Understanding business

Question 1

Identify the factors of production

Answer 1

Capital, enterprise, land and labour

Question 2

Name the sectors of industry

Answer 2

Primary, secondary and tertiary

Question 3

Identify the three types of business organisation

Answer 3

Private sector, public sector and third sector

Question 4

List the advantages of a private limited company

Answer 4

Control not lost to outsiders, limited liability, shares can be sold and specialists can be employed

Question 5

List the disadvantages of a private limited company

Answer 5

Profits shared to more people, shares cant be sold to general public, financial information is not completely private for Scottish based businesses, limit on amount of capital raised through selling shares and legal documents have to be set up

Question 6

What types of businesses are in the third sector

Answer 6

Charity, voluntary organisations, social enterprises, democratic enterprises and co-operatives

Question 7

List the benefits of being a franchiser

Answer 7

Business grows without risk of debt, regular income and enter new geographical markets

Question 8

List the benefits of being a franchisee

Answer 8

Less risk during set up, keep most of profits, selling established product, successful brand image, national marketing with less expense and training available

Question 9

What are the aims of private sector business

Answer 9

To maximise profits, expand, survive, increase market share, social responsibility, customer satisfaction and to provide a quality service

Question 10

What are the aims of public sector business

Answer 10

To be efficient, provide a quality service, be cost effective and be socially responsible

Question 11

What are the aims third sector business

Answer 11

To maximise donations, benefit a community, help those in need, provide services that otherwise wouldn’t be available to a group or community and to improve a group, area or group of people

Question 12

What external factors impact on the success of a business

Answer 12

PESTEC- political, economic, social, technological, environmental and competition

Question 13

List the advantages of a public limited company

Answer 13

Large amounts of capital can be raised through selling shares, often dominate the market, easy to borrow money from lenders and limited liability for shareholders