Term 1

Question 1

What are the key roles of a business?
(nine)

Answer 1

-Profit -Quality -Wealth -Choice -Income -Innovation Employment -Quality of life -Entrepeneurship and risk

Question 2

What is a Sole trader?

Answer 2

An incorporate business with one owner
P: -Owner retains profit
C: -Funding from owners own funds/personal

Question 3

What is a Partnership?

Answer 3

An unincorporated business that has more than one owner
P: -Allow businesses access specialist knowledge of possible investors
C: -Unlimited liability means partners are individually liable for debts of the business

Question 4

What is a Trust?

Answer 4

Is an organisation that is responsible for managing assets on behalf of an individual or a group of individuals
P: -Decisions & allocations of assets determined by investment professionals
C: -There is a element of risk for investors as assets not managed by the owners

Question 5

What is a private company?

Answer 5

A private company is usually small and has only a limited number of owners (up to 50 owners).
P: -Access to enterprise from owners
-Owners not responsible for company debts
-Decision making and responsibility within the business is shared

Question 6

What is a public company?

Answer 6

A public company is usually very large and can have unlimited owners. It’s a business that is listed on the stock exchange
P: -Anyone can own shares
-Shareholders elect management

Question 7

What is a company limited by guarantee?

Answer 7

Non-profit organisation

Question 8

What is a strategic business plan?

Answer 8

Strategic business plan is a step-by-step guide which a business puts in writing to achieve its business goals and objectives. The business plan defines the business, sets out its goals and describes the strategies that will be used to achieve those goals.

Question 9

What are the primary elements of a business plan?

Answer 9

-Vision statement
-Mission statement
-Executive statement
-Operational plan
-Marketing plan
-Financial statement

Question 10

What is a vision statement?

Answer 10

A vision is aspirational. Vision is what the owners see for the future. Vision statements are future-based and meant to inspire and give direction to employees of the company rather than customers.

Question 11

What is a mission statement?

Answer 11

A mission is actionable. Outlines clearly what the ambitions of a business are - what the business hoped to achieve for its stakeholders. While a mission statement focuses on the purpose of the brand, the vision statement looks to the fulfillment of that purpose

Question 12

What does a business plan provide?

Answer 12

Necessary for company growth and success. Provides companies with the tools to:
-Track growth -Establish a budget
-Prepare for unforeseen changes in the marketplace

Question 13

What are financial goals?

Answer 13

Relate to increasing or gaining maximum wealth for the owners of a business

Question 14

What are social goals?

Answer 14

Relate to the role of a business in the community in which it operates

Question 15

What are personal goals?

Answer 15

Personal goals of the owner will be reflected in the overall goals of the business and its future direction

Question 16

What does the acronym SMART goals stand for?

Answer 16

Specific
Measurable
Achievable
Realistic
Timely

Question 17

What are the four stages of a business life cycle?

Answer 17

-Establishment stage
-Growth stage
-Maturity stage
-Post-Maturity

Question 18

What is the Establishment stage?

Answer 18

-Idea generation, developed by an entrepreneur or a small group of individuals
-Limited resources, limited financial and Human Resources struggle to secure funding and attract investors
-High level of uncertainty, business idea and market demand are still untested
-Likely to have low sales and revenues

Question 19

What is a business?

Answer 19

A business is any organisation which provides a service, product, or good that meets a need of society in some way.

Question 20

What four sectors do business’s operate in?

Answer 20

-Primary
-Secondary
-Tertiary
-Quaternary

Question 21

What is a Primary Sector?

Answer 21

Businesses extract or grow something using the natural resources of the country.
Examples include mining and farming.

Question 22

What is a Secondary Sector?

Answer 22

Involves a process of adding value to raw materials combined with labour and capital equipment to produce a product. All manufacturing businesses operate in the secondary industry.

Question 23

What is the Tertiary Sector?

Answer 23

The tertiary sector of the economy, also known as the service sector, includes industries that provide services to individuals and businesses, such as healthcare, education, retail, and finance.

Question 24

What is the Quaternary Sector?

Answer 24

The quaternary sector of the economy refers to knowledge-based industries and services, such as research and development, information technology, and professional services. These industries are focused on the creation and management of knowledge and information.

Question 25

What is liability?

Answer 25

Liability is a legal responsibility or obligation to pay a debt, compensation, or make amends for a wrong committed. It can refer to a person or a business being accountable for damages, losses, or harm caused to another party.

Question 26

What is a business life cycle?

Answer 26

The business life cycle is a model that describes the stages a business goes through from its inception to its eventual decline or rejuvenation.

Question 27

What is the Growth stage?

Answer 27

The growth phase is the stage in a business's life cycle where the company experiences a significant increase in revenue and market share. During this phase, the company expands its operations, enters new markets, and increases its production capacity.

Question 28

What is the Maturity stage?

Answer 28

The maturity phase of the business life cycle is characterized by a slowdown in growth and stability in the market. During this phase, the company has established its product or service offerings, and has a loyal customer base.

Question 29

What is the Post-Maturity stage?

Answer 29

The post-maturity stage of the business life cycle refers to a period in which a mature business begins to decline and its growth slows down or stops. The company may struggle to remain competitive in the market.

Question 30

What are 3 options that companies can choose to do in the Post-Maturity stage?

Answer 30

- Diversify (Renewal) -Continue as usual (steady state) -Cessation (cease business)

Question 31

What is diversification (Post-Maturity)

Answer 31

One option for a business in the post-maturity stage is to diversify its offerings. This can be done by expanding into new markets, creating new products or services, or acquiring or merging with other companies.

Question 32

What is a steady state? (Post maturity)

Answer 32

In a steady state, the business has established a strong market position and has a loyal customer base.

Question 33

What is cessation/exit? (Post-maturity)

Answer 33

A third option for a business in the post-maturity stage is to exit the market altogether. This may involve selling the business to a larger competitor, spinning off unprofitable business units, or liquidating its assets.

Question 34

What are factors in the external environment?

Answer 34

- Climate - Economy - Technology - Legal - Competition - Media - Fashion

Question 35

What are factors in the internal environment?

Answer 35

- organisational culture - human resource - organisational structure - physical assets - profit and cash flow - management

Question 36

What is the internal environment?

Answer 36

The internal environment is easier to manage than the external environment because it is within the business’s direct control.

Question 37

What is the external environment?

Answer 37

This is the wider environment in which a business operates.

Question 38

Why do business's fail?

Answer 38

One of the main reasons businesses fail is because they do not have a business plan.

Question 39

What is a competitive advantage?

Answer 39

Identifying and Sustaining a Competitive Advantage Competitive advantage is the reason customers buy one business’s product over another’s. Sustaining a competitive advantage can require a business to be flexible and to respond to changing consumer tastes and preferences.

Question 40

What is under-capitalisation?

Answer 40

Small business owners often have to start their business using their own money and they often do not realise just how much money they will need. When starting a new small business it is essential to have money not only to run the business but also to pay living expenses for the first few years until a bank loan can be obtained.