Section 1- Business And Its Environment°°°°°°°°section 2- People In Organisations

Question 1

Consumer goods :

Answer 1

The physical and tangible goods sold to the general public - they include durable consumer goods, such as cars and washing machines; and non-durable goods, such as food, drinks and sweets that can only be used once (have a short life span)

Question 2

Consumer services

Answer 2

The non-tangible goods sold to the general public - they include hotel accommodation 🏩, insurance services and hair salons. This is when a business does something for their consumer (providing the service) in return for money in most cases

Question 3

Capital goods

Answer 3

The physical goods used by industry to aid in the production of other goods and services, such as machines and commercial vehicles.

Question 4

Creating value

Answer 4

Increasing the difference between the cost of purchasing the bought in materials and the price the finished goods are sold for

Question 5

Added value

Answer 5

The difference between the cost of purchasing bought-in materials and the price the finished goods are sold for.

Question 6

Opportunity cost

Answer 6

The benefit of the next desired option which is given up. This concept exists for all economic decision makers :consumers, businesses and government

Question 7

Entrepreneur 😎

Answer 7

Someone who takes the financial risk of starting and managing a new venture.

The characteristics of successful entrepreneurs is :innovation, commitment and self motivation, multiskilled, leadership skills, self confidence and ability to bounce back, and risk taking.

The challenges they face : identifying successful business opportunities, sourcing capital, determining location, competition and building a customer base.

Question 8

Social enterprise

Answer 8

a business with mainly social objectives that reinvest most of its profits into benefiting society (the community) rather than maximising returns to owners.

Their objectives are referred to as the triple bottom line : economic, social and environmental.

Common features include :

1. Directly produce g/s
2. have social aims & use ethical ways of achieving them
3. Need surplus /profit to survive as they cannot rely on donations as charities do

Question 9

Triple bottom line

Answer 9

The three objectives of social enterprises : economic, social and environmental.

💵 Economic refers to making a profit to reinvest back into the business and provide some to owners.
👬Social insinuates that they will provide jobs / support for locals, often disadvantaged communities.
🌄Environmental refers to protecting the environment and managing the business in a environmentally sustainable way.

Question 10

Primary sector business activity

Answer 10

Firms engaged in farming, fishing 🎣, oil extraction and all other industries that extract resources so that they can either be used or processed by other firms.

Question 11

Secondary sector business activity

Answer 11

Firms that manufacture and process products from natural resources, including computers, brewing, clothes - making and construction 🚧

Question 12

Tertiary sector business activities

Answer 12

Firms that provide services to consumers and other businesses, such as retailing, transport 🚘, insurance, banking, hotels 🏩, tourism and telecommunications

Question 13

Public ⛣ sector

Answer 13

Comprises of organisations accountable to and controlled by central / local government (the state and municipality )

Question 14

Private sector

Answer 14

Comprises of business owned and controlled by individuals / groups of individuals

Question 15

Mixed economy

Answer 15

Economic resources are owned and controlled by both the private and public ⛣ sectors. E. G South Africa 🌍

Question 16

Free-market economy

Answer 16

Economic resources are owned largely by the private sector with very little state intervention. E. G US

Question 17

Command economy

Answer 17

Economic resources are owned, planned and controlled by the the state. E. G North Korea

Question 18

Sole trader/proprietor

Answer 18

A business in which one person provides the permanent ♾ finance and, in return, has full 🌕 control of the business and is able to keep all the profits.

An advantage would be that it is easy to set up(no legal formalities) and a disadvantage is that it has unlimited liability (all of owners assets are potentially at risk)

Question 19

Business

Answer 19

Any organisation that uses resources to meet the needs and wants of customers by providing a product or service they demand

Question 20

Partnership ⚯

Answer 20

A business formed by 2 or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities.

An advantage s that partners may specialise in different areas of business management. A disadvantage is that profits are shared as well as there is unlimited liability.

Question 21

Limited liability

Answer 21

The only liability - or potential loss - a shareholder has if the company fails is the amount they invested into the company, not the total wealth of the shareholder

Question 22

Private limited company

Answer 22

A small to medium sized business that is owned by shareholders who are often members of the same family ; this company cannot sell shares to the general public.

An advantage is that shareholders have limited liability. A disadvantage is that capita cannot be raised by the sale of shares.

Question 23

Share

Answer 23

A certificate confirming part ownership of a company and entitling the shareholder owner to dividends and certain shareholder rights.

Question 24

Shareholder

Answer 24

A person / institution owning shares in a limited company (part ownership)

Question 25

Public ⛣ limited company

Answer 25

A limited company, often a large business, with the legal right to sell shares to the general public - share prices are quoted on the national stock exchange 💱. An advantage is continuity and a disadvantage is share prices are subject to fluctuation.

Question 26

Memorandum of association

Answer 26

This states the name of the company, the address of the head office 🏢 through which it can be contacted, the maximum share capital for which the company seeks authorisation and the declared aims of the business.

Question 27

Articles of association

Answer 27

The document covers the internals workings ⚒ and controls of the business - for example the names of directors and the procedures to be followed at the at meetings will be detailed.

Question 28

Cooperative

Answer 28

Very common form of ownership, especially in agriculture and retailing. All members can contribute to the running of the business, sharing the workload, responsibilities and decision-making, although in larger cooperatives some delegation to professional managers takes place. All members have one vote at important meetings and profits are equally shared. An advantage is buying bulk and a disadvantage is slow decision - making if all members are to be consulted on important issues.

Question 29

Franchise

Answer 29

A business that uses the name, logo and trading systems of an existing successful business e.g. Mc Donald's. An advantage is that there are fewer chances of new business failing as an established brand and product are being used. A disadvantage is that the initial franchise license fee can be expensive.

Question 30

Joint venture

Answer 30

2 or more businesses agree to work closely together on a particular project for mutual benefit and create a separate business division ➗ to do so. One of the reasons for having one is the costs and risks of a new business venture are shared - this is a major consideration when the cost of developing new products is rising rapidly. A problem of a joint venture is that the business failure of one of the partners would put the whole project at risk

Question 31

Holding company

Answer 31

A business organisation that owns and controls a number of separate businesses, but does not unite them into one unified company. Often, the separate business are in completely different markets, meaning that the holding companies have diverse interests

Question 32

Public cooperation

Answer 32

A business enterprise owned and controlled by the state - also known as nationalised industry. They usually do not have profit as a major objective. An advantage is that their finance raised mainly from the government and a disadvantage is that they have a tendency towards inefficiency due to lack of strick profits margins.

Question 33

Revenue

Answer 33

The total value of sales made by a business in a given period of time

Question 34

Capital employed

Answer 34

The total value of all long - term finance invested in the business

Question 35

Market capitalisation and formula

Answer 35

The total value of a company's issued shares. This can be used only for business who have shares quoted on the stock exchange 💱. Market capitalisation = current share price ×total number of shares issued

Question 36

Market share and formula

Answer 36

Sales of the business as a proportion of the total market's sales. Market share = ( total sales of business /total sales of industry) ×100

Question 37

Internal growth

Answer 37

Expansion of a business by means of opening new branches, shops or factories (also known as organic growth)

Question 38

Mission statement

Answer 38

°A statement of the business's core aims, phrased in a manner to motivate employees and to stimulate the interest of outside groups. They are an attempt to condense the central purpose of the business's existence in one statement. They are not concerned with specific or quantifiable goals.

Question 39

Corporate social responsibility

Answer 39

The concept applies to those businesses that consider the interests of society by taking responsibility for the impact their decisions and activities on customers, employees and the environment. For example businesses that refuse to stock goods that have been tested on animals

Question 40

Management by objectives

Answer 40

A method of co-ordinating and motivating all staff in an organisation by dividing its overall aim into specific targets for each department 🏬, manager and employee. E. G the hierarchy of objectives starting with individual targets, then departmental, divisional, corporate objectives and at the top the aim of the business

Question 41

Ethical code (code of conduct)

Answer 41

A document detailing a company's rules and guidelines on staff behaviour that must be followed by all employees.

Question 42

Stakeholders

Answer 42

People /groups of people who can be affected by and therefore have an interest in - any action taken by the organisation. The main stakeholders of a business- others than owners /shareholders - are :customers, suppliers, employees and their families as well as the local communities

Question 43

Stakeholders concept

Answer 43

The view that businesses and their managers have responsibilities to a wide range of groups not just shareholders

Question 44

Corporate social responsibility

Answer 44

The concept that accepts that businesses should consider the interests of society in their activities and decisions, beyond the legal obligations that they have.

Question 45

Manager

Answer 45

°Responsible for setting objectives, organising resources and motivating staff so that an organisations aims are met. They are responsible for: 1. Setting objectives and planning 2. organising resources to meet objectives 3. Directing and motivating staff 4. Coordinating activities 5. controlling and Measuring performance against targets

Question 46

Leadership

Answer 46

The art of motivating a group of people towards achieving a common goal

Question 47

Autocratic leadership | 4 features

Answer 47

°A style of leadership that keeps all the decision making at the centre of the organisation. Main features :leader takes all the decisions, gives little information to staff, supervises workers closely and one way communication. This leadership is usually applicable in defense forces and police (where quick decisions have to be made.)

Question 48

Democratic leadership | 3 features

Answer 48

°A leadership that promotes the active participation of workers in taking decisions. Main features : participation is encouraged, 2 way communication which allows feedback from staff and workers are given information about the business to all full staff involvement

Question 49

Paternalistic leadership

Answer 49

°A leadership style based on the approach that the manager is in a better position than the workers to know what is best for an organisation. Main features : managers do what they think is best for the workers and some consultation is but the final decision is made by the managers - so there is no true participation in decision making. Usually schools will adopt this leadership style

Question 50

Laissez-faire leadership

Answer 50

A leadership style that leaves much of the business decision making to the workforce - a 'hands-off' approach and the reverse of the autocratic style. Main features : managers delegate virtually all the authority and decisions making powers ; and very broad criteria or limits might be established for the staff to work within. This style is usually applicable in research institutions

Question 51

Informal leader

Answer 51

A person who has no formal authority but has the respect of colleagues and some power over them.

Question 52

Emotional intelligence

Answer 52

The ability of managers to understand their own emotions, and those of the people they work with, to achieve better business performance. Namely : self - awareness, self-management, social awareness and social skills.

Question 53

Motivation

Answer 53

The internal and external factors that stimulate people to take actions that lead to achieving a goal. Motivation levels have a direct impact on the level of productivity and thus the competitiveness of the business

Question 54

Self actualisation

Answer 54

A sense of self - fulfillment reached by feeling enriched and developed by what one has learnt and achieved. This need may be satisfied at work from challenging work that stretches the individual- this will give a sense of achievement ; opportunity to develop and apply new skills will increase potential.

Question 55

Motivating factors (motivators)

Answer 55

Aspects of a worker's job that can lead to positive job satisfaction, such as achievement, recognition, meaningful and interesting work and advancement at work

Question 56

Job enrichment

Answer 56

Aims to use the full capabilities of the workers 👷 by giving them the opportunity to do more challenging and fulfilling work.

Question 57

Time based wage rate

Answer 57

Payment to a worker 👷 made for each period of time worked e.g. Per hour ⏳. This is the most common way of paying manual, clerical and 'non-management' workers

Question 58

Piece rate

Answer 58

°A payment to a worker for each unit produced. The level of the rate is important. If it is set too low, it will demotivate staff. If it is set too high, it could reduce the incentives because workers will be able to meet their target 🎯 wage level by producing relatively few units

Question 59

Salary

Answer 59

Annual income that is usually paid on a monthly basis. It is most common form of payment for professional, supervisory and management staff

Question 60

Commission

Answer 60

A payment to sales person for each sale made. Frequently used in personal selling, where the salesperson is paid a commission or a proportion of the sales gained.

Question 61

Bonus

Answer 61

A payment made in addition to the contracted wage /salary. Criteria of this are usually agreed upon between the managers and workers e.g. If the net number of additional customers is acquired.

Question 62

Performance related pay

Answer 62

A bonus scheme to reward staff for above average work performance. It requires regular target setting and establishing specific objectives for the individual.

Question 63

Profit sharing

Answer 63

A bonus for staff based on the profits of the business - usually paid as a proportion of the basic salary. This scheme shares some of the company's profits not just with the shareholders but also with the workers 👷

Question 64

Fringe benefits

Answer 64

Benefits given, separate from the pay, by an employer to some or all employees. These are non-cash forms of reward e.g. Free insurance offered to employees

Question 65

Job rotation

Answer 65

Increasing the flexibility of employees and the variety of the work they do by switching from one job to another. This may relieve boredom and give the workers multiskills

Question 66

Job enlargement

Answer 66

Attempting to increase the scope of a job by broadening or deepening the tasks undertaken

Question 67

Job redesign

Answer 67

Involves the restructuring of a job - usually with employees' involvement and agreement-to make work more interesting, satisfying and challenging

Question 68

Quality circles

Answer 68

Voluntary groups of workers who meet regularly to discuss work - related problems and issues

Question 69

Workers participation

Answer 69

Workers are actively encouraged to become involved in decision-making within the organisation

Question 70

Human resource management

Answer 70

The strategic approach to the effective management of an organisation's workers so that they help the business gain competitive advantage.

Question 71

Recruitment

Answer 71

The process of identifying the need for a new employee, defining the job to be filled and the type of person needed to fill it and attracting suitable candidates for the job

Question 72

Selection

Answer 72

Involves the series of steps by which the candidates are interviewed, tested and screened for choosing the most suitable person for the vacant post.

Question 73

Job description

Answer 73

A detailed list of the key points about the job to be filled - stating all its key 🗝 tasks and responsibilities. For example the job title, details of the tasks to be performed, responsibilities involved, place in the hierarchical structure, working conditions and how the job will be assess a decision performance measured.

Question 74

Person specification

Answer 74

A detailed list of the qualities, skills and qualifications that a successful applicant will need to have.

Question 75

Employment contract

Answer 75

A legal document 📄 that sets out the terms and conditions governing a worker's job. For example : the employee's responsibilities and main tasks to be undertaken as well as their working hours

Question 76

Labour turnover and formula

Answer 76

° measures the rate at which employees are leaving an organisation. Labour turnover = (number of employees leaving in 1 year / average number of employees employed) ×100 Example : If result is high and increasing over time~then this is a good indicator of employee discontent, low morale and possibly a recruitment policy that leads to the wrong people being employed

Question 77

Training and the three types

Answer 77

Work-related education to increase workforce skills and efficiency. There are 3 different types : 1. Induction training - given to all new recruits 2. on the job training 3. Off the job training

Question 78

Induction training

Answer 78

Introductory training programmes to familiarise new recruits with the systems used in the business and the layout of the business site.

Question 79

On the job training

Answer 79

Instruction at the place of work on how a job should be carried out

Question 80

Off the job training

Answer 80

All training undertaken away from the business e.g. Work related college 🎓 courses

Question 81

Employee appraisal

Answer 81

The process of assessing the effectiveness of an employee judged against preset objectives.

Question 82

Dismissal

Answer 82

Being dismissed or sacked (fired) from a job due to incompetence or breach of discipline

Question 83

Unfair dismissal

Answer 83

Terminating a worker's employment contract for a reason that the law regards as being unfair. For example : because of pregnancy, a discriminatory reason, being a member of a union and/ or a non-relevant criminal record

Question 84

Redundancy

Answer 84

When a job is no longer required, the employee doing thus job becomes unnecessary though no fault of their own

Question 85

Work - life balance

Answer 85

A situation in which employees are able to give the right amount of time and effort to work and to their personal life outside of work. E. G. Their family

Question 86

Equality policy

Answer 86

Practices and processes aimed at achieving a fair organisation where everyone is treated in the same way and has the opportunity to fulfill their potential

Question 87

Diverse policy

Answer 87

Practices and processes aimed at creating a mixed workforce and placing positive value on diversity in the workforce