Unit 1

Question 1

4 Business Objectives

Answer 1

Profit, Growth, Survival, Cash Flow

Question 2

Social + Ethical Objectives

Answer 2

Social, Non-Profit, For-Profit

Question 3

Long-Term Objectives

Answer 3

Set direction of business, long-term growth, affect big decisions

Question 4

Short-Term Objectives

Answer 4

Survival, making short-term profit, require business to cut back on long term objectives

Question 5

Public Sector

Answer 5

Organisations owned by the Government, provide services to the public rather than make profit. e.g NHS

Question 6

Private Sector

Answer 6

Organisations owned and run by private individuals. Aim to make a profit, can be a sole trader or a large business such as John Lewis

Question 7

Unlimited Liability

Answer 7

Shareholders/owners fully responsible for all the business debts and can lose personal assets to repay the debt

Question 8

Limited liability

Answer 8

Shareholders only responsible and can lose the money they invested into the business

Question 9

Sole Trader

Answer 9

Individually run, self-employed, fully responsible for the financial control, unlimited liability, minimal legal formalities

Question 10

Sole Trader Advantages

Answer 10

Own boss, Profit, Simplicity, Savings on fees (no legal costs)

Question 11

Sole Trader Disadvantages

Answer 11

Risk, Time, Expertise, Finance, Vulnerability, Unlimited Liability

Question 12

Private Limited Company (Ltd)

Answer 12

Sell shares to only friends and family, share prices aren’t on the stock exchange, can’t sell shares without agreement with other shareholders, small family business, no minimum share capital

Question 13

Public Limited Company (Plc)

Answer 13

Can sell shares to the public, share prices on stock exchange, shares freely transferable, go public to raise more capital, need over £50,000 of share capital

Question 14

Share Capital

Answer 14

for long-term investment, shareholders paid in dividends in return for investment

Question 15

Market Capitalisation

Answer 15

Total value of all the ordinary shares issued

Question 16

Ownership and How it Affects Mission

Answer 16

1. Non-profit usually help people or communities in need
2. Private sector maximise profits
3. Public sector benefit society

Question 17

Share Prices

Answer 17

Ltd’s have control over their share price because they are sold privately, Plc’s shares are sold on the stock exchange, determined by demand and supply

Question 18

Factors Affecting Demand and Supply

Answer 18

performance of the company, rumours of new product launches, current share price, interest rates, the economy

Question 18

Market Conditions

Answer 18

Describes wide range of factors affecting the market, influence the costs faced by the business

Question 19

Political Factors

Answer 19

If demand is too low governments try to increase it, they try reduce demand if its too high, they can raise and can cut taxes

Question 20

Labour Supply

Answer 20

when unemployment is high, there’s a good supply of labour, low employment rate can mean there’s a shortage of labour

Question 21

Incomes and Economic Factors

Answer 21

In recession, businesses need to reduce costs, lower incomes mean they have less to spend on products

Question 22

Seasonal Demand and Supply

Answer 22

Weather and holidays can create variations in demand, and also variations supply as if there is more of product in a certain time it would reduce costs for a shop selling that product

Question 23

Competition

Answer 23

If a new competitor enters the market, the demand for a rival business may decrease, the rival business is likely to increase its marketing costs

Question 24

Interest Rates

Answer 24

Affect the cost of borrowing and return on savings, affect consumer spending, high interest rates mean consumers have low disposable income

Question 25

External Environment

Answer 25

Demographic, Environmental factors can increase costs, Ethical businesses have great reputations with customers, Technological advances can influence demand and costs