Understanding Business

Question 1

What is a need

Answer 1

Basic requirement for survival

Question 2

What are the factors of production

Answer 2

Land, labour, capital, enterprise

Question 3

What is capital

Answer 3

A factor of production
Man-made resources used to produce a product or a service

Question 4

What is enterprise

Answer 4

A factor of production
Entrepreneur who had the idea to create the business

Question 5

What is wealth creation

Answer 5

When value is added to a product at each stage of production

Question 6

What is tertiary

Answer 6

Sector of industry
Provision of a service

Question 7

What is land

Answer 7

Factor of production
Natural resources used to create a product

Question 8

What is primary

Answer 8

Sector of industry
Extraction of raw materials

Question 9

What is labour

Answer 9

Factor of production workforce used to create a product

Question 10

What is secondary

Answer 10

Sector of industry
Manufacturing of raw materials

Question 11

What are sectors of industry

Answer 11

Primary
Secondary
Tertiary

Question 12

What is secondary

Answer 12

Sector of industry
Manufacturing of raw materials

Question 13

What are the sectors of economy

Answer 13

Private
Public
Third

Question 14

Who owns, controls and finds the private sector

Answer 14

Owns - individuals (sole traders, partnerships, pltd)
Controlled - owners or a board of directors
Funded - individuals

Question 15

Who owns, controls and funds the public sector

Answer 15

Owns - government
Controlled - government
Funded - taxes

Question 16

Who owns, controls and funds the third sector

Answer 16

Owned - trustees
Controlled - board of trustees
Funded - donations

Question 17

What types of businesses are in the private sector

Answer 17

Sole traders, partnerships, private limited company’s (pltd)

Question 18

advantages of a sole trader (3)

Answer 18

retains all profit
Makes all decisions - their own boss
Easy to set up - legally easier type of ownership

Question 19

Disadvantages of a sole trader (3)

Answer 19

heavy workload - fully responsible
unlimited liability - personally liable for all debts
difficult to raise finance (savings etc)

Question 20

Advantages of a partnership (3)

Answer 20

Shared workload - shared responsibility
easier to raise finance - banks are more likely to lend money to partners
bring more skills - different partners are stronger in other areas

Question 21

Disadvantages of a partnership (3)

Answer 21

unlimited liability
Profit is shared - sole traders receive all profits
disagreements - sole traders make all decisions

Question 22

Who owns a private limited company

Answer 22

Shareholders

Question 23

Advantages of a private limited company (3)

Answer 23

Limited liability - only loose what they invest
Owner can retain control
easier to raise money - borrowing through share issue

Question 24

Disadvantages of a private limited company

Answer 24

Must register with registrar of companies
high set-up costs - legal and administrative
Harder to motivate workers - profits are only shared between share holders

Question 25

What is customer service

Answer 25

How a business treats/looks after their customers before, during and after a purchase

Question 26

Advantages of customer service (3)

Answer 26

Customer loyalty - can lead to increased sales and profits Improved reputation - can lead to larger market share employee satisfaction - can lead to low staff turnover, more motivation

Question 27

Result of poor customer satisfaction (5)

Answer 27

Loss of sales Decrease in profits Bad reputation Loss of market share Low staff morale

Question 28

How to maximise customer satisfaction

Answer 28

Market research - find needs and wants of customers staff training - deliver higher standard of customer care after-sales service - returns, refunds, etc customer care service - customers know what service to expect Customer complaints procedure - effectively handled = loyalty Quality products - meet customers needs

Question 29

What are the internal factors

Answer 29

Human Resources - employees and managers within a business Finance - availability or lack of finance in an organisation technology - technology the business is currently using

Question 30

How does finance impact/influence a business

Answer 30

impact - needed to achieve objectives influence - lots available = business can grow and employ more staff not available = business may have to cut costs

Question 31

How can Human Resources impact/influence a business

Answer 31

Impact - well trained staff = more productive poorly trained staff = low quality goods/services and poor customer satisfaction Influence - unhappy staff may take industrial action good quality managers = better decision making and leadership