1.1 Business Organization

Question 1

What is the economic problem?

Answer 1

That there are infinite wants and needs, but finite resources

Question 2

What is opportunity cost?

Answer 2

When making a choice, the next best alternative we had to give up is called the ‘opportunity cost’

Question 3

What is the primary sector?

Answer 3

Extracts and uses the natural resources

Question 4

What is the secondary sector?

Answer 4

Manufactures goods using the raw materials from the primary sector

Question 5

What is the tertiary sector?

Answer 5

Provides services to consumers and other sectors of industry

Question 6

What is the quaternary sector?

Answer 6

Knowledge based part of the economy

Question 7

What are the 4 factors of production?

Answer 7

Land, labour, capital and enterprise

Question 8

What is “specialisation”?

Answer 8

Specialisation is when each worker specialises in some part of the production process. This dividing of the production process into different tasks is called division of labour. Specialisation and the division of labour increase efficiency and output.

Question 9

What does ‘‘Land’’ refer to?

Answer 9

Natural resources

Question 10

What does “Labour” refer to?

Answer 10

Workforce/ employees

Question 11

What does “Capital” refer to?

Answer 11

Machinery

Question 12

What does “Enterprise” refer to?

Answer 12

The skill and risk-taking ability of the person who brings together the resources

Question 13

What is “Added value”?

Answer 13

Added value is the difference between the selling price and the cost price of a good or service

Question 14

What are the 4 functional areas of an organisation?

Answer 14

Operations, Marketing, Finance, Human Resources

Question 15

What do “Operations” do in an organisation?

Answer 15

Decides how the good will be manufactured, stock control, quality control, research and development

Question 16

What does “Marketing” do in an organisation?

Answer 16

Product, price, place, promotion

Question 17

What does “Finance” do in an organisation?

Answer 17

Recording financial transactions, cash flow, budgeting

Question 18

What does “Human resources” do in organisation?

Answer 18

Recruitment, training, pay and benefits, health and safety

Question 19

What’s an entrepreneur?

Answer 19

An individual who demonstrates enterprise and initiative to make a profit

Question 20

What’s an intrapreneur?

Answer 20

An individual employed by a large organisation who demonstrates entrepreneurial thinking in the development of new products or services

Question 21

What are some reasons for starting your own business?

Answer 21

Freedom, passion for the product, profit, enjoyment, new experience

Question 22

What are the 6 stages to setting up your own business?

Answer 22

1. Organising the basics
2. Researching the market
3. Planning the business
4. Establishing legal requirements
5. Raising the finance
6. Testing the market

Question 23

What is a business plan?

Answer 23

“A written document that describes a business, its objectives and its strategies, the market it is in and its financial forecasts”

Question 24

Why is a business plan important?

Answer 24

The plan allows potential investors (including the bank) to check the validity of the idea