Paper 1 _Summer 2023 Flashcards
IGCSE (73 cards)
1
Q
Entrepreneur
A
An individual who creates and manages a business, taking on financial risks in the hope of profit.
2
Q
Market Research
A
The process of gathering, analysing, and interpreting information about a market.
3
Q
Primary Research
A
Collecting new data directly from sources (e.g., surveys, interviews).
4
Q
Secondary Research
A
Analyzing existing data that has already been collected (e.g., reports, studies).
5
Q
Market Segmentation
A
Dividing a market into distinct groups of buyers with different needs or characteristics.
6
Q
Stakeholders
A
Individuals or groups who have an interest in the business activities, such as owners, employees, customers, suppliers, and the community
7
Q
Explain one way the internet may affect where a small business chooses to locate
A
The internet allows small businesses to operate online, reducing the need for a physical storefront. This means they can choose locations with lower rent costs, as they don’t rely on foot traffic.
For example, an online retailer can set up in a less expensive area while reaching customers globally through their website
8
Q
Explain one advantage to a small business of meeting its legal obligations
A
Meeting legal obligations helps a small business avoid fines and legal trouble. It also builds trust with customers and employees, showing that the business is responsible and trustworthy.
9
Q
Explain one advantage to a small business from using retained profit as a source of finance.
A
One advantage of using retained profit is that the business does not have to borrow money and pay interest. This means the business can use its own earnings to grow with-out having any debt, making it financially safer
10
Q
Fill in the blank: The primary purpose of a business is to ________.
A
make a profit
11
Q
What are the four main factors of production?
A
Land, labor, capital, and entrepreneurship
12
Q
Which of the following is NOT a type of business ownership? (A) Sole trader (B) Partnership (C) Corporation (D) Franchise
A
D) Franchise
13
Q
Short answer: Name one advantage of being a sole trader.
A
Complete control over the business
14
Q
What is the term for the amount of money a business makes after all expenses are subtracted?
A
Profit
15
Q
True or False: A partnership can have an unlimited number of partners.
A
False
16
Q
What is meant by ‘entrepreneurship’?
A
The process of starting and running a new business
17
Q
Multiple choice: Which of the following is a characteristic of a corporation? (A) Limited liability (B) Unlimited liability (C) Sole ownership (D) Simple taxation
A
A) Limited liability
18
Q
Revenue
A
The total income generated from sales of goods or services.
19
Q
Costs
A
Expenses incurred in the production of goods or services (can be fixed or variable).
20
Q
Profit
A
Financial gain when revenue exceeds costs.
21
Q
Break-even Point
A
The level of sales at which total revenue equals total costs, resulting in no profit or loss.
22
Q
Cash Flow
A
The movement of money in and out of a business.
23
Q
Cash Flow Forecast
A
A projection of future cash inflows and outflows to predict whether a business will have enough cash to operate.
24
Q
Marketing Mix (4 Ps)
A
Product, Price, Place, Promotion - the elements used to meet customer needs and achieve business objectives.
25
Branding
The process of creating a unique name, image, or identity for a product in consumers' minds.
26
Business Plan
A formal document outlining the goals, strategies, target market, and financial forecasts of a business.
27
Quality Control
Processes to ensure products meet certain standards and specifications.
28
Lean Production
Techniques aimed at reducing waste and improving efficiency in the production process.
29
Stakeholders
Individuals or groups who have an interest in the business activities, such as owners, employees, customers, suppliers, and the community.
30
SWOT Analysis
A strategic planning tool that identifies strengths, weaknesses, opportunities, and threats.
31
PESTLE Analysis
A framework for analysing external factors affecting a business (Political, Economic, Social, Technological, Legal, Environmental).
32
Gross Profit Margin
(Gross Profit / Revenue) x 100
33
Net Profit Margin
(Net Profit / Revenue) x 100
34
Current Ratio
Current Assets / Current Liabilities
35
Return on Capital Employed (ROCE)
(Net Profit / Capital Employed) x 100
36
Competitive Advantage
Unique attributes that allow a business to outperform its competitors.
37
Motivation
Factors that drive individuals to work hard and achieve goals.
38
Economies of Scale
Cost savings that businesses achieve when they produce goods in large quantities, making each unit cheaper to produce.
## Footnote
Internal Economies of Scale: Savings from within the company (e.g., bulk buying, specialized employees, efficient production techniques). External Economies of Scale: Cost savings that result from external factors (e.g., industry growth, improved infrastructure, supplier networks).
39
Advantage of Private Limited Company
Limited Liability: Shareholders are only liable for the company's debts up to the amount they have invested. Personal assets are protected from business losses, reducing financial risk for owners.
40
Explain one way the internet may affect where a small business chooses to locate.
The internet allows small businesses to operate online, reducing the need for a physical storefront. This means they can choose locations with lower rent costs, as they don't rely on foot traffic.
## Footnote
For example, an online retailer can set up in a less expensive area while reaching customers globally through their website.
41
Explain one way a small business could become more competitive.
One way a small business could become more competitive is by improving customer service. By providing exceptional service, the business can build strong customer relationships, encourage repeat business, and generate positive word-of-mouth.
## Footnote
For example, offering personalized support and quick responses to inquiries can set the business apart from competitors.
42
Explain one advantage to a small business of meeting its legal obligations.
Meeting legal obligations helps a small business avoid fines and legal trouble. It also builds trust with customers and employees, showing that the business is responsible and trustworthy.
## Footnote
For example, complying with health and safety regulations shows the business cares about everyone's well-being.
43
Explain one disadvantage to a small business of not paying its employees on time.
One disadvantage to a small business of not paying its employees on time is decreased employee morale and motivation. When employees do not receive their wages on time, it can lead to dissatisfaction, decreased productivity, and a higher likelihood of staff turnover.
44
Explain one advantage to a small business from using retained profit as a source of finance.
One advantage of using retained profit is that the business does not have to borrow money and pay interest. This means the business can use its own earnings to grow without having any debt, making it financially safer.
45
Explain how adapting existing products can help a small business develop new business ideas.
Adapting existing products can help a small business develop new business ideas by improving features, targeting new markets, or addressing customer feedback.
## Footnote
For example, a small bakery might add new flavours to its existing line of cupcakes, attracting more customers and boosting revenue.
46
Multiple choice: Which one of the following describes a minimum wage?
A. Fixed amount per year and paid monthly
B. The lowest amount a business can legally pay its employees
C. Payment made to an employee for working additional hours
D. Payment made to an employee for reaching a target
| Select one
B. The lowest amount a business can legally pay its employees
47
Multiple choice: Which one of the following describes the cash cow category in the Boston matrix?
A. High market growth, high market share
B. High market growth, low market share
C. Low market growth, high market share
D. Low market growth, low market share
| Select one
C. Low market growth, high market share.
48
Multiple choice: Which one of the following would give a business a negative cash flow?
A. Cash inflow is greater than cash outflow
B. Costs are greater than profits
C. Profits are greater than costs
D. Cash outflow is greater than cash inflow
| Select one
D. Cash outflow is greater than cash inflow.
49
Multiple choice: Which one of the following is a recruitment document that outlines the tasks and responsibilities of a job?
A. Job description;
B. Person specification;
C. Application form;
D. Curriculum vitae
| Select one
A. Job description.
50
Aude Rose buys 150 metres of wrapping paper from London, England, every week, at a cost of £0.46 per metre. In October 2022 the exchange rate was £1 = €1.15. Which one of the following is the total cost, in euros, of buying a four-week supply of wrapping paper?
A. €79.35
B. €276.00
C. €317.40
D. €396.75
| Select one
C. €317.40.
51
Which one of the following is an impact of a decrease in interest rates?
A. Businesses will borrow less money
B. Customers will borrow less money
C. Customers will borrow more money
D. Repayments on loans should go up
| Select one
C. Customers will borrow more money.
52
Aude Rose provides flowers for large events. The most popular is a selection of traditional flowers selling for £65. The cost of making this selection of flowers is £42.
Which one of the following is the markup for a selection of traditional flowers?
A. 54.76%
B. 64.62%
C. 182.61%
D. 282.61%
| Select one
B. 64.62%.
53
Which one of the following could a small business use to add value?
A. Locate in a convenient place
B. Pay a higher rate of taxation
C. Reduce its cash inflows
D. Use a long-term source of finance
| Select one
A. Locate in a convenient place.
54
What is retained profit?
A. Profit that is distributed to shareholders as dividends
B. Profit that is kept in the business for future use
C. Profit that is paid to employees as bonuses
D. Profit that is used to pay off loans
| Select one
B. Profit that is kept in the business for future use.
55
Why might a business choose to use retained profit instead of borrowing money?
A. To avoid paying interest
B. To increase its liabilities
C. To reduce its assets
D. To decrease its equity
| Select one
A. To avoid paying interest.
56
Which of the following is a potential disadvantage of using retained profit?
A. It increases the business's debt
B. It reduces the amount available for dividends
C. It requires the business to pay interest
D. It decreases the business's retained earnings
| Select one
B. It reduces the amount available for dividends.
57
Retained profit is a form of which type of finance?
A. External finance
B. Internal finance
C. Short-term finance
D. Long-term finance
| Select one
B. Internal finance.
58
How is retained profit calculated?
A. Total revenue minus total costs
B. Net profit minus dividends paid
C. Gross profit minus operating expenses
D. Total assets minus total liabilities
| Select one
B. Net profit minus dividends paid.
59
What is one primary benefit of adapting existing products for a small business?
A. Reducing production costs
B. Entering new markets
C. Decreasing employee wages
D. Lowering the quality of products
| Select one
B. Entering new markets.
60
How can adapting existing products help a business attract new customers?
A. By keeping prices high
B. By offering outdated products
C. By meeting changing customer needs and preferences
D. By reducing advertising efforts
| Select one
C. By meeting changing customer needs and preferences.
61
Which of the following is a way to adapt an existing product?
A. Lowering the price without changing the product
B. Improving product features based on customer feedback
C. Reducing the quality of materials used
D. Keeping the product exactly the same
| Select one
B. Improving product features based on customer feedback.
62
Why might a business choose to adapt an existing product rather than develop a completely new one?
A. It can be more cost-effective and faster to implement
B. It avoids any changes to the production process
C. It requires no market research
D. It guarantees immediate success
| Select one
A. It can be more cost-effective and faster to implement.
63
Adapting existing products can help a business stay competitive by:
A. Ignoring market trends
B. Keeping the product unchanged for years
C. Continuously improving and innovating based on customer needs
D. Reducing customer service efforts
| Select one
C. Continuously improving and innovating based on customer needs.
64
Why is employee training important for maintaining competitiveness?
A. It increases employee turnover
B. It has no impact on business performance
C. It enhances employee skills and productivity, leading to better customer service and innovation
D. It decreases operational efficiency
| Select one
C. It enhances employee skills and productivity, leading to better customer service and innovation.
65
How can a small business utilize partnerships to become more competitive?
A. By operating in isolation
B. By collaborating with other businesses to share resources and access new markets
C. By avoiding any form of collaboration
D. By reducing product offerings
| Select one
B. By collaborating with other businesses to share resources and access new markets.
66
Which of the following strategies can help a small business become more competitive?
A. Reducing product quality
B. Ignoring customer feedback
C. Offering unique products or services
D. Increasing prices without adding value
| Select one
C. Offering unique products or services.
67
How can improving customer service make a small business more competitive?
A. By increasing operational costs
B. By creating a loyal customer base and enhancing customer satisfaction
C. By reducing the number of employees needed
D. By focusing less on product quality
| Select one
B. By creating a loyal customer base and enhancing customer satisfaction.
68
What role does innovation play in increasing a small business's competitiveness?
A. It helps maintain the status quo
B. It allows the business to offer outdated products
C. It enables the business to introduce new and improved products or services that meet changing customer needs
D. It decreases the business's market share
| Select one
C. It enables the business to introduce new and improved products or services that meet changing customer needs.
69
Which of the following is a benefit of using social media for a small business?
A. Decreasing visibility to customers
B. Increasing marketing costs significantly
C. Reaching a larger audience and engaging with customers directly
D. Limiting customer interaction
| Select one
C. Reaching a larger audience and engaging with customers directly.
70
How can small business use market researches to become more competitive?
A. By copying competitors without understanding the market
B. By identifying customer needs and preferences, and tailoring products or ser-vices to meet those needs
C. By ignoring trends and focusing on internal processes
D. By reducing the quality of products to save costs
| Select one
B. By identifying customer needs and preferences, and tailoring products or services to meet those needs.
71
How can a small business achieve cost leadership to gain a competitive advantage?
A. By raising prices to premium levels
B. By minimizing operational costs and offering products at lower prices
C. By reducing customer service efforts
D. By maintaining high inventory levels
| Select one
B. By minimizing operational costs and offering products at lower prices.
72
Which two of the following are examples of customer needs?
A. Choice
B. Profit
C. Quality
D. Risk
E. Taxation
| Select two
A. Choice
C. Quality
73
Which two of the following are roles of an entrepreneur?
A. Going to university
B. Organising resources
C. Personal satisfaction
D. Taking risks
E. To be a sole trader
| Select two
B. Organising resources
D. Taking risks
