Revision

Question 1

Evaluate the importance of detailed planning in reducing start up risks


Answer 1

• Cut cost of material
• Less issue of lanch, no manfantion
• Planning reduces risk

Question 2

Source of finances to cover start-up cost


Answer 2

• Bank loans
• Individual investors called venture capital
• Parent (may not have to pay back )

Question 3

Venture

Answer 3

project/ business

Question 4

Role of a venture capitalist

Answer 4

Provide capital, provide mentoring and support - in return of money back in form of royalties.

Question 5

Legislation


Answer 5

These are the rules or laws made by the government. These laws set guidelines and regulations for how individuals, businesses, and organizations must act in society. (such as employment, trade, taxes, and financial regulation)

Question 6

Interest is

Answer 6

This is the extra money you pay when you borrow money or the extra money you earn when you save money. It’s usually a percentage of the amount.

Question 7

The three factors that are most likely to affect interest rates are:

Answer 7

• Changes to exchange rate: Exchange rates can influence monetary policy and interest rates.
• Changes to inflation: Central banks adjust interest rates to control inflation.
• Changes to legislation: New laws can directly or indirectly influence financial markets.

Question 8

How to calculate the interest rate


Answer 8

Interest Rate=( Principal Amount Borrowed/Interest )×100

Question 9

Entrepreneurial qualities

Answer 9

Creativity
Risk taking
Good decision making
Passion
Planning
Open minded
Knowledge

Question 10

What is a venture capitalist?


Answer 10

Investor

Question 11

What is in dependence? 


Answer 11

Being your own boss

Question 12

What is financial risk?


Answer 12

The possibility of losing money or not achieving expected financial returns.

Question 13

What is a gap in the market?

Answer 13

Missing product or service that is yet to be made ( + no competition)

Question 14

Explain the difference between a good and a service.


Answer 14

Goods are tangible and services are intangible.

Question 15

Is a sport package a product or a service

Answer 15

A service

Question 16

Rewards

Answer 16

• Take holidays at any time
• Sense of satisfaction
• Flexibility
• To be able to work from home
• Learn about business
• Work-life balance

Question 17

Why new business ideas come about:


Answer 17

• Changes in technology
• Changes in what consumers want
• Products and services becoming obsolete

Question 18

How new business ideas come about:


Answer 18

• Original ideas
• Adapting existing products/services/ideas

Question 19

A service


Answer 19

is an act that a business person carries out for you in exchange for money

Question 20

A product


Answer 20

is anything that is capable of satisfying customer needs

Question 21

Invention


Answer 21

Creating something from scratch (made by yourself).

Question 22

Innovation


Answer 22

Improving pre- existing products.

Question 23

Obsolete 


Answer 23

a product or service that is no longer used or that is out of date

Question 24

Original ideas 


Answer 24

ideas that have not been used before to put a product or service into production

Question 25

The impact of risk and reward on business activity:


Answer 25

* Risk: business failure, financial loss, lack of security * Reward: business success, profit, independence

Question 26

An entrepreneur


Answer 26

a person who is prepared to take a risk in the hope of gaining a reward

Question 27

Business risk


Answer 27

risk that may lead to failure to achieve the goals of the organisation, for example to not make a profit

Question 28

Business failure


Answer 28

when a business ceases to trade or when a business does not trade in a profitable way or when a business makes a terrible decision.

Question 29

Risks


Answer 29

Cyber attacks Economic problems Poor reputation Employment laws Change in tastes and trends Cash flow problems Natural disasters Failure to plan Staff training Operational risks Staff reliability Commercial risks

Question 30

The role of business enterprise and the purpose of business activity:


Answer 30

*To produce goods or services * To meet customer needs * To add value: convenience, branding, quality, design, unique selling points

Question 31

Explain one reason why new business ideas come about.


Answer 31

Consumer want something new -> products may not meet customers need -> gap in market Change in technology -> new products -> look to create that new products

Question 32

The role of entrepreneurship:


Answer 32

An entrepreneur: organises resources, makes business decisions, takes risks

Question 33

Explain one way an entrepreneur might identify a new business idea.

Answer 33

Original idea -> knowledge of market-> no competition Innovation -> improve product -> interested customers

Question 34

What are the five things that businesses can compete on?

Answer 34

Price, quality, location, product range and customer service

Question 35

What does 'margin of safety' mean?

Answer 35

The number of sales a business can lose before it reaches its break-even point

Question 36

What does 'break even level of output' mean?


Answer 36

The number of sales the business needs to make to not make a profit or loss

Question 37

What is the break-even formula?

Answer 37

Break even = Total fixed costs / (Selling price per unit - variable cost per unit)

Question 38

Name the five non-financial objectives


Answer 38

Social objectives, personal satisfaction, challenge, independence and control

Question 39

What is the formula for working out interest on loans?


Answer 39

Interest in % = ((total repayment - borrowed amount) / borrowed amount) x 100

Question 40

What is interest?

Answer 40

The reward for saving, or the cost of borrowing money

Question 41

What is the profit formula?

Answer 41

Profit = Revenue - costs

Question 42

What is the 'total variable cost' formula?


Answer 42

Total variable costs = Variable cost x quantity made

Question 43

Define revenue


Answer 43

Money received from sales

Question 44

Define variable costs

Answer 44

Costs that do change with output e.g. raw materials

Question 45

Name the five financial objectives


Answer 45

Survival, profit, sales, market share, financial security

Question 46

What is the 'total cost' formula?


Answer 46

Total costs = Total fixed costs + Total variable costs (TC = TFC + TVC)

Question 47

What is the revenue formula?


Answer 47

Revenue = Sales price x quantity

Question 48

Define fixed costs


Answer 48

Costs that do not change with output e.g. rent

Question 49

Differents between goods and products

Answer 49

Goods" specifically refers to tangible items or merchandise, while "products" can encompass a broader range, including both tangible and intangible items