Topic 1: Business In The Real World

Question 1

What is an Enterprise?

Answer 1

• another name for a business
• describes the actions of someone who takes risk by setting up, investing in and running a business

Question 2

Who is an Entrepreneur?

Answer 2

Someone who takes calculated risk through starting a business.

Question 3

What do Entrepreneurs do?

Answer 3

• takes initiative
• calculates risks involved
• makes investment
• goes ahead - even if there is a risk of business failure

Question 4

What are the Chracteristics of an Entrepreneur?

Answer 4

• Innovative
• Organised
• Risk Takers
• Persuasive
• Hardworking
• Leadership Skills
• Lucky

Question 5

What are the Objectives of an Entrepreneur?

Answer 5

• Be their own boss
• Flexible working hours
• Pursue an interest
• Earn more money
• Identify a gap in the market
• Dissactistfaction with current job
• Self - esteem
• Personal Development

Question 6

What is a Business?

Answer 6

An organisation that exists to produce goods or supply services to customers.

Question 7

What are Goods?

Answer 7

Goods are tangible objects that can be touched and felt, they are produces & consumed.

Question 8

What are Services?

Answer 8

Services are intangible and are provided by other people or business.

Question 9

What is a Needs?

Answer 9

Needs are goods & services that we must consume or that we require if we are to live like, food, shelter and warmth.

Question 10

What are Wants?

Answer 10

Wants are goods & services that we would like e.g phones, holidays and other luxuries.

Question 11

What is Opportunity Cost?

Answer 11

Cost of what has been given up, sacrifices or forfeited when another option has been chosen.

Question 12

What are some reasons for starting a business?

Answer 12

• To produce goods
• Supply services
• Distribute products
• Fulfil a business opportunity
• Provide goods or services to benefit others (social enterprise)

Question 13

What are not for profit organisations?

Answer 13

These organisations are set up to help others in need by providing goods or services, any surplus of money generate is used to meet the aims and objectives of the organisation. E.g Charities

Question 14

What are the 3 business sectors?

Answer 14

• Primary
• Secondary
• Tertiary

Question 15

What is the primary sector?

Answer 15

Producing raw materials/ extracting like fishing, farming or mining

Question 16

What is the secondary sector?

Answer 16

Manufacturing goods, turning raw materials into finished goods like car manufacturing

Question 17

What is the tertiary sector?

Answer 17

Providing goods or services like shops i.e the distributing process

Question 18

What are the 4 factors of production?

Answer 18

• Land
• Labour
• Capital
• Enterprise

Question 19

What is land in production?

Answer 19

The land where the business is located, but also includes natural resources
on or under that land.

Question 20

What is labour in production?

Answer 20

People working for that business - involved in manufacturing the product, etc.

Question 21

What is Capital in production?

Answer 21

Any money invested into the business - machinery or building needed to produce the product.

Question 22

What is enterprise in production?

Answer 22

The entrepreneur who sets up the business - running the business by organising the factors of production and takes the risks involved in running the business.

Question 23

What is dynamic nature business?

Answer 23

• Constantly faced with many changes outside of the control of the organisation
• Successful businesses will be able to meet these changes and demonstrate flexibility in the way they operate.

Question 24

What are some changes in the business environment that may occur?

Answer 24

• Legislation
• Exonomic
• Technological
• Environmental
• Social
• Staff training

Question 25

Who is a sole trader?

Answer 25

The individual who has sole ownership of the business, e.g hairdressers or gardeners - they may also employ people but they do not share the ownership.

Question 26

What are some drawbacks of being a sole trader?

Answer 26

- Unlimited Liability - Can be difficult to raise finance - Heavy workload

Question 27

What is a partnership?

Answer 27

A partnership is formed where a business is started and owned by more than one person.

Question 28

What are some examples of partnerships?

Answer 28

Doctors, Solicitors and Vets, etc.

Question 29

What is the legal document between a partnership?

Answer 29

Partnership agreement, is always recommended and sets out how a partnership is run and how profits as divided

Question 30

What are 3 benefits of a partnership?

Answer 30

- Simple to form a business - Any loses will be shared - Greater potential to raise finance

Question 31

What are 3 drawbacks of a partnership?

Answer 31

- Unlimited Liability - Profits have to be shared - Decisions can take a long time

Question 32

What is Unlimited Liability?

Answer 32

- It is a big risk when operating as a sole trader or partnership Having to use their own personal funs to pay for any debts gathered by the business. The owner(s' are liable for any debts that the business incures.

Question 33

What are limited companies?

Answer 33

- A company formed when a business is set up to have a separate legal identity from its owners.

Question 34

What does the ownership of a limited company look like?

Answer 34

Owners = Shareholders - each owns a share of the company

Question 35

What is a Dividend?

Answer 35

Shareholders receive a share of the profits known as a dividend as a reward for being a shareholder.

Question 36

What are limited companies run by?

Answer 36

Board of Directors - people who make important decisions - they are also appointed by the shareholders.

Question 37

What is Limited Liability?

Answer 37

- Within limited companies, shareholders are not responsible for the company's debts - meaning share holders many only loose the money they invested in to the company to help pay off any outsanding debts or liabilities.

Question 38

How to calculate unites costs (cost per unit)?

Answer 38

Average cost per unit = Total Costs (£) / Output (units produced)

Question 39

What does the average unite cost increasing mean?

Answer 39

The Business is becoming less efficient

Question 40

What the average unit cost decreasing mean?

Answer 40

The Business is becoming more efficient

Question 41

What is economies of scale?

Answer 41

Economies of scale are achieved when the average cost per unit falls as the scale of production increases

Question 42

What is business plan?

Answer 42

A business plan is a written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts

Question 43

What is the difference between a stakeholder and a shareholder?

Answer 43

STAKEHOLDERS have an interest in the business but do not own it, they may also work with the business (employee) oe even be transact with the business. Whereas SHAREHOLDERS actually OWN THE BUSINESS, they may also work for the business, they are mainly interested in frowning the value of their shareholding and a shareholder is an EXAMPLE of a Stakeholder