Business in the real world

Question 1

What is a good?

Answer 1

A product or item that is tangible.

Question 2

What is a service?

Answer 2

Something that is intangible.

Question 3

What are the four factors of production?

Answer 3

1) labor- work
2) land- raw materials
3) capital- where it is sold
4) entrepreneurship- the idea of running the business as a good or service.

Question 4

Why and when do you use/need the four factors of production?

Answer 4

Inputs that are needed to start a business.

Question 5

How do the factors work?

Answer 5

Input to transition to output to goods and service.

Question 6

What is the definition of a entrepreneur?

Answer 6

Someone who is willing to take a risk in a business.

Question 7

What are the dynamic business environment for a Legal business?

Answer 7

Government laws.

Question 8

What are the dynamic business environment for a technological business?

Answer 8

Tech developments.

Question 9

What are the dynamic business environment for an economic business?

Answer 9

Economy- affecting a business, could be:

• tax
• GDP
• interest rates
• exchange rate

Question 10

What are the dynamic business environment for an environmental business?

Answer 10

environmental changes.

Question 11

What are sole traders?

Answer 11

They are business’ run by only one person. They are self employed and have unlimited liability

Question 12

What is unlimited liability?

Answer 12

Unlimited liability is completely responsible for business debts - risking personal assets.

Question 13

What is a partnership?

Answer 13

Business’ owned by 2-20 people. They have to contain a deed of partnership which highlight all financial aspects and have unlimited liability.

It is useful to Have a partnership as you can share different skills and expertise.

Question 14

What are ltd’s?

Answer 14

Companies that sell shares to friends and family. They have limited liability and require £2 share capital to set up

Question 15

What are plc’s?

Answer 15

Company where shares are sold on the stock market to anyone. They have limited liability. They need a £50k min share capital.

They have to publish the accounts. And if they are not performing well anyone can see it which could make them sell the shares

Question 16

What is limited liability?

Answer 16

Owner (shareholders) only responsible for the amount that they had invested in.

Question 17

What are not for profit organisations?

Answer 17

Business’ that raise money for ‘good causes’

Question 18

What are franchisors?

Answer 18

Business that sells rights to another business to use the name, product or process

Question 19

What are franchisees?

Answer 19

A business tat has legal rights to use the business they are franchising from.

Question 20

What are some benefits for franchising?

Answer 20

Ors: growth is paid for by the franchisee
Ees: safe strategy for them 6-7% fail rate
Ors: Quick growth for the franchisor
Ees: most of the profits are collected and kept by the franchisee.

Question 21

What are some drawbacks of franchising?

Answer 21

Ees: the franchisor can end the franchise without reason
Ors: a franchisee could not kept to their legal agreement which could damage the business
Ors: if one franchise attracts poor publicity, the franchisor takes a hit.

Question 22

What are the four functional areas?

Answer 22

• Marketing
• Finance
• Human Resources
• Production ( operations)

Question 23

What is expansion?

Answer 23

Increase in size or status.

Question 24

Why would a business want to grow?

Answer 24

• Gain customers
• increase your market share
• brand recognition / increase in reputation
• the bigger you are the lower the bulk costs. Economies of scale…

Question 25

What is the difference between organic and inorganic growth?

Answer 25

Organic is where a business grows using their own resources whereas inorganic is where you grow using another business in some way.