Bussiness

Question 1

Define Market Share

Answer 1

the percentage of the market, often measured in total sales, held by a business.

Question 2

Define Sole Proprietorship

Answer 2

a form of business structure where the business is owned and operated by one person

Question 3

Define Capital (Business)

Answer 3

items of value contributed to the business by the owner, usually in the form of cash or equipment.

Question 4

Define Shares

Answer 4

unit of ownership in a business.

Question 5

Define Goodwill

Answer 5

a monetary value placed on the reputation of the business.

Question 6

Define Niche Market

Answer 6

the area of a target market where a company is particularly strong due to the uniqueness of their good or service. Niche markets tend to experience limited competition

Question 7

Define Limited Liability

Answer 7

it means that he or she is not personally responsible for business debts and obligations of the corporation. In other words, if the corporation is sued, only the assets of the business are at risk, not the owners’ (shareholders) personal assets, such as their houses or cars.

Question 8

Define Unlimited Liability

Answer 8

it means that he or she is personally responsible for business debts and obligations of the corporation. In other words, if the corporation is used, not only the assets of the business are at risk, the owners’ (shareholders) personal assets, such as their houses or cars

Question 9

What are the characteristics of a Sole proprietorship?

Answer 9

• There’s only one owner that operates the business.
• The owner has total control over the major decisions of the business and the freedom to run the business however they like.
• Profits are retained by owner and does not have to be shared out among other people.

Question 10

What are the characteristics of a Partnership?

Answer 10

• A partnership can be a group between two and twenty people.
• These people can be involved in the ownership and operation of the business in differing degrees.
• Sometimes one of the partner will simply provide the investment capital and let someone else run the business. This is known as a silent partner or limited partner.
• A partnership can be very easy and inexpensive to create.
• Provided you and your partners trust each other it can be a simple verbal agreement.

Question 11

What are the characteristics of a Company?

Answer 11

• Each person involved in the ownership of the business is referred to as a shareholder.
• A private company can have between one and 50 shareholder.
• Private company cannot sell their shares to the general public; their names are distinguished from public company names by the label ‘Pty Ltd’ or proprietary limited.

Question 12

What criteria is used to classify a business?

Answer 12

By Size and Industry.

Question 13

What is the size of a business?

Answer 13

• The level of employment
• The market share
• The level of independence enjoyed by the owner(s)
• The sources of finance available to the owner.

Question 14

What is the industry of a business?

Answer 14

• Retail
• Service
• Manufacturing

Question 15

What contribution does small business make to the economy?

Answer 15

• They provide employment opportunities

- They provide a range of goods and services; locally and conveniently.

Question 16

What factors are taken into consideration when selecting an appropriate location for a business?

Answer 16

• Area profile
• Cost of site
• Access to site
• Location of competition
• Personal affinity

Question 17

What are the advantages of setting up a business from scratch or buying an established business?

Answer 17

• The difficult start-up work has already been done. The business should have plans and procedures in place.
• Buying an established business means immediate cash flow.
• The business will have a financial history, which gives you an idea of what to expect and can make it easier to secure loans and attract investors.
• You will acquire existing customers, contacts, goodwill, suppliers, staff, plant, equipment and stock.
• A market for your product or service is already established.
• Existing employees and managers will have experience they can share.

Question 18

What are the disadvantages of setting up a business from scratch or buying an established business?

Answer 18

• The business might need major improvements to old plant and equipment.
• You often need to invest a large amount up front, and will also have to budget for professional fees for solicitors and accountants.
• The business may be poorly located or badly managed, with low staff morale.
• External factors, such as increasing competition or a declining industry, can affect future growth.
• Under-performing businesses can require a lot of investment to make them profitable.
• The seller’s personality and their established relationships may be a major factor for the success of the business.