Types of Businesses and Functional Areas of a Business Flashcards
(15 cards)
- John Brown has just inherited one million dollars ($1,000,000) from his grandfather’s estate. He is not sure what to do with his new-found wealth and seeks the advice of a financial analyst. He is told that there are lots of opportunities to set up new businesses and that if John can come up with a suitable idea, this would be a good way of investing his money and making it work for him.
(a) Identify two (2) types of business that John Brown could start. (2 marks)
(b) List the five (5) functional areas of a typical business organisation. (4 marks)
(c) State the role of any two (2) functional areas identified in question (b) above. (4 marks)
(d) Define the following terms, giving an example of a type of business commonly found in each:
(i) The public sector (3 marks)
(ii) The private sector (3 marks)
(e) State two (2) reasons why a government may nationalise an industry. (4 marks)
(a) Identify two (2) types of business that John Brown could start. (2 marks)
- Retail business
- Service-based business (e.g., catering, cleaning services)
(b) List the five (5) functional areas of a typical business organisation. (4 marks)
- Production
- Marketing
- Finance
- Human Resources
- Administration
(c) State the role of any two (2) functional areas identified in question (b). (4 marks)
- Production: Responsible for creating goods or services to meet customer demands.
- Marketing: Ensures products are promoted, priced, and distributed to attract and satisfy customers.
(d) Define the following terms, giving an example of a type of business commonly found in each:
(i) The public sector (3 marks)
Definition: The public sector consists of government-owned organisations and services.
Example: A public hospital or government school.
(ii) The private sector (3 marks)
Definition: The private sector comprises businesses owned and operated by private individuals or groups.
Example: A local grocery store or private bank.
(e) State two (2) reasons why a government may nationalise an industry. (4 marks)
- To prevent exploitation and ensure fair pricing for essential goods and services.
- To protect jobs and maintain economic stability during crises.
- (a) Define the term “business ethics” (2 marks)
Business ethics refers to the moral principles and standards that guide the behavior of individuals and organizations in the business environment, ensuring fairness, honesty, and integrity.
(b) Describe two ethical business principles practised by a firm in your country. (4 marks)
- Fair treatment of employees: A firm may ensure equal opportunities and safe working conditions for all employees.
- Environmental sustainability: A firm may adopt practices such as reducing waste and using eco-friendly materials to minimize environmental harm.
(c) Explain two consequences of unethical business practice. (4 marks)
- Legal penalties: Unethical practices such as fraud or false advertising can lead to lawsuits, fines, and legal sanctions.
2 . Loss of reputation: Businesses involved in unethical practices risk losing customer trust, leading to decreased sales and market share.
(d) Identify two organisations that have been established in your country to prevent unethical business practices. (2 marks)
- The Fair Trading Commission (FTC)
- The Integrity Commission
(e) (i) List two legal regulations related to ethics that must be adhered to when setting up a business. (2 marks)
- Consumer Protection Act
- Employment Rights Act
(ii) Discuss two obstacles faced by businesses in your country when trying to follow ethical practices. (6 marks)
- High costs: Implementing ethical practices, such as eco-friendly production or fair wages, can be expensive and impact profit margins.
- Lack of enforcement: Weak regulatory systems may allow unethical businesses to gain an unfair competitive advantage, discouraging others from following ethical practices.
- (a) List two types of economic systems practised today. (2 marks)
Capitalism
Socialism
(b) Explain two ways in which the government of your country contributes to the efficient operation of the economic system. (4 marks)
- Infrastructure development: The government invests in roads, electricity, and communication systems to facilitate business operations.
- Regulation and policy enforcement: Through laws and agencies, the government ensures fair competition and protects consumers.
(c) What are the differences between any two economic system practices in the modern economy? (4 marks)
- Ownership of resources: In capitalism, resources are privately owned, while in socialism, resources are owned and controlled by the state.
- Profit motive: Capitalism focuses on profit generation for private individuals, whereas socialism emphasizes equitable distribution of wealth and social welfare.
