business 901 - 905

Question 1

define effective demand

Answer 1

group of users in sufficent numbers which want/need a specific service/product and are willing to pay for it

Question 2

name the four factors of production and describe

Answer 2

1) labour - work done by people
2) capital - items used in the production of goods
3) enterprise - the human element; people responsible for the business
4) land - all resources from nature

Question 3

define added value

Answer 3

the difference between the selling price value and the cost of the materials

Question 4

name and describe the sectors of business

Answer 4

primary sector - direct use of natures resources (fishing, extraction and agriculture)
secondary sector - uses raw materials from primary sector to produce manufactured goods (car assembly, food production)
tertiary sector - responsible for the services involved in the distribution, marketing and sales. (security, transport,advertising)

Question 5

how do you measure business size

Answer 5

sales volume, number of employees, profit level, capital

Question 6

how do companies grow?

Answer 6

1) internal growth - entering new markets,more outlets,new products, etc.
2) external growth - by take over/aquire(take control of the business )/merge with another company(two business agree to run their business as one)

Question 7

define economies of scale

Answer 7

reduction in average price as a result of increasing the scale of production

Question 8

name the 5 different economies

Answer 8

1) managerial
2) marketing and commercial
3) financial
4) technical
5) risk bearing

Question 9

how come small companies survive

Answer 9

1) able to manufacture specialized components for larger firms
2) niche- small demand, therefore business stays small
3) ability to customise and serve customers better
4) ability to adapt faster

Question 10

why do small companies remain small?

Answer 10

1) market size
2) owners personal decision
3) nature of industry

Question 11

difference between social cost and benifit

Answer 11

a social cost is a cost incurred to society because of a business decision
a social benefit is a benefit enjoyed by society because of a business decision

Question 12

how is national wealth calculated

Answer 12

by GDP(gross domestic profit )- it is the total output of a country in the annual production of goods and services

Question 13

objectives of private enterprise are?

Answer 13

1)profit 2)growth 3)market share 4)survival

Question 14

objective of public enterprise

Answer 14

1)employment 2)maintain economic growth 3)provide essential goods at a low price

Question 15

difference between shareholders and stakeholders

Answer 15

shareholders are the people who own the company through shares. Stakeholders are people who are affected by the business activities

Question 16

define inflation

Answer 16

general price increase resulting in decrease in purchasing power of individuals

Question 17

define balance of payments

Answer 17

the difference between country’s imports and exports

Question 18

name the 4 taxes and describe them

Answer 18

1) cooperate tax - charged by profits that businesses make
2) direct tax - directly taxed from taxpayers income
3) indirect tax - tax is collected by the businesses(intermediary) from the customer
4) tarrifs - imposed by the government on imported goods to try and reduce importation

Question 19

what is monetary policy

Answer 19

authority controls money supply often through the rate of interest

Question 20

fiscal policy definition

Answer 20

use of government revenue collection and expenditure to influence the economy

Question 21

effect of increased taxes

Answer 21

1) lowers profit
2) less money for reinvestment
3) discourages new businesses

Question 22

factors that influence demand

Answer 22

1)price 2)price of other goods 3)seasonal factors 4)income 5)population size 6)government policies 7)trends

Question 23

describe CAD, CAM, CIM

Answer 23

computer aided design - assist in creation/modificaton/analysis
computer aided manufacturing- control machine tools
computer integrated manufacturing- control the entire production process

Question 24

what is cloud computing?

Answer 24

cloud computing is sharing resources on a “cloud” instead of a centralized server

Question 25

advantages of e-commerence

Answer 25

1) easier to reach new customers 2) effective and efficient usage of technology 3) better distribution of products

Question 26

disadvantages of e-commerence

Answer 26

1) costs for researching/installing/purchasing and maintaining technological investments. 2) training workers to work online 3) lower motivation of workers as they are being replaced

Question 27

threats of e-commence

Answer 27

1)security issues 2)access to internet is still limited in some areas 3)laws of e-commence would have to be ironed out

Question 28

sole trader characteristics

Answer 28

- business controlled by one person - self employed - lesser legal requirements - low operating cost - no profit sharing - small capital amount needed

Question 29

characteristics of a partnership

Answer 29

- few individual owners(2-20) - shared profits and losses - easier to raise capital - low start up cost

Question 30

difference between limited liability and unlimited liability

Answer 30

unlimited: business owners obligation for the company's losses extend to their personal wealth limited: business owners obligation is restricted to the original amount invested into the company

Question 31

limited company characteristics

Answer 31

1) minimum 2 owners, no max 2) is a separate legal entity 3) can be public or private 4) subject to more legal requirements 5) profit share is called dividends 6) limited liability 7) access to greater capital

Question 32

define franchise, franchiser, and franchisee

Answer 32

franchise - when a business operates under another businesses name and sells their products/provides their services franchiser - the company which other companies operate under their name and sell/provide their goods/services franchisee - the company that operates under another businesses name and sells their products/offers their services

Question 33

define joint venture

Answer 33

when 2 or more business organization decides to work together for a special project

Question 34

what does an organizational chart show?

Answer 34

1) relationship between departments and their responsibilities 2) lines of formal communication 3) chain of command 4) spam of control

Question 35

difference between centralization and decentralization

Answer 35

centralization - concentration of decision-making powers at a high level in the management hierarchy decentralization - giving decision making powers to lower level employees

Question 36

define "noise" in business terms and give examples

Answer 36

barriers to effective communication are called noise. | eg: language, atmosphere, physical barriers, timing, perception, filtering

Question 37

name the 4 ways of communication and describe them

Answer 37

horizontal - among staff of the same level diagonal - occurs among staff and units outside the chain of command downwards- info flows from higher level to lower upwards - info flows from lower level to higher

Question 38

steps of communication process

Answer 38

(sender)encode message -->transmit message ---> receive message ---->decode message ----> feedback

Question 39

advantages of oral communication

Answer 39

instant feedback from receiver and its easier to clear up misunderstandings quickly.

Question 40

difference between public and private limited company

Answer 40

``` private limited company 1)2-50 shareholders 2)shares not sold in the stock exchange 3)to keep control of the business (eg. within family) public limited company 1) 2-unlimited number of shareholders 2)shares are sold to the public in the stock exchange 3)easier to gain capital ```

Question 41

disadvantages of public limited company

Answer 41

1) high finantial commitment 2) high operating cost 3) expensive to set up 4) ownership and control issues - no control over shares, risk of takeover 5) have to disclose fanatical information

Question 42

advantages of public limited company

Answer 42

1) easily transferred ownership, sell/buy shares in stock exchange 2) more growth/expansion opportunities 3) better management

Question 43

franchise advantages

Answer 43

1) easier to sell their products/services | 2) less risky for the franchisee because they have support on training, advertising, and marketing

Question 44

factors to consider when choosing method of communication

Answer 44

1) what is the message 2) why is it being sent (confidential/public) 3) how many people need to know 4) how quickly it needs to reach them 5) is written evidence needed

Question 45

advantages and disadvantages of oral communication

Answer 45

``` advantages: 1)instant feedback 2)corrected easily disadvantages: 1)if passed through many people the message could get distorted 2)intonations - the way you speak 3)no permanent record ```

Question 46

advantages and disadvantages of written communication

Answer 46

``` advantages: 1)provides permanent record 2)useful when sending long/complex data 3)as much time can be taken to read/study information disadvantages: 1)time consuming 2)no immediate feedback ```

Question 47

disadvantages and advantages of private limited company

Answer 47

ad: 1)perpetual existance 2) control over the business dis: 1)cannot transfer shares easily 2) harder to make decisions