Business in the real world (1&2)

Question 1

3 types of businesses

Answer 1

Primary, secondary and tertiary

Question 2

Explain the 3 types of businesses

Answer 2

Primary = raw materials like farming. Secondary = manaufacturing goods like builders. Tertiary= providing a service like hairdressing.

Question 3

4 factors of production and explain them

Answer 3

Land = where it is based.
Labour = staff needed.
Capital = buildings and machinery needed.
Enterprise = the entrepreneur that sets up the business by taking calculated risk.

Question 4

Name some external changes a business could face

Answer 4

legislation, economic climate, interest rates, new tech.

Question 5

Benefits and drawbacks to a sole trader

Answer 5

owned by 1 person. quick, easy, profits all kept. Stressful, unlimited liability.

Question 6

Benefits and drawbacks to a partnership

Answer 6

jobs and workload shared, more ideas. Unlimited liability, profits shared.

Question 7

LTD meaning, benefits and drawbacks

Answer 7

Separate legal identity to its owners and can sell shares. Limited liability, easier to raise finance. Takeover possible, control loss possible.

Question 8

PLC meaning, benefits and drawbacks

Answer 8

Lists its shares on the stock market. Limited liability, raise large sums of money. Takeover possible and so is control loss.

Question 9

Limited liability

Answer 9

owner’s not responsible for the company’s debts and can only loose the money invested into the company.

Question 10

Unlimited liability

Answer 10

No difference between business and owner themselves. Liable for any debts.

Question 11

4 Role of objectives

Answer 11

Direction, focus for employees, allows planning, measurement of success.

Question 12

Name 8 stakeholders

Answer 12

shareholders, employees, customers, local community, suppliers, competitors, banks, government.

Question 13

Governments main objectives

Answer 13

Taxes, creating jobs.

Question 14

Suppliers main objectives

Answer 14

financial stability, good prices.

Question 15

Purpose of business planning

Answer 15

Provides a focus, review performance, modify objectives.

Question 16

Benefits and drawbacks of business planning

Answer 16

Reduces risk, allows reviews of performance. Updates need, can be costly and lots of time.

Question 17

Organic growth examples, benefits and drawbacks

Answer 17

From within a business. Franchsing or outsourcing. Less risky, more clout. Loss of control and reputation possibly.

Question 18

External growth examples, benefits and drawbacks.

Answer 18

Through merges or takeovers. economies of scale, lower competition. Redundant workers, diseconomies of scale possible.

Question 19

Franchising meaning, benefits, drawbacks

Answer 19

Letting another business use your name. More exposure, more customers and clout. Control of quality maybe reduced, reputation in doubt, shared profits.

Question 20

Economies of scale meaning

Answer 20

Average unit costs decreased

Question 21

diseconomies of scale meaning

Answer 21

average unit costs increased

Question 22

Average unit costs formula

Answer 22

total costs/ output