Unit 1 - Business In The Real World

Question 1

What are the main products that businesses sell?

Answer 1

Businesses sell products that can be:
* Goods
* Services

Question 2

Define ‘goods’ in the context of business.

Answer 2

Goods are physical items like books or furniture.

Question 3

What are ‘services’ in a business context?

Answer 3

Services are actions performed by other people to aid the customer.

Question 4

What are ‘needs’ in terms of goods and services?

Answer 4

Needs are things that you can’t live without, like water and food.

Question 5

What are ‘wants’ in terms of goods and services?

Answer 5

Wants are things you would like to have but can survive without, like holidays and jewellery.

Question 6

What are some reasons people start businesses?

Answer 6

People start businesses for various reasons:
* To make a good or provide a service
* To distribute goods
* To benefit others (not-for-profit)
* To fulfill a business opportunity

Question 7

What is the PRIMARY SECTOR in the economy?

Answer 7

The PRIMARY SECTOR produces raw materials.

Question 8

What does the SECONDARY SECTOR do?

Answer 8

The SECONDARY SECTOR manufactures goods, turning raw materials into finished products.

Question 9

What is the role of the TERTIARY SECTOR?

Answer 9

The TERTIARY SECTOR provides services to consumers and businesses.

Question 10

What is ‘enterprise’ in a business context?

Answer 10

Enterprise can mean either a business or the personal qualities to see and take advantage of new business opportunities.

Question 11

What is an entrepreneur?

Answer 11

An entrepreneur is someone who takes on the risks of enterprise activity.

Question 12

What are some financial motivations for becoming an entrepreneur?

Answer 12

Financial reasons can include:
* Earning more money than before
* Improving quality of life

Question 13

What does it mean to identify a gap in the market?

Answer 13

Identifying a gap in the market means thinking of a useful good or service that no other business is providing.

Question 14

What are some personal motivations for entrepreneurship?

Answer 14

Personal motivations can include:
* Desire for independence
* Following an interest
* Dissatisfaction with current job

Question 15

List some qualities of a successful entrepreneur.

Answer 15

Successful entrepreneurs often possess qualities such as:
* Hardworking
* Organised
* Innovative
* Willingness to take calculated risks

Question 16

Fill in the blank: Enterprise involves identifying new business opportunities and then _______.

Answer 16

[taking advantage of them]

Question 17

True or False: Entrepreneurs only take financial risks when starting a business.

Answer 17

False

Question 18

What are the Four Factors of Production?

Answer 18

The four factors of production are land, labour, capital, and enterprise.

Question 19

What does ‘land’ include in the context of factors of production?

Answer 19

‘Land’ includes all of the Earth’s natural resources, such as non-renewable resources (natural gas, oil, coal), renewable resources (wind, tidal power, wood), materials extracted by mining (diamonds, gold), water, and animals found in an area.

Question 20

What is opportunity cost?

Answer 20

Opportunity cost is the benefit that’s given up in order to do something else; it’s the cost of the choice that’s made.

Question 21

What is the significance of opportunity costs in business decisions?

Answer 21

Managers compare opportunity costs when making decisions to determine the best way to use limited resources.

Question 22

What is a sole trader?

Answer 22

A sole trader is a business owned by one person, who may employ others.

Question 23

What are the advantages of being a sole trader?

Answer 23

Advantages include ease of setup, being your own boss, and having full control over profits.

Question 24

What are the disadvantages of being a sole trader?

Answer 24

Disadvantages include long working hours, unlimited liability, lack of a separate legal identity, and difficulty in raising funds.

Question 25

What is a partnership in business?

Answer 25

A partnership involves two to twenty partners who share decision-making and profits, unless otherwise stated in a deed of partnership.

Question 26

What are the advantages of partnerships?

Answer 26

Advantages include more ideas and skills, shared workload, and increased capital for business growth.

Question 27

What are the disadvantages of partnerships?

Answer 27

Disadvantages include shared legal responsibility, potential for disagreements, and shared profits.

Question 28

What are the two types of limited companies?

Answer 28

The two types of limited companies are private limited companies and public limited companies.

Question 29

What is a key feature of a limited company?

Answer 29

A limited company is incorporated, meaning it has a separate legal identity from the owners.

Question 30

What does limited liability mean for owners of a limited company?

Answer 30

Limited liability means that owners only risk losing the money they have invested in the company.

Question 31

Who owns a limited company?

Answer 31

A limited company is owned by shareholders, and control is proportional to the number of shares owned.

Question 32

What does 'private' mean in private limited companies?

Answer 32

'Private' means that shares can only be sold if all shareholders agree.

Question 33

What is a disadvantage of private limited companies?

Answer 33

Private limited companies are more expensive to set up than sole traders or partnerships due to legal paperwork.

Question 34

What is a key advantage of private limited companies?

Answer 34

The big advantage is limited liability — owners can't lose more than they invest.

Question 35

What does 'public' mean in public limited companies?

Answer 35

'Public' means that the company shares are traded on a stock exchange and can be bought and sold by anyone.

Question 36

What is a key advantage of public limited companies?

Answer 36

Public limited companies can raise much more capital than any other kind of business.

Question 37

What is a disadvantage of public limited companies?

Answer 37

It can be hard to get shareholders to agree on how the business is run.

Question 38

What must businesses decide when starting?

Answer 38

Businesses must decide whether to have limited or unlimited liability.

Question 39

What type of liability do smaller businesses typically have?

Answer 39

Smaller businesses, such as sole traders and partnerships, tend to have unlimited liability.

Question 40

Can a business change its ownership structure over time?

Answer 40

Yes, businesses can change their ownership structure as they grow.

Question 41

What is a not-for-profit business?

Answer 41

Not-for-profit businesses do not aim to make a profit for their owners; any surplus is reinvested.

Question 42

What is a key feature of social enterprises?

Answer 42

Social enterprises generate income by selling products, using profits to benefit society.

Question 43

What is a challenge faced by not-for-profit organizations?

Answer 43

Not-for-profit organizations can struggle with financial stability, especially if they rely on donations.

Question 44

What is an unincorporated association?

Answer 44

An unincorporated association is easy to set up but has unlimited liability for its managers.

Question 45

What is a common legal structure for larger not-for-profit organizations?

Answer 45

Larger not-for-profit organizations are often incorporated and limited by guarantee.

Question 46

What are business aims?

Answer 46

Overall goals that businesses want to achieve.

Question 47

What is the main short-term aim of new businesses?

Answer 47

Survival, as around 60% of new businesses close within five years.

Question 48

What do most businesses aim to maximise?

Answer 48

Profits, although it may take a few years for a new firm to make any profit.

Question 49

What does growth mean for businesses?

Answer 49

Growth can mean increasing the number of employees, products sold, or income from sales.

Question 50

What is the aim of increasing shareholder value?

Answer 50

To make shareholders more wealthy by increasing the value of the firm.

Question 51

What does market share indicate?

Answer 51

The percentage of a market's total sales that a particular product or company has made.

Question 52

What is a common aim for new businesses regarding market share?

Answer 52

To capture a part of the market and establish itself.

Question 53

What do some firms aim to do socially and ethically?

Answer 53

Act in ways that are best for society and avoid causing harm to the environment.

Question 54

How is customer satisfaction measured?

Answer 54

By carrying out customer opinion surveys.

Question 55

What are business objectives?

Answer 55

Specific, measurable steps that help businesses achieve their aims.

Question 56

How do objectives differ from aims?

Answer 56

Objectives are more specific and measurable than aims.

Question 57

What factors affect a business's objectives?

Answer 57

The size of the business, level of competition, and type of business.

Question 58

How can a company's objectives change over time?

Answer 58

As a firm evolves, its objectives may shift from survival to growth and maximising profits.

Question 59

What external factors can influence a business's objectives?

Answer 59

New legislation, changes in the economy, technology, and environmental expectations.

Question 60

How do businesses use objectives to monitor success?

Answer 60

By checking if the objectives have been achieved after a period of time.

Question 61

What is a common objective to measure success?

Answer 61

Profit, such as meeting a yearly profit target.

Question 62

What is an example of a firm that might focus on customer satisfaction?

Answer 62

A small, local business that depends on word of mouth.