business studies (edexcel igcse)

Question 1

1.1 what are ‘business objectives’?

Answer 1

a specific outcome that a company works to achieve

Question 2

what are ‘financial objectives’?

Answer 2

specific goals related to the financial performance of a business

Question 3

list all the main financial objectives:

Answer 3

survival, profit, sales, market share, financial security

Question 4

what are ‘non-financial objectives’?

Answer 4

goals that are not related to making money

Question 5

list all the main non-financial objectives:

Answer 5

social objectives, personal satisfaction, challenge, independence and control

Question 6

what is meant by the term ‘market share’

Answer 6

proportion of total sales in a market

Question 7

what is an impact of market conditions on business objectives?

Answer 7

• increased competition may result in change of objective depending on the level of competition in market

Question 8

what is an impact of technology on business objectives ?

Answer 8

• improvements in ecommerce software may help increase sales

Question 9

what is an impact of legislation on business objectives?

Answer 9

• new laws may increase business costs and force business to focus on increasing sales

Question 10

1.2 what is a sole trader?

Answer 10

business with a single owner who makes all the decisions and gets to keep all of the profit

Question 11

what are some advantages of setting up as a sole trader?

Answer 11

-easy and inexpensive to set up

-the owner has complete control over the business and can make all decisions

-all profit belongs to the owner

Question 12

what are some disadvantages of setting up as a sole trader?

Answer 12

-limited skillset of the owner/entrepreneur may limit business growth

-long hours, hard work and lots of responsibility for the owner

-no business continuity. The business often dies with the owner

Question 13

what are partnerships?

Answer 13

involves two or more people joining together to own a business

Question 14

what are some advantages of setting up as a partnership?

Answer 14

-Easy and inexpensive to set up and run as there are few legal formalities

-Shared responsibilities and decision-making

-More skills and knowledge means partners can specialise in their area of expertise

Question 15

what are some disadvantages of setting up as a partnership?

Answer 15

-There is potential for disputes between partners

-Profits are often shared equally regardless of a partner’s contribution

Question 16

define shareholder

Answer 16

a person or organization that owns shares in a company

Question 17

what is a private limited company?

Answer 17

a business that is owned by one or more shareholders who have each invested a sum of money into the business

Question 18

list some advantages of private limited companies:

Answer 18

-Shareholders benefit from limited liability for debts incurred by the company

-Access to greater finance from investors and lenders who consider limited companies to be less risky

-Ownership can be easily transferred by selling shares

-Business continuity as the business does not die with its original owner

Question 19

list some disadvantages of private limited companies:

Answer 19

-More expensive and time-consuming to set up as legal advice is often required

-More complex operational rules than sole traders or partnerships

-Annual financial reporting and auditing are required

-Shareholders may have little control over the company as the founder usually imposes their own agenda

Question 20

what are public limited companies?

Answer 20

large businesses that sell shares publicly on the stock exchange

stock exchange- a place where shares in companies are bought and sold

Question 21

list some advantages of public limited companies:

Answer 21

• significant amounts of capital can be raised
• Company shares can be bought and sold easily on a public stock exchange

-PLCs have high visibility with customers, suppliers, and potential investors which can help grow its customer base

Question 22

list some disadvantages of public limited companies:

Answer 22

• Setting up a public limited company can be expensive
• PLCs must comply with complex legal and financial regulations

Question 23

What are public corporations?

Answer 23

Corporations owned and controlled by the government

Question 24

What is a stakeholder?

Answer 24

Person, group or organisation that has a direct or indirect interest in the outcomes of a particular development or decision

Question 25

What are some characteristics of a small business?

Answer 25

> employ fewer than 50 ppl
provide goods and services at a local or regional level

Question 26

What are some characteristics of a large business?

Answer 26

> employ 250 or more workers
very well known

Question 27

What are some advantages and disadvantages of owning a franchise?

Answer 27

ADVANTAGES
> a recognised brand name which is promoted by the franchisor
> product training is provided to ensure consistency of the brand

DISADVANTAGES
> a fixed sum must be paid at the start of the franchise for the right to use the business name and resources
> franchisees have little input and lack freedom to introduce products or change prices

Question 28

What is a social enterprise?

Answer 28

A business that has the primary purpose of creating social or environmental impacts

Question 29

What are some advantages and disadvantages of social enterprises?

Answer 29

ADVANTAGES
> good reputation which encourages customer loyalty
> deserving causes receive financial support

DISADVANTAGES
> may face media scrutiny
> profits available for reinvestment are limited as they are shared with members or good causes

Question 30

What are multinational companies?

Answer 30

Business that is registered in one country but has manufacturing operations in different countries