Unit 1 introduction to business

Question 1

what is meant by an entrepreneur?

Answer 1

someone who starts their own business

Question 1

what is meant by enterprise?

Answer 1

1) another word for business
2) the actions of a risk taker starting their business

Question 2

characteristics of an entrepreneur?

Answer 2

risk taker
shows initiative
innovative
not afraid of failure

Question 3

what are the factors of production?

Answer 3

land (natural resources) e.g sunlight
labour e.g education/skills
enterprise e.g individuals who tasks risk
capital e.g machinery/ technology

Question 4

what are the 3 sectors of the economy?

Answer 4

primary sector
secondary sector
tertiary

Question 5

what is a primary sector?

Answer 5

activities undertaken by directly using natural resources e.g farming
(forms 1% of uk economy)

Question 6

Benefits of adding value

Answer 6

Customer loyalty
Change higher in price, increase profit margin
More competitive
Point of difference from competitors
Good reputation

Question 7

what is the secondary sector?

Answer 7

involves converting natural resources into finished goods e.g manufacturing
(19% of uk economy)

Question 8

what is the tertiary sector?

Answer 8

provision of services
(19% of uk economy)

Question 9

what’s a stakeholder?

Answer 9

an individual or organisational who have a vested interest within the activities and decision making
- shareholders/owners
- customers
-employees/employers

Question 10

what is a private sector?

Answer 10

privately owned companies e.g sole traders
- run to generally make profit, help make community, act ethically.

Question 11

what is a public sector?

Answer 11

ruined on behalf of public, government or by organisations that fund.
- not generally for profit
- for public but use public funds

Question 12

what is a third sector?

Answer 12

voluntary groups, charities, social enterprise
- value driven, not necessarily motivated by profit but a desire to achieve social goals.

Question 13

limited liability is?

Answer 13

only responsibly for debts to an extent. e.g can’t take personal belongings

Question 14

what is unlimited liability?

Answer 14

has to repay debt off fully, this could lead to losing personal belongings

Question 15

what does franchise mean?

Answer 15

business with well known brand name lets a person or group of people set up using that brand. e.g subway
- has no legal structure as liability depends on how business is established

Question 16

what’s a franchisor?

Answer 16

the owner

Question 17

what’s a franchisee?

Answer 17

individuals buy in the right to use the brand name

Question 18

advantages of a franchiser?

Answer 18

• applicants ca be carefully selected for sustainability
• products necessary for franchise to operate are under the franchisers control.
• firm may not have to spend large amounts of money to expand.

Question 19

disadvantages for the franchiser?

Answer 19

• control issues
• the cost of supporting the franchisees
• the possibility of conflict

Question 20

advantages to the franchisee?

Answer 20

• lower risk (proven business concept)
• support advice & training
• marketing (national)
• maybe easier to obtain finance

Question 21

disadvantage of the franchisee?

Answer 21

• profit shared
• franchise fee
• supplies have to be brought from franchiser
• lose control and independence
• business cannot be sold without permission
• franchise may be for fixed period

Question 22

sole trader advantages

Answer 22

• your own boss
• keep all profits
• easy to set up
• open whenever
• less disagreements
• quick decisions

Question 23

sole trader disadvantages

Answer 23

• unlimited liability
• workload
  -sickness
• limited skills and finance
• higher tax rate
• no continuity

Question 24

partnership definition

Answer 24

owned by more than one person - need legal partnership agreement (deed of a partnership)

Question 25

partnership advantages

Answer 25

more skills/ideas easier to raise finance continuity

Question 26

partnership disadvantages

Answer 26

unlimited liability slower decision making disagreements

Question 27

Ways to add value

Answer 27

USP unique selling point Updates Quality Collaboration with others Branding Improve image Convenience Adds to sale service/ customer service Functionality Warrantee

Question 28

What’s a multinational company?

Answer 28

Companies that operate in a number of countries around the world

Question 29

Reasons for diseconomies of scale

Answer 29

- poor communication (as business expands communication may become strained along the chain of command or different departments) - lack of motivation (workers feel isolated, less appreciated leading to loyalty and motivation to diminish and a fall in that can increase labour costs

Question 30

Co operatives?

Answer 30

Is owned and run by its member (employees and customers). Profits are shared between members rather than being distributed to share holders.

Question 31

Advantages of cooperatives

Answer 31

- Legally straightforward to establish - liability for members usually limited - a higher quality of service is likely to be provided - customers are usually loyal supportive

Question 32

Disadvantages of cooperatives

Answer 32

- capital can be limited - weak management - slower decision making - employees may want more

Question 33

What types of businesses have limited liability

Answer 33

Private and public limited company

Question 34

What types of businesses have limited liability

Answer 34

Private and public limited company

Question 35

What type of businesses Have unlimited liability

Answer 35

Sole trader Partnership

Question 36

What are international markets