Understanding Buisness

Question 1

Sectors of industry

Answer 1

Primary
Secondary
Tertiary
Quaternary

Question 2

What is the primary sector

Answer 2

Concerned with the extraction of raw materials or natural recourses from the land.

Question 3

What Is the secondary sector

Answer 3

Concerned with manufacturing.
Takes raw materials from the primary sector and converts them into new products.

Question 4

What is tertiary

Answer 4

Concerned with providing a service.

Question 5

What is quaternary sector

Answer 5

Consists of those industries providing information services

Question 6

What are the sectors of economy

Answer 6

Private
Public
Third

Question 7

What is the private sector

Answer 7

Owned and controlled by private banks individuals.
Aims to survive and make a profit.
Soletraders, partnerships, private limited companies

Question 8

What is the public sector

Answer 8

Owned and controlled by the government.
Aims to provide a service to the public and are funded by taxes.
National government, local government

Question 9

What is the third sector

Answer 9

Set up to help a cause or provide a service.
Aims to raise money and awareness for a cause.
Charities , social enterprises

Question 10

Types of businesses in the private sector

Answer 10

Sole trader
Partnership
Private limited company
Public limited company
Multinational
franchise

Question 11

Advantages of a sole trader

Answer 11

Easy to set up
Sole traders retain all profits for themselves
Sole trader make all the decisions

Question 12

Disadvantages of sole traders

Answer 12

Can be difficult to raise finance
Unlimited liability
Heavy workload

Question 13

Advantages of a partnership

Answer 13

More equity available to finance the business compared to a sole trader.
Different partners can bring different skills.
Workload is shared.

Question 14

Disadvantages of partnership

Answer 14

Unlimited liability
Profit is shared between the partners
Partners may not always agree on decisions

Question 15

Advantages of private limited companies

Answer 15

Owner can retain control
More able to raise awareness
Limited liability

Question 16

Disadvantages of private limited companies

Answer 16

Must be registered with
The registrar of companies.
High set up costs.
Harder to motivate and control workers.

Question 17

Advantages of public limited companies

Answer 17

Raise more money by selling shares on the stock exchange
Easier to grow and diversify

Question 18

Disadvantages of public limited companies

Answer 18

Disagreements over how to run the company
Threat of take over
Difficult to pursue objectives other than increasing profit

Question 19

Why would a company want to become a multinational

Answer 19

To increase market share
To secure cheaper premises and labour
To avoid tax or trader barriers
Government grants

Question 20

Advantages of multinational companies

Answer 20

Create jobs available
Brings in expertise - improving skills of the workforce
Benifiting from economies of sales
Purchasing economies
Gains technical economies with automated equipment

Question 21

Disadvantages of multinational companies

Answer 21

Exploiting the workforce
Damages reputation
Cultural differences
Difficult to control
Transportation can be expensive

Question 22

Advantages of a franchisor
(Parent company)

Answer 22

Guaranteed income
Rapid expansion/growth
Risk is shared
Good ideas can be shared

Question 23

Disadvantages of franchisor
(Parent company)

Answer 23

Income from franchisee sales could be less
Risk of damage to the business name/reputation if the franchisee performs poorly

Question 24

Advantages of franchisee
(Individual person)

Answer 24

Reputation of franchisor will help buisness to gain customers and sales quickly.
Franchisor will help and support

Question 25

Disadvantages of franchisee (Parent company)

Answer 25

Franchisee has no control over products and prices Can be expesnive to purchase a franchise Must purchase all supplies from the franchisor Has to pay a % of profits to franchisor

Question 26

Objective of a business in the private sector

Answer 26

Maximise profits Provide a good quality service Survive Operate ethically Maximise sales Growth Corporate social responsibility

Question 27

Objectives of a business in the public sector

Answer 27

Provide a service Work within a budget Operate ethically Serve the local community

Question 28

Objectives of a business in third sector

Answer 28

Support a cause Provide a service raise awareness of a cause Maximise donations Operate ethically Survival Increase number of volunteers

Question 29

Skills of an entrepreneur

Answer 29

Identify a gap in the market Risk taking Communication Determination Marketing Decision making Leadership

Question 30

Ways businesses can measure their customer service

Answer 30

Email/written/phone questionnaire Suggestion boxes Face to face interviews Mystery shoppers

Question 31

How can a business maximise customer service

Answer 31

High quality products Trained employees Customer complaint procedures After sales service

Question 32

What is a stakeholder

Answer 32

An individual or group of people who have an interest in the success of an organisation

Question 33

What are the internal stakeholders

Answer 33

Owner/shareholders Managers Employees

Question 34

What are the external stakeholders

Answer 34

Community Customers Suppliers Banks Goverment

Question 35

What can be some stakeholder conflicts of interest

Answer 35

Shareholder vs customers Shareholder vs employees Shareholders vs supplier

Question 36

Examples of interdependence

Answer 36

Owners & suppliers - managers need suppliers to provide high quality materials, suppliers need manager to keep buying from them. Owners & customers - owners need customers to buy their products, customers need high quality products and service.

Question 37

What are the internal factors

Answer 37

Finance Staff Technology Corporate culture

Question 38

What is corporate culture

Answer 38

The set of values and beliefs that is shared by all people within a business. Company values Office layout Corporate colours Store layout Business jargon

Question 39

Advantages of corporate culture

Answer 39

Motivated staff Relaxed working environment Lower staff turnover High quality staff are attracted

Question 40

Disadvantages of corporate culture

Answer 40

Hard to introduce Staff have to be aware of changes Some cultures can be seen as a ‘bribe’ Management can loose focus and control if the culture is too loose

Question 41

What are the external factors

Answer 41

Political Economic Social Technological Enviormental Competitive

Question 42

Internal methods of growth

Answer 42

Launching new products/advertising Expanding into new geographical markets Selling to new outlets Hiring new staff Franchising

Question 43

External methods of growth

Answer 43

Takeover of competition Merger with competitor

Question 44

Advantages of internal methods of growth

Answer 44

No loss of control as outsiders are not involved Hiring more staff will bring new ideas Investing in new equipment will increase product capacity Opening new Brauches means the company can reach new markets

Question 45

Disadvantages of internal methods of growth

Answer 45

Can be a slow method of growth May be limited by the size of the market Restricted by the amount of finance available

Question 46

What is the external method of growth ‘merged’

Answer 46

Is the joining of 2 companies on equal terms A new business is created

Question 47

What is the external method of growth ‘takeover’

Answer 47

When one firm takes control and ownership of another business There is no need to create a new business

Question 48

What is a de-merger

Answer 48

When a conglomerate business splits into separate companies Shareholders are allocated shares in n the new , separate , companies Specialists in each type of organisation will separate with their specialised field.

Question 49

What is a divestment

Answer 49

Selling of the buisness’s assets

Question 50

Methods of growth

Answer 50

Organic growth Horizontal integration Vertical integration Diversification