Topic 1 : Business Activity

Question 1

What are the 4 characteristics of an entrepreneur?

Answer 1

Risk-taking
Determined
Creative
Confident

Question 2

What are the main facts about Internal / organic growth?

Answer 2

Cheaper but slower

Question 3

How can a business organically grow?

Answer 3

Sell new products
Enter new markets

Question 4

What is an advantage of selling new products?

Answer 4

Increase sales/ revenue by better meeting customer wants and needs

Question 5

What are disadvantages of selling new products to grow organically?

Answer 5

Expensive to research and develop
Can take a long time

Question 6

What is an advantage of entering new markets?

Answer 6

Wider demographic and more sales

Question 7

What is a disadvantage of entering a new market?

Answer 7

Exchange rates could mean business loses money
Tariffs in different countries can result in higher prices
Most effective in decline

Question 8

What is an advantage of diversification?

Answer 8

Reduces risk because if one industry isn’t doing well , the business can still have a consistent revenue in the other

Question 9

What are the main facts about external growth / integration?

Answer 9

Faster
Expensive

Question 10

Why would a business merge or takeover?

Answer 10

To increase market share which means less competition
To secure supplier and deny competitors of using the same one.
To have an economy of scale, decrease average cost per unit

Question 11

What are the 5 stakeholders?

Answer 11

Owners,employees,customers,suppliers,government and local community

Question 13

3 internal stakeholders

Answer 13

Owners
Employees
Shareholders

Question 14

4 external stakeholders

Answer 14

Suppliers
Government
Local community
Customer

Question 15

What is a stakeholder?

Answer 15

Someone who has an interest in the business

Question 16

What is it called if Walkers takes over Tesco?

Answer 16

Forward Vertical

Question 17

What is forwards vertical takeover?

Answer 17

When a business takes over a retailer

Question 18

What is diversification?

Answer 18

When a business takes over another in a completely different iinudstry

Question 19

What is it called if Walkers takes over a potato farm?

Answer 19

Backwards vertical

Question 20

What is horizontal growth?

Answer 20

When a business takeover a very similar one in the same industry
E.g walkers and kettle

Question 21

What are ways of growing organically?

Answer 21

-Gaining new customers
-Releasing new products
-increase market share

Question 22

Disadvantages of sole trader

Answer 22

Long work hours
Not enough skills
Unlimited Liability

Question 23

Advantages of sole trader

Answer 23

Keep all profit
East set up
Private finance information

Question 24

What is a sleeping partner?

Answer 24

Investor of the business who receives profit but doesn’t take part in management

Question 25

Disadvantages of PLC

Answer 25

Risk of takeover if another business buys lots of shares Public finance information

Question 26

What is in a business plan?

Answer 26

1.Who runs it 2.Market research 3.Financial forecasts 4.Aims + Objectives 5.Target market 6.Competitors

Question 27

Rewards of starting a business

Answer 27

1.Financial gain 2.Self satisfaction 3. Independence

Question 28

Risks of starting a business

Answer 28

Finial loss and restrained relationships

Question 29

What is the role of a business?

Answer 29

Spot opportunities or gaps in market Develop Idea Satisfy customer wants and needs

Question 30

4 characteristics of entrepreneurs

Answer 30

Creative Confident Risk-taking Determined

Question 31

Advantages of LTD

Answer 31

Limited liability Easy to raise finance Control who buys shares

Question 32

Disadvantages of LTD

Answer 32

Shares family and friends are willing to buy are limited Admin and costly set up Finance information is public Dividend payments

Question 33

Dividend payments

Answer 33

a reward paid to the shareholders for their investment in a company

Question 34

Disadvantageous of partnership

Answer 34

Profit sharing Slow descison making