1.1 The Purpose And Nature Of Business

Question 1

What is a business

Answer 1

an organisation that provides goods and/or services

Question 2

What is the purpose of a business

Answer 2

To meet the needs of customers

Question 3

What are the reasons for starting a business

Answer 3

• producing goods
• supplying services
• distributing products
• fulfilling a business opportunity
• providing a good or service to benefit others

Question 4

What is the difference between a customer and a consumer

Answer 4

A customer buys the product, whereas a consumer uses it

Question 5

What is a good and give an example

Answer 5

A physical product like a car

Question 6

What is a service and give an example

Answer 6

An intangible product (which you cannot touch) like a lawyer or hairdresser

Question 7

What is a need and give an example

Answer 7

Goods and services which are necessary for living e.g. food, shelter, and warmth

Question 8

What is a want and give an example

Answer 8

Goods and services we would like, but are not necessary to survive e.g. holidays, phones, entertainment

Question 9

What are the four factors of production and their meaning

Answer 9

Capital - Buildings and machinery needed by the business
Enterprise - The entrepreneur who set up the business, organises factors of production, and takes the risks involved in running the business
Land - Where business is based and natural resources under the land
Labour - People working in the business

Question 10

What is opportunity cost

Answer 10

The alternative that is given up when a decision is made to use resources in a particular way

Question 11

What are the three business sectors

Answer 11

primary, secondary, tertiary

Question 12

What is the primary sector and give examples

Answer 12

The extraction of earths natural resources e.g. farming, mining, and fishing

Question 13

What is the secondary sector and give examples

Answer 13

Manufacturing goods from raw materials e.g. builders, clothing makers, car manufacturers

Question 14

What is the tertiary sector and give examples

Answer 14

Providing services to consumers and other organisations e.g. shops, transport, entertainment, banking

Question 15

What does enterprise mean

Answer 15

business - skills of people involved in the business to identify opportunities and bring resources together

Question 16

What is an entrepreneur

Answer 16

Someone who is willing to take the risks involved in starting a new business

Question 17

What is entrepreneurship

Answer 17

The ability to be an entrepreneur - to take risks to develop a business idea

Question 18

What are the characteristics of an entrepreneur

Answer 18

Innovative - having a vision of how things will be
Organised - Meeting deadlines
Hard working - Getting the business known
Risk taking - Being prepared to accept failure and try again. Taking the risk that their idea will work

Question 19

Why do people become an entrepreneur?

Answer 19

be their own boss
flexible working hours
to pursue an interest
earn more money
identify a gap in the market
dissatisfaction with current job

Question 20

What are the reasons for change in business environment

Answer 20

Technology - New technology is always being adapted which affects how products are made and how we buy them
Economy - Borrowing money, increasing prices, money related issues
Legislation - New laws which affects costs and demand
Environment - The businesses affect on the environment like materials used and how it manufactures products