1.1 - What is a business?

Question 1

Adding value

Answer 1

The process of producing a particular good or service that is worth more than the cost of the resources used to produce it.

Question 2

Business

Answer 2

A decision-making organisation established to produce goods and/or provide services.

Question 3

Consumers

Answer 3

The individuals or organizations that actually use a product.

Question 4

Customers

Answer 4

The individuals or organizations that purchase a product.

Question 5

Entrepreneurs

Answer 5

The individuals who take Risks in overseeing a business organization or business venture, usually in pursuit of profit.

Question 6

Entrepreneurship

Answer 6

The knowledge, skills and experiences of individuals who have the capability to manage the overall production process.

Question 7

Factors of production

Answer 7

The collective term for the resources used in the production process, i.e. land, labour, capital and entrepreneurship.

Question 8

Finance

Answer 8

Function of an organization responsible for ensuring that the business has sufficient funds in order to conduct its daily operations.

Question 9

Goods

Answer 9

These are physical (tangible) products, such as cars, clothes, flowers, food, furniture, smartphones, and toys.

Question 10

Services

Answer 10

Intangible products, such as haircuts, tourism, public transport, banking, insurance education, and healthcare.

Question 11

Human resources

Answer 11

The business function that handles all aspects relate to the workforce, involving all aspects of a firm’s operations related to staff (personnel) within an organization.

Question 12

Marketing

Answer 12

Business function of identifying the needs and wants of customers so that the organization can provide goods and services to meet these requirements and desires, usually in a profitable way.

Question 13

Needs

Answer 13

The basic necessities that an individual must have in order to survive, such as food, water, and shelter.

Question 14

Operations management

Answer 14

The business function refers to the process of making goods and providing services from the available resources of a business to meet the needs and wants of its customers.

Question 15

Primary sector

Answer 15

Business activity involved with the extraction of natural resources, e.g. fishing, mining and agriculture.

Question 16

Production

Answer 16

The process of creating goods and/or services using the factors of production available to the business.

Question 17

Quaternary sector

Answer 17

Business activity involving the creation or sharing of knowledge and information. Research and Development.

Question 18

Secondary sector

Answer 18

Business activity involved with the manufacturing or production of finished products.

Question 19

Tertiary sector

Answer 19

Business activity that involves providing services to customers, i.e. consumers and business clients.

Question 20

Value added

Answer 20

The numerical difference between the cost of factor inputs in the production process and the price that the final output is sold for. (final price-cost factor inputs)

Question 21

Wants

Answer 21

These are the desires of individual customers, i.e., the goods and services that they would like to have (rather than things they need to survive), such as a new smartphone, a family holiday in an overseas location, fresh flowers, or jewellery.

Question 22

Consumer goods

Answer 22

Products sold to the public, rather than to other businesses. Can be classified as either Consumer durables (can be used repeatedly) or non-durables (cannot be reused or need to be used shortly after their purchase because they cannot last).

Question 23

Capital goods (or producer goods)

Answer 23

The physical products bought by businesses to produce other goods and/or services. E.g buildings, computers, machinery, tools and specialist equipment

Question 24

Intrapreneurship

Answer 24

Intrapreneurship is simply entrepreneurship in an existing organization. In many ways, intrapreneurship is easier for an individual than entrepreneurship because it has the support of an existing organization.