Nature of Business

Question 1

What is purpose of Research and Development

Answer 1

Creation of new products (invention) and improvement of existing ones (innovation)

Question 2

What is a person who transforms their ideas into a new business

Answer 2

Entrepreneur

Question 3

What is quality of life

Answer 3

Well being of an individual, and is a combination of

material and non-material benefits.

Question 4

Business purpose

Answer 4

Provide goods and services to satisfy wants and needs

Question 5

Three benefits of business to economy

Answer 5

Provide employment
improves quality of life
provides income for owner

Question 6

Functions of business

Answer 6

Choice
Profit
Incomes
Entrepreneur and risk
Wealth Creation in economy
Quality of life

Question 7

Main ways of classifying business

Answer 7

geographical spread
Industry sector
Legal structure
Size

Question 8

Types of geographical spread

Answer 8

Local
National
Transnational
Global

Question 9

Types of industry

Answer 9

Primary
Secondary
Tertiary (quaternary, quinary)

Question 10

what is primary industry

Answer 10

Deals with raw materials e.g. mining/fishing

Question 11

What is secondary industry

Answer 11

Businesses that take output of firms in primary industry and produce into finished/semi finished goods/services e.g. manufacturing

Question 12

What is tertiary industry

Answer 12

Provides a service

Question 13

What is Quaternary industry

Answer 13

Service that involves transfer and processing of information

Question 14

What is Quinary industry

Answer 14

Services that have traditionally been performed at home

Question 15

Types of legal structure

Answer 15

Sole trader
partnership
private company
public company

Question 16

What is incorporated business

Answer 16

private/public company. business is separate legal entity limited liability

Question 17

What is unincorporated business

Answer 17

Sole trader/partnership business has unlimited liability

Question 18

How many people in most partnerships

Answer 18

2-20

Question 19

Difference between private and public company

Answer 19

Public is listed on stock exchange private is not

Question 20

Reasons for choice of legal structure

Answer 20

size of business
ownership structure
finance

Question 21

different sizes of business

Answer 21

micro
small
medium
large

Question 22

number of employees for each business

Answer 22

micro 5
small 5-20
medium 20-199
large 200+

Question 23

external influences in business environment

Answer 23

Financial 
Government
Economic
Legal
Social
Political
markets 
competitive situation

Question 24

internal influences in business environment

Answer 24

Product
location
management
resource management
stakeholders
business culture

Question 25

Location factors

Answer 25

visibility proximity to suppliers proximity to customers cost

Question 26

Types of business resources

Answer 26

Human information physical financial

Question 27

management influences

Answer 27

business structure flatter or hierarchical

Question 28

Main stakeholders in business

Answer 28

``` Society employees managers shareholders customers environment ```

Question 29

Main stages of business life cycle

Answer 29

establishment growth maturity post-maturity

Question 30

Establishment stage features

Answer 30

``` sales are erratic generating positive cash flow high fixed cost failure rate high small employee number and customer base ```

Question 31

Growth stage features

Answer 31

expanding too rapidly business diversifying production costs decrease due to economies of scale

Question 32

difference between mergers and acquisitions

Answer 32

merger 2 businesses combine and acquisition one business acquires another

Question 33

Maturity features

Answer 33

business growth slows sales plateau costs need to be controlled business must avoid complacency

Question 34

Main outcomes of post-maturity stage

Answer 34

steady state-business continues decline-business fails renewal-increase in sales and profits

Question 35

Factors that contribute to business decline

Answer 35

Lack of management expertise | Lack of sufficient money

Question 36

Difference between voluntary and involuntary cessation

Answer 36

voluntary- business decides | involuntary- forced by other

Question 37

What happens when unincorporated business goes fails

Answer 37

Bankruptcy (voluntary or involuntary)

Question 38

What is bankruptcy

Answer 38

declaration business or person is unable to pay their debts

Question 39

What happens when company fails

Answer 39

placed in voluntary administration then if that fails placed into voluntary or involuntary cessation, then liquidation

Question 40

What is voluntary administration

Answer 40

When person takes over business with hope of saving the business

Question 41

What is liquidation

Answer 41

When business assets are turned into cash to pay back creditors

Question 42

what is product life cycle

Answer 42

intro growth maturity decline/product extension

Question 43

Types of business expansion

Answer 43

horizontal/vertical integration, diversification

Question 44

what is vertical integration

Answer 44

movement along supply chain | forward/backward

Question 45

what is horizontal integration

Answer 45

acquiring another business