Business, sectors and objectives, Stakeholders, Integration and Pricing.

Question 1

What is Profit Maximisation

Answer 1

When you try to make the most profit possible. This is likely to be the aim of the owners and shareholders.

Question 2

What are the 4 business objectives?

Answer 2

Profit maximisation, Survival, Growth and Providing a service.

Question 3

What is a Stakeholder?

Answer 3

Everyone who is affected by a business because they have a stake in what the business does.

Question 4

Who is the most important stakeholder?

Answer 4

The owner

Question 5

What are internal stakeholders?

Answer 5

Stakeholders that work in the business itself.

Question 6

What are external stakeholders?

Answer 6

Stakeholders that are outside the business.

Question 7

What are the three business sectors?

Answer 7

Primary, Secondary and Tertiary

Question 8

What is the definition of the primary business sector?

Answer 8

The first stage of the production process. Eg. Fishing, mining, farming, and forestry

Question 9

What is the definition of the secondary business sector?

Answer 9

Manufacturing industries that make a product from raw materials. Eg. Car manufacture and computer manufacture.

Question 10

What is the definition of the tertiary business sector?

Answer 10

Businesses that provide a service rather than a physical product. Eg. Shops, banking, insurance and hotels

Question 11

What are the four factors of production?

Answer 11

Land, Labour, Capital and Enterprise.

Question 12

What grants are available for entrepreneurs?

Answer 12

Government grants and advice grants.

Question 13

What is diversification integration?

Answer 13

When you take over or merge with another business that in involved in a different business activity.

Question 14

What is horizontal integration?

Answer 14

When you merge or take over a business that is involved in the same business activity.

Question 15

What is the trend between price and demand?

Answer 15

As price increases, quantity demand decreases.

Question 16

What is the trend between price and quantity supplied?

Answer 16

As price increases, quantity supply increases.

Question 17

What we the 3 ways of distribution?

Answer 17

1. Producers -> consumers
2. Producers -> sales outlet -> consumers
3. Producers -> wholesaler -> sales outlet -> consumers

Question 18

What is competitor pricing?

Answer 18

When you look at your competitors prices to give you an indication on what you should price your product at.

Question 19

What is cost-plus pricing?

Answer 19

When you look at your costs before deciding on a price.

Question 20

When is competitor pricing important?

Answer 20

When you are selling homogenous goods eg. Tennis balls or pencils

Question 21

When is cost-plus pricing important?

Answer 21

When you are making a product with high costs.

Question 22

What is penetration pricing?

Answer 22

When you try and penetrate into a market by lowering your price to try and tempt your customers away from competitors.

Question 23

What is skimming?

Answer 23

When a business introduces a new technical product that is superior to competitors so consumers are willing to pay a premium for the best products. Eg. The tablet market

Question 24

What is forwards vertical integration?

Answer 24

When you merge or take over your sales outlets.

Question 25

What is backwards vertical integration?

Answer 25

When you merge or take over your suppliers.

Question 26

What are the four types of integration?

Answer 26

Diversification, horizontal, forwards vertical and backwards vertical.

Question 27

Why is E-commerce necessary?

Answer 27

Because of competition, to gain extra profit and to boost productivity.

Question 28

What are the 3 ways a business can grow?

Answer 28

Internal expansion, takeover and Merging with other companies.

Question 29

What is E-commerce?

Answer 29

The interaction between producers and consumers over the Internet.

Question 30

What is differential pricing?

Answer 30

Differential pricing is when different businesses charge different prices for the same product when selling to different customers e.g. train tickets

Question 31

What is promotional pricing?

Answer 31

Promotional pricing is when the price is reduced to either attract customers to an existing product or to sell off old products i.e. in a sale

Question 32

What is psychological pricing?

Answer 32

Psychological pricing is where prices such as £9.99 are used to make the customer think they are saving money.

Question 33

What is predatory pricing?

Answer 33

Predatory pricing is an illegal pricing strategy where prices are set deliberately very low by dominant competitors in the market, to restrict or prevent competition.

Question 34

What are takeover and merger examples of?

Answer 34

Integration.