Unit 1- Business in the real world (Paper 1 & 2)

Question 1

3 reasons for starting a business

Answer 1

Making profit, benefiting others, gap in the market

Question 2

Primary business

Answer 2

Produces raw materials extracted from nature

Question 3

Secondary business

Answer 3

Manufacture goods from raw materials into finished goods. Also includes construction

Question 4

Tertiary business

Answer 4

Provide services. Also involved in distribution process

Question 5

Name 4 factors of production

Answer 5

Land, labour, capital, enterprise

Question 6

Describe land (f of p)

Answer 6

Land where business is based, natural resources on that land

Question 7

Describe labour (f of p)

Answer 7

All people work in the business

Question 8

Describe capital (f of p)

Answer 8

Buildings and machinery needed by business

Question 9

Describe enterprise (f of p)

Answer 9

Entrepreneurs who set up the businesses, organise factors of production and take risks

Question 10

What is an entrepreneur?

Answer 10

Someone who takes a calculated risk through starting a business

Question 11

2 financial reasons for starting a business

Answer 11

Making profit, investing money

Question 12

3 non-financial reasons for starting a business

Answer 12

Work-life balance, skills and interest, being their own business

Question 13

8 words to describe a good entrepreneur

Answer 13

Innovative, risk-taker, hard working, organised, determined, persuasive, leadership, teamworker

Question 14

4 advantages of sole trader

Answer 14

Quick and easy to set up, simple to run, keep all profits, quick decision making

Question 15

4 disadvantages of sole trader

Answer 15

Unlimited liability, harder to raise finance, limited time off, stressful

Question 16

4 advantages of partnership

Answer 16

Quite simple for 2-20 people to set up, bring more knowledge and skills, jobs shared so less stressful, easier to raise finance

Question 17

4 disadvantages of partnership

Answer 17

Unlimited liability, profits have to be shared, decision making takes longer, short life- if partner leaves

Question 18

What’s in a deed of partnership?

Answer 18

How profits are shared, how much each partner invests, how decisions are taken, what happens if a partner leaves

Question 19

4 examples of an Ltd

Answer 19

Iceland, Virgin, John Lewis, Clark’s

Question 20

Who are shares available to in an Ltd?

Answer 20

Friends and family

Question 21

3 advantages of an Ltd

Answer 21

Limited liability, easier to raise finance, stable form of structure

Question 22

3 disadvantages of an Ltd

Answer 22

Shareholders have to agree how profits are distributed, greater costs, less privacy

Question 23

4 examples of a PLC

Answer 23

BP, Boots, Barclays, Marks and Spencer

Question 24

Who are shares available to in a PLC?

Answer 24

The stock market

Question 25

3 advantages of PLC

Answer 25

Limited liability, can raise large sums of finance, stable form of structure

Question 26

3 disadvantages of PLC

Answer 26

Public can see information, risk of being taken over, separation of ownership and control

Question 27

6 possible aims for a business

Answer 27

Survival, profit/sales maximisation, share value, quality, growth, social responsibilities

Question 28

4 roles of objectives

Answer 28

Direction, focus for employees, allows planning, measurement of success

Question 29

Name 7 stakeholders

Answer 29

Customers, employees, managers, suppliers, local community, government, shareholders

Question 30

What are managers and employees mainly interested in?

Answer 30

Pay, job security, promotion, job satisfaction, success of business

Question 31

What are shareholders mainly interested in?

Answer 31

High profits, success and growth, proper running of business

Question 32

What is the government most interested in?

Answer 32

Payment of taxes, creating jobs, compliance with legislation

Question 33

What are suppliers most interested in?

Answer 33

Fair or high prices, profitable and continuous trade, financial stability

Question 34

What are customers most interested in?

Answer 34

Value for money, quality meets need

Question 35

What is the local community most interested in?

Answer 35

Success of business, compliance with local laws

Question 36

4 factors that influence location

Answer 36

Market, raw materials, labour, competition,

Question 37

What should be included in a business plan?

Answer 37

The idea, objectives/aims, finance required, market, how it will operate

Question 38

2 ways of internal growth

Answer 38

Franchising, outsourcing

Question 39

2 ways of external growth

Answer 39

Mergers, takeovers

Question 40

Franchising

Answer 40

Giving other businesses the right to sell its products

Question 41

Outsourcing

Answer 41

Pay another firm to perform tasks for you

Question 42

Merger

Answer 42

Consolidation of 2 titles

Question 43

Takeover

Answer 43

One entity takes ownership of another

Question 44

Economy of scale

Answer 44

Average cost per unity falls as output grows

Question 45

Diseconomy of scale

Answer 45

Once economies of scale is reacted- if business grows/increases output, leads to increased average cost per unit