(1)Introduction To Business

Question 1

What are the characteristics of an entrepreneur?

Answer 1

• hardworking
• competent
• reliable
• diligent
• enthusiasm

Question 2

What are the four factors of production?

Answer 2

Land, labour, capital and enterprise

Question 3

What is value added?

Answer 3

What a business ensures it has when it charges consumers more than the cost of that product or service to consumers

Question 4

What is another word for business functions?

Answer 4

Departments

Question 5

What is chain of production?

Answer 5

Stages that a product passes through until it reaches the final consumer

Question 6

What are the different business sectors?

Answer 6

Primary - businesses in the primary sector are concerned with the extractive industries
Secondary - manufacturing
Tertiary- output of services

Question 7

What is deindustrialisation?

Answer 7

The decline in the secondary sector of the economy.

Question 8

What is private sector and public sector?

Answer 8

Private - businesses owned by private individuals - run for profit
Public - owned and run by the government - provides a service

Question 9

What is a sole trader?

Answer 9

• business that is own and run by the sole trader - the business does not exist in its own right - its unincorporated

Question 10

What are the advantages of of being a sole trader?

Answer 10

• few legal requirements
• financial information kept private
• cannot be subject to takeovers
• keeps all profit
• decision making power is kept with the owner

Question 11

What are the disadvantages of a sole trader?

Answer 11

• unlimited liability
• hard to raise capital and expand
• no continuity

Question 12

What is a partnership, what are some advantages and disadvantages of operating as a partnership?

Answer 12

• when two or more people run a business together.

Advantages - easy to establish

• more capital
• losses are shared
• share of expertise and ideas
• workload is spread

Disadvantages- unlimited liability

• decision making process is slower
• profits are shared
• lack of continuity

Question 13

What is a deed of partnership?

Answer 13

Legal document that clarifies matters such as - how much money each partner contributed and take from the business, duties, arrangements on taking new partners on etc.

Question 14

What is a limited liability partnership?

Answer 14

An LLP has separate legal identity to owners - it has limited liability

Question 15

What are the characteristics of a limited company?

Answer 15

• incorporation
• shares
• limited Liability

Question 16

What are the advantages of companies?

Answer 16

• access to large amounts of capital through shares
• limited liability
• less risky
• continuity

Question 17

What are the disadvantages of companies?

Answer 17

• expensive to set up
• more complicated to run
• company accounts are not private
• danger of takeover
• requires more complicated management structures

Question 18

What is the third sector?

Answer 18

Includes charities and community groups they are not owned by the government but are not run for profit.

Question 19

What is a franchise?

Answer 19

Where a business with a well known brand name lets a person or group of people set up their business under the name of that brand.

Question 20

What are the advantages for the franchiser?

Answer 20

• firm doesn’t have to spend large amounts in order to expand
• products are under their control
• applicants are carefully chosen

Question 21

What are the disadvantages for the franchiser?

Answer 21

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

Question 22

What are the advantages for the franchisee?

Answer 22

• using a tried and tested brand name
• specialist advice
• easier to obtain a loan from a bank

Question 23

What are the disadvantages for the franchisee?

Answer 23

• supplies have to be bought from the franchiser
• royalty payments
• has no control over what its selling
  Cannot be sold without the franchisers permission
• fixed period of time

Question 24

What is a co-operative?

Answer 24

Business owned and run by its members. Profits are shared between embers rather than being distributed to shareholders.

Question 25

What are the advantages of a co-op?

Answer 25

• legally straight forward
• common goal
• limited liability
• high quality service

Question 26

What are the disadvantages of a co-op?

Answer 26

• capital can be limited
• weak management
• employees may want more

Question 27

What is capital employed?

Answer 27

Total value of business’ assets.

Question 28

How many people does a small, medium and large business employ?

Answer 28

Small - under 50
Medium - under 250
Large - 250 +

Question 29

What factors affect the size of a business?

Answer 29

Market size
Nature of product
Personal preference
Access to resources to expand

Question 30

What is organic growth?

Answer 30

Is growth that comes from within the business - usually through increasing sales.

Question 31

What is a merger and acquisition?

Answer 31

Merger - where two companies join together to form a new larger business
Takeover - involves acquiring control of another company by buying its shares

Question 32

What is a joint venture?

Answer 32

Formal business arrangement between businesses who commit to work together on a particular project

Question 33

What are the advantages of joint ventures?

Answer 33

• capital cost of the project might be high - allowing the cost to be spread
• spread the risk
• enables the businesses to share their strengths
• good way to expand into new markets

Question 34

What is a strategic alliance?

Answer 34

It is where two businesses co-operate together rather than join together. It is less involved and less permanent than a joint venture