1.1 Introduction to business management

Question 1

What is the role of businesses?

Answer 1

produce goods and services for people

Question 2

What are the main functions of a business?

Answer 2

human resources
finance and accounts
marketing
operations

Question 3

Human resources

Answer 3

responsible for managing the personnel of the organisation.
→ deals with workforce planning, recruitment, training, appraisal, dismissals and redundancies and outsourcing human resource strategies.

Question 4

Finance and accounts

Answer 4

manage the organisation’s money.
→ ensure accurate recording and reporting of financial documentation
→ comply with legal requirements and inform those interested in the business’ financial position

Question 5

Marketing

Answer 5

identify and satisfy the needs and wants of customers
→ ensure that the firm’s products sell
→ market research, test marketing, advertising and branding.
→ functions include the four Ps:
→ product: ensure that goods and services meet the customers’ requirements
→ price: use various pricing strategies to sell the products of a business
→ place: ensure that goods and services are available in convenient places for customers
→ promotion: make sure that the customers know about the firm’s products

Question 6

Operations management (production)

Answer 6

the process of converting raw material and components into finished goods, ready for sale and delivery to customers.

Question 7

Business sectors

Answer 7

primary sector
secondary sector
tertiary sector
quaternary sector

Question 8

Primary sector

Answer 8

involved with the cultivation or extraction of natural resources
e.g. farming, mining, quarrying

Question 9

Secondary sector

Answer 9

the section of the economy where business activity is concerned with the construction and manufacturing of products

Question 10

Tertiary sector

Answer 10

the section of the economy where business activity is concerned with the provision of services to customers

Question 11

Quaternary sector

Answer 11

a subcategory of the tertiary sector, where businesses deal with the intellectual, knowledge-based activities that generate and share information

Question 12

Sectoral change

Answer 12

a shift in the relative share of national output and employment that is attributed to each business sector over time

Question 13

Reasons for sectoral change

Answer 13

higher household incomes
more leisure time
greater focus on customer services
increasing reliance on support services

Question 14

Factors of production

Answer 14

the four types of inputs or resources necessary for the production process
land - natural resources
labour - the physical and mental efforts of people
capital - non-natural resoures
entrepreneurship - management, organisation and planning of other factors

Question 15

Entrepreneur

Answer 15

an individual who plans, organises and manages a business, taking on financial risks in doing so

Question 16

Intrapreneur

Answer 16

an entrepreneur but as an employee within a large organisation

Question 17

Reasons for starting up a business

Answer 17

growth 
earnings
transference and inheritance
challenge
autonomy
security
hobbies

Question 18

Process of starting up a business

Answer 18

1. write a business plan
2. obtain start-up capital
3. obtain business registration
4. open a business bank account
5. marketing

Question 19

What are some factors to consider when setting up a business

Answer 19

business idea
finance
human resources
enterprise
fixed assets
suppliers
customers
marketing
legal issues

Question 20

What are some problems a new business might face?

Answer 20

lack of finance
cash flow problems
marketing problems
unestablished customer base
people management problems
legalities
production problems
high production costs
poor location 
external influences

Question 21

What is a ‘business plan’?

Answer 21

a report detailing how a business sets out to achieve its goals and objectives. It is a useful planning tool as it requires the owner(s) to consider the marketing, financial and human resources of the business.

Question 22

Why is a business plan needed?

Answer 22

helps to reassure financial lenders (banks, venture capitalists) that the entrepreneur has researched the idea.
→ used to assess both opportunities and risks that may be reflected in a business plan.
→ can also be used by other stakeholders such as shareholders to assess the potential gains from investment.

Question 23

Contents of a business plan

Answer 23

the business
the product 
the market 
the finance
the personnel
the marketing