Business Functions

Question 1

What are the three environments that surround a business?

Answer 1

1) Micro environment
2) Market environment
3) Macro environment

Question 2

Micro Environment

Answer 2

— the business can control
— the business itself
— the eight business functions

Question 3

Market Environment

Answer 3

— cannot be controlled but can be impacted/influenced
— includes customers, the media and suppliers

Question 4

Macro Environment

Answer 4

PESTLEE
P— political factors
E— economic factors
S— social/ socio-economic factors
T— technological factors
L— legal factors
E— environmental factors
E— ethical factors

Question 5

What elements have an impact on the business?

Answer 5

1) Competitors
2) New competitors
3) Substitute goods
4) Suppliers
5) Consumers.

Question 6

What are the eight internal business functions?

Answer 6

1) Purchasing
2) Production
3) Financial
4) Human Capital
5) Marketing
6) Public Relations
7) Administration
8) General Management

Question 7

What is an important concept of the Purchasing function

Answer 7

The relationship between the supplier and the business

Question 8

The purchasing function

Answer 8

The department that buys gods and services that are required by all the functions within the business.

Question 9

What are the types of purchases that take place in the purchasing function?

Answer 9

1) the purchase of products for the business’s own use
2) the purchase of products so that they can be resold at a higher price in order to make a profit
3) the purchase of products with the aim of processing them to manufacture other products

Question 10

What must the supplier offer in order to be the most suitable for the business?

Answer 10

The required product/service of the correct quantity and correct quality at the required place and the correct time and at the best possible price.

Question 11

What are the risks within the Purchasing function?

Answer 11

1) the aim of the department is to ensure that the business can make the best possible profit by negotiating lowest possible price without compromising the quality of the products.
2) place orders and follow up to ensure that what they ordered is delivered and need to be thoroughly checked to ensure that no products have been damaged.
3) contingency plan must be in place in case a supplier is unable to deliver goods on time.
4) develops a system to control stock (not too much and not too little)

Question 12

The production function

Answer 12

A department that aims to produce goods and services that satisfy the Eve changing wants and needs of the consumers

Question 13

True of False: all businesses will have a production function.

Answer 13

False, some businesses operate only in the tertiary sector where goods and services are bought and sold. These businesses are known as service operations.

Question 14

What is the aim of the production function?

Answer 14

To create value by changing raw materials into a form that will satisfy customers’ needs and wants. This happens when the factors of production all work you in order to produce goods and services.

Question 15

List the benefits of automation in the production function.

Answer 15

— automation during the production process saves money, as machines work more quickly and for a longer period of time without the need of a break, require no sick leave, provide fewer mistakes, which means lest wasted resources, which in turn earns the business more profit as productivity levels are a lot higher.

Question 16

List the problems that lie in the process of automation.

Answer 16

— machines replace the jobs that humans can do, resulting in higher unemployment rates
— machinery is also very expensive

Question 17

Discuss the risk management in the production department.

Answer 17

1) manufacturing costs must be kept as low as possible without compromising the quality of the product
2) produce the right quantities of the correct products at the time and place at a price that the customer is prepared to pay.
3) keep abreast of changes and development of technology
4) contingency plan
5) must regularly be in line with customers’ demands and requirements

Question 18

What is an important concept to remember when talking about the financial function?

Answer 18

Money/ capital

Question 19

Financial function:

Answer 19

Capital is necessary to start a business. Capital is either contributed by the owners or it is borrowed in order to purchase inventory and/or to manufacture goods and services

Question 20

What is used to help understand a business’ financial situation?

Answer 20

1) The statement of Comprehensive Income (previously referred to as the Income Statement)
2) The statement of Financial Position (previously referred to as the Balance sheet)

Question 21

What are the goals that the two financial statements are used to ensure?

Answer 21

— to obtain the maximum profit
— to increase profitability
— to ensure that liquidity is good
— to be solvent.

Question 22

Discuss the risk managements in the financial department.

Answer 22

1) responsible for developing budgets
— to make a profit
— to increase profitability
— unexpected expenses due to a lack of financial control
2) bad debt
3) make use of a loan
4) the change of exchange rate
5) theft needs to be dealt with proactively

Question 23

Define liquidity.

Answer 23

The available money to run a business (petty cash)

Question 24

Define solvency.

Answer 24

A comparison of a business’s assets and their liabilities

Question 25

To be solvent vs to be insolvent.

Answer 25

To be solvent: Assets are greater than liabilities
To be insolvent: Liabilities are greater than assets

Question 26

What does EPOSSE stand for?

Answer 26

Electronic Point Of Sale Scanning Equipment

Question 27

Define bad debt.

Answer 27

When a business’s debtor doesn’t pay their account on time, it proves a risk for the business that may never pay back their balance. To prevent that from happening, businesses check a customer’s credit worthiness before granting credit to them.