Chapter 1: The Role of Business

Question 1

Why do businesses exist?

Answer 1

To make profit for owners

Question 1

How can business gain profit?

Answer 1

By having more revenue that expenses.

Revenue - expenses = profit

Question 2

How do businesses become successful?

Answer 2

By transforming inputs (raw mats, workers, capital equipment etc) into goods or services (outputs) that people, other business and governments need and want.

Question 3

How do businesses contribute to society?

Answer 3

by providing employment and increasing the nation’s wealth

Question 4

What are TNCs (transnational corporations)?

Answer 4

• business that operate in many countries
• Employ thousands of people and earn millions of profit

Question 5

What is the common feature shared by all businesses?

Answer 5

that they produce products - goods or services - which are sold in a market where buyers and sellers meet.

Question 6

What are inputs?

Answer 6

• raw materials
• workers
• machinery
• energy
• management skills
• other management

Question 7

What are outputs?

Answer 7

Finishes products (goods & services)

Question 8

What are the four main functions overseen by management?

Answer 8

• operations (production)
• marketing
• finance
• human resources

Question 9

What is the concept of interdependence?

Answer 9

Interdependence means that things depend on each other.

In the business context this means that the four main functional areas of a business need each other in order to carry out their own responsibilities, and in order for the business to operate effectively.