11

Question 1

What is a joint venture

Answer 1

A business arrangement where 2 or more parties agree to pool their resources for the purpose of achieving a specific task

Question 2

Is a joint venture legally binding?

Answer 2

Yes, and is written in law

Question 3

Key points about joint ventures

Answer 3

• The business’s remain separate in legal terms
• Firms have to benefit from collaborative work
• Share fixed costs

Question 4

Evaluation points of joint ventures

Answer 4

• Difficulty agreeing on a strategy
• Mutual benefit is minimal
• Have to decide on the amount of resources each firm provides for it
• Legal problems eg who owns what

Question 5

What is meant by a strategic alliance

Answer 5

An arrangement between 2 parties that have decided to share resources to undertake a specific, mutually beneficial project
Less involved and less permanent than joint ventures

Question 6

What is meant by a business strategy

Answer 6

The action plan the business puts together to achieve its objectives

Question 7

What needs to be done to put together a strategy

Answer 7

An audit

Question 8

What is looked at in an internal audit

Answer 8

Strengths and weaknesses of the business

Question 9

What is looked at in an external audit

Answer 9

Opportunities and threats from outside

Question 10

What does SWOT analysis stand for

Answer 10

Strengths
Weaknesses
Opportunities
Threats

Question 11

What is meant by a business strategy

Answer 11

The method a business will use to achieve objectives/aims

Question 12

What is meant by direct investment

Answer 12

Purchase of capital goods that are used directly in production

Question 13

What is meant by indirect investment

Answer 13

Purchase of capital goods that are not used directly in production

Question 14

Example of indirect investment

Answer 14

Filing cabinet

Question 15

What different types of risk are there

Answer 15

To each functional area of a business

Eg financial, marketing

Question 16

How can risk be managed

Answer 16

• Studying the internal and external risks first
• Contingency planning from this
• Conservative forecasts/projections

Question 17

What are examples of financial rewards of enterprise

Answer 17

• Profits
• Dividends
• Capital growth

Question 18

What are examples of non-financial rewards of enterprise

Answer 18

• Satisfaction
• Control
• Contribution to society

Question 19

What is meant by quantifiable risks

Answer 19

Those which can be measured eg costs

Question 20

What is meant by non-quantifiable risks

Answer 20

Those which are intangible eg reputation, mental health

Question 21

What are some reasons that starts ups are high risk

Answer 21

• Require large capital investment
• Have no customer loyalty
• Barriers to entry
• No investor confidence

Question 22

What are some examples of external uncertainty

Answer 22

• Economic uncertainty
• Governmental uncertainty
• Competitors
• Consumer trends

Question 23

What internal factors can cause uncertainty in a leadership

Answer 23

• Poor management
• Financial uncertainty
• Employee uncertainty
• Shareholder uncertainty

Question 24

What is the relationship between risk and reward

Answer 24

The higher the risk, the higher the possible reward

Question 25

What is the difference between risk and uncertainty

Answer 25

A risk can be predicted, the uncertainty is what is used to predict the risk

Question 26

What is meant by uncertainty

Answer 26

The lack of sureness of an event

Question 27

What is one impact of uncertainty

Answer 27

Reduced investment

Question 28

What is meant by opportunity cost

Answer 28

The loss of alternatives when a decision is made

Question 29

What is meant by crisis management

Answer 29

The process by which a business deals with a disruptive and unexpected event that threatens to harm the business or its stakeholders

Question 30

What is an example of a crisis and therefore crisis management

Answer 30

KFC ran out of chicken