Topic 1

Question 1

What is a Business ?

Answer 1

an organisation that transforms inputs (resources) into outputs (products/ services) that are purchased by their customers

Question 2

Why do businesses exist?

Answer 2

Supply goods or services

Create Employment

provide source of revenue for government

Create wealth for country

Question 3

Primary Sector

Answer 3

extraction of raw materials

Question 4

Secondary sector

Answer 4

the part of the economy that transforms raw materials into manufactured goods

Question 5

Tertiary Sector

Answer 5

involves services rather then manufacturing

Question 6

How is the wealth of a country measured ?

Answer 6

GDP

Question 7

What is GDP (Gross Domestic Product)?

Answer 7

value of everything produced in a country

Question 8

Benefits of online retailing

Answer 8

Convenient, always a selection of products, requires little effort

Dont have to pay to keep branches open

can reach wider audience

Question 9

Drawbacks of Online Retailing

Answer 9

Delivery Charge

Wait time

product can be damaged / arrive faulty

Wrong product

Question 10

What is an Mission Statement ?

Answer 10

communicates the purpose of a business and why it exists

Question 11

+ of setting objectives

Answer 11

Have vision / business plan

motivate employees

Question 12

What is an objective ?

Answer 12

medium to long term plan to co ordinate business functions and act like a target

Question 13

what do co operate objectives do ?

Answer 13

quantify the mission so its measurable

Question 14

what are some co operate objectives ?

Answer 14

innovation , growth , shareholder value and social responsibility

Question 15

What are functional objectives ?

Answer 15

Functional objectives are the objectives of each department. They are specific to each department.

Question 16

What are the Main objectives of a business ?

Answer 16

Survival

Profit

Growth

Cash flow

Ethical objectives

Social objectives

Question 17

Why do businesses set objectives ?

Answer 17

Provide steps to achieve aims

motivate and reward staff

measure success against targets

Question 18

What does S.M.A.R.T stand for ?

Answer 18

Specific, Measurable, Attainable, Realistic, Timely

Question 19

Some influences on objectives ?

Answer 19

How competitive market is
depends on the sector as public sectors are not driven by profit

Question 20

What is revenue ?

Answer 20

total income earned by sales

Question 21

Revenue formula

Answer 21

price x quantity

Question 22

Fixed costs

Answer 22

costs that have to be paid regardless of output

Question 23

variable costs

Answer 23

costs that change as output increases or decreases

Question 24

total costs formula

Answer 24

fixed costs + variable costs

Question 25

how would you increase revenue ?

Answer 25

increase price have promotions decrease VC

Question 26

Importance of profit ?

Answer 26

funds expansion suppliers may give longer credit periods as theyll trust youll pay banks more likely to give you loan

Question 27

what is liability?

Answer 27

refers to legal responsibility of a business towards their debt

Question 28

Unlimited liability

Answer 28

The owner and the business are the same entity

Question 29

Limited liability

Answer 29

The business and owner are separate

Question 30

what are the advantages and disadvantage of sole trader ?

Answer 30

+ keeps all profit has full control quick decision making as does not need to consult shareholders - unlimited liabilty long hours no new ideas to business wont benefit from economies of scale

Question 31

who can an ltd sell shares too - private limited company

Answer 31

family friends

Question 32

advantages and disadvantages of private limited company

Answer 32

+ limited liability can sell shares privately and earn capital retain control of company - has to publish financial info profits have to be shared

Question 33

how do ltds become PLCs?

Answer 33

stock market floatation