104 - 108

Question 1

What is Market Research?

Answer 1

The process of gathering primary and secondary data on the buying habits, lifestyles, usage and attitudes of actual and potential customers.

Question 2

What is Primary Research?

Answer 2

Primary research, or field research, gathers first-hand information that is new and directly relevant to the needs of the business.

Methods include questionnaires, interviews, focus groups, consumer panels, experiments, observations and test marketing.

Question 3

What is Secondary Research?

Answer 3

Secondary research, or desk research, involves the use of previously collected information that has not been gathered specifically for the business but instead adapted for its use.

Methods include official publications, industry magazines, internal information or online desk research.

Question 4

What is Qualitative Data?

Answer 4

Data referring to attitudes, opinions, intentions, motives and beliefs.

Methods include focus groups, open-ended questionnaires, interviews, customer reviews.

Question 5

What is Quantitative Data?

Answer 5

Data or facts that can be tested, in the form of numerical/mathematical data that can be measured and is statistically valid.

Question 6

What is Sampling?

Answer 6

Sampling occurs when researchers take a selection of the population who are representative of the whole population.

Examples are quota and random.

Question 7

What is Quota Sampling?

Answer 7

Involves population being segmented into specific groups with the same characteristics and then a number selected from each group.

Question 8

What is Random Sampling?

Answer 8

A subset of a statistical population where every member of the population has an equal chance of being interviewed.

Question 9

What is Bias in research?

Answer 9

Something that may cause data within a sample to be weighted towards one side, occurring when one subgroup outweighs another in a sample.

Question 10

What is the Private Sector?

Answer 10

Businesses owned and run by private individuals, aiming for survival, market share, profit maximisation, growth, maximisation of sales revenues, and increasing share value.

Question 11

What is the Public Sector?

Answer 11

Organisations which are owned and run/funded/controlled by the government (local and national).

Question 12

What is a Sole Trader?

Answer 12

A private sector business that is owned and run by one individual (but they may employ people) and has unlimited liability.

Question 13

What is a Partnership?

Answer 13

A private sector business owned and run between 2–20 people with unlimited liability.

Question 14

What is the Sale of Assets?

Answer 14

Established businesses are able to sell off assets that are no longer required, such as buildings and machinery.

Question 15

What is Debt Factoring?

Answer 15

Where a business can raise cash by selling their outstanding sales invoices to a third party at a discount, useful for cash flow problems.

Question 16

What is Retained/Reinvested Profit?

Answer 16

Where a business uses profits made at the end of the financial year and reinvests them back into the business to fund expenses.

Question 17

What is a Share Issue?

Answer 17

The offering for sale of new shares of ownership in a business, available only to LTDs and PLCs.

Question 18

What is an Overdraft?

Answer 18

An arrangement where a bank allows its customer to take out more money than is in their account, charged with interest and/or a fee.

Question 19

What is a Bank Loan?

Answer 19

Borrowing a fixed amount for a fixed period, with payments usually made monthly.

Question 20

What is Trade Credit?

Answer 20

Businesses buy items and pay for them at a later date, possibly 30–90 days later.

Question 21

What is Leasing?

Answer 21

Where a business pays for the use of an asset/equipment but will never own the asset, improving short-term cash flow compared to buying outright.

Question 22

What is Unlimited Liability?

Answer 22

Where the owners become personally responsible for the debts of the business, possibly forced to sell personal possessions or use personal savings.

Question 23

What is a Private Limited Company (Ltd)?

Answer 23

A business owned by its shareholders, run by directors, with limited liability, where shares can only be sold privately.

Question 24

What is a Public Limited Company (PLC)?

Answer 24

A business owned by its shareholders, run by directors, with limited liability, where shares can only be sold publicly on the stock exchange.

Question 25

What is Limited Liability?

Answer 25

The investor/owner is seen as separate to the company, with personal assets not at risk to pay debts.

Question 26

What are Social Enterprises?

Answer 26

Businesses that aim to solve problems and improve communities, not existing solely to make profits, with profits usually reinvested towards social goals.

Question 27

What are Charities?

Answer 27

Non-profit-making organisations established to collect money from individuals and spend it on a specified cause.

Question 28

What is Revenue?

Answer 28

The money a business makes from sales, calculated as total revenue = quantity sold x selling price.

Question 29

What is Profit?

Answer 29

The amount left after a business subtracts total costs from the revenue generated from selling products.

Calculation: Total Revenue – Total Costs.

Question 30

What are Fixed Costs?

Answer 30

Costs that do not vary with output and only change in the long run, such as rent and insurance.

Question 31

What are Variable Costs?

Answer 31

Costs that change in direct proportion to changes in output, such as raw materials and stock.

Question 32

What are Semi Variable Costs?

Answer 32

Costs that include both fixed- and variable-cost components, such as a salary with overtime pay.

Question 33

What are Direct Costs?

Answer 33

Costs which can be identified directly with the production of a good or service, e.g., raw materials.

Question 34

What are Indirect Costs (Overheads)?

Answer 34

Costs which cannot be matched against each product because they need to be paid regardless of production, e.g., rent.

Question 35

What are Total Costs?

Answer 35

Total fixed costs + total variable costs.

Question 36

What is Contribution?

Answer 36

Selling price – variable cost per unit, allowing analysis of whether each product covers its own variable costs.

Question 37

What is a Breakeven Chart?

Answer 37

A diagram that shows the level of output where a business does not make a profit nor a loss.

Formula: Fixed Costs / Contribution (Selling Price – Variable Cost per unit).

Question 38

What is the Margin of Safety?

Answer 38

Shows how much a producer can reduce output before the business starts to make a loss.

Formula: Actual output – Break-even output.