Business In The Real World

Question 1

What is a business ?

Answer 1

A business is an orginisation designed to supply a product which is capable of satisfying a customers need

Question 2

What is a service ?

Answer 2

A service is an act that a business person carries out for you in exchange for money. A service can’t be touched it is intangiable
E.g. cleaning, gardening, taxis etc

Question 3

What is land in the 4 factors of production ?

Answer 3

Land is somewhere to produce the goods
E.g. a farm

Question 4

What is labour in the 4 factors of production ?

Answer 4

Labour - people to work in the business
E.g. farm workers

Question 5

What is capital in the 4 factors of production ?

Answer 5

Capital - money to get the business started

Question 6

What is enterprise in the 4 factors of production ?

Answer 6

Enterprise is the drive or motivation from the owners to start a business

Question 7

What is the primary sector ?

Answer 7

The primary sector extracts raw materials from the planet

Question 8

What is the secondary sector ?

Answer 8

In the secondary sector goods are manufactured from raw materials into finished goods

Question 9

What is the tertiary sector ?

Answer 9

The tertiary sector is the support service for the business
E.g. shops, banks, insurance etc

Question 10

What is a product ?

Answer 10

A product is anything capable of satsfying customer needs it is tangiable and can be touched

Question 11

What is a sole trader

Answer 11

A sole trader is someone who owns their entire business so it’s only ran by them

Question 12

What is a partnerhip

Answer 12

A partnership is the relationship between two or more people to do trade or business

Question 13

What ia aPLC (public limited company)

Answer 13

A PLC is a business that is leagally allowed to sell its shares to the public

Question 14

What is a LTD (private limited comapany)

Answer 14

A LTD is a business means the companys owners are not personally responsiable for the debts of the business

Question 15

What is unlimited liability

Answer 15

When the business owner or owners are personally responsible for all the debt of the business, no matter what the value

Question 16

Stock market

Answer 16

A centralised market where business shares are traded

Question 17

Shares

Answer 17

A percentage or portion of a company

Question 18

Share holders

Answer 18

A part of a private or public limited company

Question 19

Share capital

Answer 19

The money raised when a business becomes a public limited company by offering shares in the business in return for capital

Question 20

Profits

Answer 20

The amount of money made after all costs are deducted

Question 21

Limited liability

Answer 21

When the business owner or owners are only responsible for business debts up to the value of their financial investment in the business

Question 22

Income tax

Answer 22

Tax that someone pays based on their personal income

Question 23

Hostile takeover

Answer 23

A takeover of one company (called the ‘target company’) by another (called the ‘acquirer’) that is accomplished without the agreement of the target company’s management. Instead, the acquirer approaches the company’s shareholders directly or fights to replace the management to get the takeover approved

Question 24

Grant

Answer 24

A grant is money given to a business, usually by the government or lottery fund, that does not need to be paid back

Question 25

Economies of scale

Answer 25

Where the average costs (of production, distribution and sales) fall as the business increases the amount of product that it produces, distributes and sells

Question 26

Dividends

Answer 26

A sum of money paid regularly by a company to its shareholders out of its profits

Question 27

Deed of partnership

Answer 27

A document that is signed by all of the owners of a business setting out the terms they must abide by and their obligations as owners

Question 28

Companies house

Answer 28

Any limited company or partnership business has to register with Companies House. These records are public and there is usually a fee to register

Question 29

Advanteges of sole trading

Answer 29

1. Its quick and easy to set up 2. Be your own boss make your decisions 3. You claim all the profit 4. Low set up cost

Question 30

Disadvantege of sole trading

Answer 30

it has the risk of unlimited liability. it can involve long work hours and stressful conditions. there is a high level of responsibility for the owner. often the owner performs many different roles in the business.

Question 31

Business survival

Answer 31

is a very common objective for a small business. Business survival refers to keeping the business operating for a certain amount of time. Most businesses initially aim to survive their first year

Question 32

Profit maximisation

Answer 32

will become the aim of a business once it has reached its break-even point

Question 33

Growth

Answer 33

can refer to increasing the number of employees, the number of products sold, or income from sales. Firms may aim to grow domestically (in the same country) or internationally (in other countries)

Question 34

Market share

Answer 34

refers to the percentage of the market that a business occupies. The market is the industry that a business operates in, for example the fast food industry

Question 35

Value of shares

Answer 35

is an important aim for a limited company. By increasing the value of the shares, they will keep their shareholders happy

Question 36

Customer satisfaction

Answer 36

measures how happy a customer is with the products or services provided by the firm. This is a key objective for firms in a competitive market

Question 37

Social and ethical objectives

Answer 37

are linked to doing things in an ethical or environmentally friendly manner, or having a business whose sole purpose is to meet a social need

Question 38

What does SMART stand for

Answer 38

Specific Measurable Acheivable Realistic Time bound

Question 39

What is business planning ?

Answer 39

A document created by a business or entrepreneur that provides details about each element of the business.

Question 40

Fixed costs

Answer 40

An expense that does not change when the sales or production volumes increase or decrease

Question 41

Variable costs

Answer 41

An expense that changes in proportion to how much a company produces or sells

Question 42

Sales revenue

Answer 42

The income recived from the companys sales of goods or services

Question 43

Profit / loss

Answer 43

The money made or lost when taking away the money spent on fixed costs Profit = revenue - expenses