Unit 1.1 what is a business?

Question 1

Whats A business?

Answer 1

A business is a decision-making organization involved in the process of using inputs to produce goods and/or services.

Question 2

Examples of inputs

Answer 2

-Capital
-Enterprise
-Land
-Labour

Question 3

Examples of processes

Answer 3

-Human resources
-Finance
-Marketing
-Operations management

Question 4

Examples of outputs

Answer 4

-Goods
-Services

Question 5

Primary sector

Answer 5

Businesses in this sector are involved in the extraction, harvesting and conversion of natural resources.

Question 6

Secondary sector

Answer 6

Businesses in this sector are involved in the manufacturing or construction of products.

Question 7

Tertiary sector

Answer 7

Businesses in this sector specialize in providing services to the general population.

Question 8

Quaternary sector

Answer 8

are involved in intellectual, knowledge-based activities that generate and share information.

Question 9

Interdependence between sectors

Answer 9

chain of production links all the production sectors by tracking the stages of an item’s production from the extraction of raw materials all the way through to it being delivered the consumer.

Question 10

Functional areas of a business

Answer 10

-Human resources
-Finance
-Operations management
-Marketing

Question 11

Human resources

Answer 11

Manages the personnel of the organization.
Personnel issues include:
-Workforce planning
-Recruitment
-Training
-Appraisals
-Dismissals
-Redundancies
-Outsourcing HR strategies

Question 12

Finance and accounts

Answer 12

-Manages the organization’s money and ensuring compliance with legal requirements
-Accurate recording and reporting of financial documents must take place to:
-Comply with legal requirements (e.g., taxation laws)
-Inform stakeholders such as shareholders and potential investors.

Question 13

Marketing

Answer 13

-Responsible for identifying and meeting the needs and wants of customers.
-Key functions focus on the seven Ps of marketing:
1.Product
2.Price
3.Place
4.Promotion
5.People
6.Processes
7.Physical evidence

Question 14

Operations management

Answer 14

-Responsible for the process of converting raw materials and components into finished goods.
-Operations management also applies to the process of providing services to customers.

Question 15

factors of production

Answer 15

is the collective term for the resources needed to produce goods and services
-Land
-Labour
-Capital
-Entrepreneurship

Question 16

Land

Answer 16

These are natural resources needed to produce goods and services. Examples include water, timber, sand, minerals, metal ores, plants and animals.

Question 17

Labour

Answer 17

This refers to human effort used to produce goods and services.

Question 18

Capital

Answer 18

This refers to non-natural (or man-made) resources used in the production process. Examples include tools, machinery, motor vehicles, physical premises, and infrastructure.

Question 19

Entrepreneurship

Answer 19

This refers to the knowledge, skills and experiences of individuals who have the capability to manage the overall production process. Entrepreneurs have the ability and willingness to take risks in order to produce goods and provide services to customers, profitably.

Question 20

Adding value

Answer 20

the process of producing a particular good or service that is worth more than the cost of the resources used to produce it.

Question 21

Consumers

Answer 21

the people who use goods and services. They are not necessarily the customers though.

Question 22

Customers

Answer 22

are the people or other businesses that purchase goods and services.

Question 23

Goods

Answer 23

are physical products, e.g. food, clothes, furniture, cars, and smartphones.

Question 24

Services

Answer 24

are intangible products, e.g. haircuts, tourism, public transport, banking, insurance education, and healthcare.

Question 25

consumer goods (consumer durables)

Answer 25

products sold to the general public

Question 26

producer goods (capital goods)

Answer 26

physical goods brought by other businesses to produce other goods and/or services

Question 27

Characteristics of entrepreneurs

Answer 27

Taking substantial risks
Having a vision for the business.
Rewarded with profit.
Responsibility for employees.
Failure may result in personal costs.

Question 28

Commonly encountered challenges for new businesses

Answer 28

-Production problems
-Poor location
-People management problems
-External influences
-Legalities
-Marketing problems
-Unstable customer base
-Lack of finance capital
-High production costs
-Cash flow problems

Question 29

reasons to why people set up a business
G
E
T
C
A
S
H

Answer 29

Growth
Earnings
Transference and inheritance
Challenge
Autonomy
Security
Hobbies

Question 30

Growth

Answer 30

-Capital growth is one of the rewards to entrepreneurs who own their own businesses.
-This is when there is an appreciation in the value of the assets of the business (e.g. land and buildings).
-Capital growth has the potential to become worth more than the value of the owners’ salaries.

Question 31

Earnings

Answer 31

Entrepreneurs can earn far in excess of salaries from any other occupation that they might pursue working for someone else.

Question 32

Transference and inheritance

Answer 32

In many societies, it is the cultural norm for entrepreneurs to pass on their businesses (transference) to the next generation of children (inheritance) to secure the future of the younger generation.

Question 33

Challenge

Answer 33

Some people view the setting up and running of a business to be an enjoyable challenge.

Question 34

Autonomy

Answer 34

-There is autonomy (independence, freedom of choice and flexibility) in how a business is run by the self-employed.
-This is highly attractive to individuals who prefer to decide how they work instead of following the instructions and rules set by their employers.

Question 35

Security

Answer 35

-Being self-employed can offer more job security than working for an employer.
-It is potentially easier to increase personal wealth for financial security in retirement.

Question 36

Hobbies

Answer 36

Some people want to pursue their passion or turn their hobby into a business.

Question 37

Entrpeneurship

Answer 37

collective knowledge skills and experiences of entrepreneurs