B

Question 1

What are corporate objectives?

Answer 1

They tend to focus on the desired performance and results of the business.

Question 2

What are the functions of a business?

Answer 2

.production
.research and development (R&D)
.purchasing
.marketing
.finance

Question 3

What is the external environment to a business

Answer 3

.economic
. Market
.demographic
.social
.competitors

Question 4

What are mission statements

Answer 4

A formal summary of the aims and values of a company, organisation or individual

Question 5

What is a profit and loss statement?

Answer 5

It lists your sales and expenses, it tells you how much profit your making, or how much you’re losing. They are usually completed every month, quatrefoil or year.

Question 6

What is meant by going into administration?

Answer 6

It is when a company becomes insolvent and is put under the management of licensed insolvency practitioners. And administrators can be used through a court process to protect the company and their positions as much as possible.

Question 7

What is a recession?

Answer 7

It is when the economy falls into decline and trade and industrial activity is reduced, generally recognised when there’s a fall in GDP in two successive quarters.

Question 8

What is GDP?

Answer 8

It is the total of all value added created in an economy

Question 9

Effects of changes in the external environment

Answer 9

Positive and negative

E.g. increase in competition can lead to decrease in sales

Question 10

Rise in income =

Answer 10

Increased sales

Question 11

How do interest rates affect a business?

Answer 11

. A small increase in interest rates has little impact
. A rise in interest rates can increase the cost of production since most business’s borrow money and are subject to interest charges. There fore increasing costs.
. They are used in short term for day to day operations or long term investments.

.
.

Question 12

Interest rate rising example

Answer 12

Grangemouth Oil Refinery:
Borrowed £230 mil
0.5% interest increase = 1.15 mil cost increase per year

Question 13

Interest rates and exchange rates

Answer 13

.If base rate interest rates increase then exchange rate of pound will rise.
. Imports of goods and services become cheaper, this could benefit business’s that import raw materials, components or services.
. This will also make Uk exporters products more expensive overseas.

Question 14

Pros and cons interest rates

Answer 14

Rising: . Interest of loans may increase
. Cost of imported products may fall
.demand for products may fall

Falling: . Interest on loans could fall
. Cost of imported products may rise
. Demand for products may rise

Question 15

Environmental

Answer 15

. Being seen to be environmentally friendly can separate you from competitors.
.