Introduction to Business

Question 1

entrepeneur

Answer 1

a risk taker who sets up a business

Question 2

enterprise

Answer 2

The process by which new businesses are formed in order to offer products and services in a market

Question 3

what are the factors of production

Answer 3

land
labour
capital
enterprise

Question 4

what is land in factors of production

Answer 4

natural resources e.g minerals+fields

Question 5

what is labour in factors of production

Answer 5

all human resources available

Question 6

what is capital in factors of production

Answer 6

buildings
machinery+tools
not money

Question 7

what is the enterprise in factors of production

Answer 7

entrepreneur who organises the three other factors

Question 8

how is bread produced using production factors

Answer 8

land-grow wheat
labour-plant wheat
capital-combine harvester
enterprise-owner of farm/bakery making a profit

Question 9

what will happen if there is a shortage of a particular factor of production

Answer 9

price will rise

have to make up for the shortages- increase costs

Question 10

benefits of entrepreneurship to the economy

Answer 10

create jobs

encourage innovation

Question 11

sectors

Answer 11

primary-raw materials
seconding-production+manufacturing
tertiary-service output

Question 12

third sector

Answer 12

want to achieve social goals

e.g charities, co-operatives

Question 13

sole trader

Answer 13

business owned and controlled by 1 person

employs multiple people

Question 14

advantages of sole trader

Answer 14

keep all profits

control over decisions

Question 15

disadvantages of a sole trade

Answer 15

unlimited liability

hard to raise capital for expansion

Question 16

partnership

Answer 16

two or more people run a business

Question 17

what is a deed of partnership

Answer 17

legal document governs running of the business and sets out matters e.g duties of each partner

Question 18

advantages of a partnership

Answer 18

more capitals

more skills

Question 19

disadvantage of partnership

Answer 19

share profits

slower decision making

Question 20

limited liability partnership

Answer 20

legal partnership where all partners have limited liability

Question 21

unlimited liability

Answer 21

personally responsible for all the debts

Question 22

plc

Answer 22

type of limited company where shares are sold on the stock exchange

Question 23

ltd

Answer 23

type of limited company where shares cannot be publicly trade

Question 24

limited company

Answer 24

company which has limited liability

Question 25

limited liability

Answer 25

not personally responsible for debt

Question 26

franchise

Answer 26

business (franchisor) authorizes the use of their brand name to individuals setting up their own business

Question 27

advantages of a franchise

Answer 27

franchiser can charge high prices for supplies | franchisee gets free training+less risk

Question 28

royalty payment

Answer 28

payment from franchisee to franchisor on percentage of profits made by franchisee

Question 29

what factors affect the decision to franchise a business

Answer 29

time money attitude toward risk franchise are long term investments no immediate reward

Question 30

co-operative

Answer 30

business own and run my its members | profits shared between members>shareholders

Question 31

advantages of a co-operative

Answer 31

work toward a common goals,motivated | high quality service

Question 32

disadvantages of co-operatives

Answer 32

slower decisions-more member involved | investors put off by limited returns

Question 33

what factors affect the size of a business

Answer 33

market size nature of product (standardized bigger EOS) Personal preference (may not want to expand) ability to access resources

Question 34

what factors determine the size of business

Answer 34

employees offices/shops/factories stock market value capital employed

Question 35

advantages and disadvantages of a large business to employees

Answer 35

job security large hr department co-ordination difficult feeling detached from those who make the decisions

Question 36

advantages and disadvantages of a large business to suppliers

Answer 36

large orders | over dependence on large customers

Question 37

advantages and disadvantages of a large business on shareholders

Answer 37

more market power,higher prices, dividends | managerial EOS

Question 38

advantages and disadvantages of a large business on customers

Answer 38

EOS-lower prices | DOS-higher prices

Question 39

organic growth

Answer 39

growth from within the business

Question 40

joint venture

Answer 40

separate entity created by two or more parties involving shared ownership, returns+risks

Question 41

how is a joint venture different from a merger

Answer 41

no change of ownership involved

Question 42

why would a business want to undertake a joint venture

Answer 42

share cost burden risk spreading share strengths gain access to other markets

Question 43

strategic alliance

Answer 43

formal relationship between two or more companies in pursuit of a common goal

Question 44

drawback of using joint ventures

Answer 44

clash in organizational cultures objectives of each partner might change inbalance of resources/expertise, one has more power than other