors prices

Question 12

critical mass

Answer 12

a market segment is big enough to make the productions of a products worthwhile

Question 13

market equilibrium

Answer 13

when the demand and supply curve intersect

Question 14

normal goods

Answer 14

positive YED
YED between 0 and 1

Question 15

inferior goods

Answer 15

they have a negative income elasticity
YED < 0

Question 16

luxury goods

Answer 16

positive elastic YED
YED > 1

Question 17

sample

Answer 17

small group that represents a wider market

Question 18

the consumer rights act

Answer 18

-all goods must be satisfactory quality
-fit for purpose
-match description

services must be
-reasonable price
-within reasonable time
-reasonable care and skill

Question 19

ombudsman

Answer 19

they will investigate a dispute and make a final decision

Question 20

the competition and markets authority

Answer 20

set up to make sure that the market works for the consumer and investigate monopolies

Question 21

what are the 5 parts of a business plan

Answer 21

• overview
• market plan
• operation plan
• HR plan
• financial plan

Question 22

3 types of market segmentation

Answer 22

demographic, philographic, geographic

Question 23

define the law of demand

Answer 23

as price increases demand decreases

Question 24

4 consumer protection laws

Answer 24

• consumer rights act 2015
• consumer credit act
• consumer protection from unfair trading regulations
• consumer contracts

Question 25

consumer rights act

Answer 25

law covering the purchase of goods, services and digital content. Every time a consumer buys a product or a service, they make a ‘contract’ with the retailer. The Consumer Rights Act regulates this contract (agreement). It states that all goods must be of satisfactory quality, fit for the purpose for which they were bought and must correspond with any description given.

Question 26

consumer credit act

Answer 26

controls the way that businesses lending money operate. These laws require the creditor (lender) to give certain key information to the debtor (borrower) before the contract is made including the interest rate, how much the repayments will be and the cancellation rights of the debtor. Credit companies have to publish a figure known as the Annual Percentage Rate (APR).

Question 27

consumer protection from unfair trading regulation

Answer 27

makes it a criminal offence for businesses to engage in unfair business practices. such as making untrue statements about a product or service, using aggressive sales techniques such as harassment or misleading consumers about the price of a product or service

Question 28

consumer contracts

Answer 28

These help protect consumers who buy over the phone or online. These are distance sales, which mean that there was no face to face contact at the time of purchase. If businesses break these regulations then the consumer is not bound by the purchase contract

Question 29

3 consumer protection bodies

Answer 29

- the ombudsman - trading standards departments - the competition and market authority (CMA)

Question 30

the ombudsman

Answer 30

Ombudsman services are available for various industries and offer complaints procedures for dissatisfied customers.

Question 31

trading standards departments

Answer 31

all local authorities have a Trading Standards department. The department is responsible for checking that local businesses are complying with the various trading laws e.g. Consumer Protection from Unfair Trading Regulations 2008. Trading Standards officers visit businesses and carry out spot checks. They investigate whether goods are correctly described, priced clearly and sold in the correct quantities

Question 32

the CMA

Answer 32

the CMA carries out investigations into various markets such as the groceries market and the energy market. The purpose of these investigations is to ensure that the businesses operating in these markets are not engaging in any ‘anticompetitive business practices’ that restrict competition within the market

Question 33

Advantages of a sole trader

Answer 33

- keeps all profits - easy to set up - full control - flexible work life

Question 34

Disadvantages of a sole trader

Answer 34

- unlimited liability - harder to raise finance - heavy workload - limited skills

Question 35

Advantages of a partnership

Answer 35

- more capital available - shared workload - wide range of skills - simple to set up - better decision making

Question 36

Disadvantages of a partnership

Answer 36

- unlimited liability - profit sharing - risk of conflict - Slower decision making

Question 37

Advantages of a limited company

Answer 37

- limited liability - separate legal identity - Greater access to finance

Question 38

Disadvantages of a limited company

Answer 38

- complex set up - financial information made public - profit sharing - slower decision making - cooperate tax