Chapter 2

Question 1

Business Plan

Answer 1

It is a planning tool/report drafted by a business to show how
businesses set out to achieve its aims and objectives

Question 2

Economies of Scale

Answer 2

It refers to lower average costs of production as a firm operates on a large scale due to improvement in productive efficiency.

Question 3

Joint Venture

Answer 3

A business arrangement where two or more businesses (parties) agree to pool resources for a specific task or project

Question 4

Strategic Alliance

Answer 4

It is same as joint venture except that each of the businesses
remain as independent organisations

Question 5

Merger

Answer 5

Integration of two or more businesses to form one single
company.

Question 6

Takeover

Answer 6

It occurs when a company buys a controlling interest in another
company.

Question 7

Vertical Integration

Answer 7

This takes place between businesses that are at different
stages of production.

Question 8

Horizontal Integration

Answer 8

This occurs when there is integration of firm that operates in the same industry.

Question 9

Conglomerate

Answer 9

This refers to the integration of two firms that are completely
in different markets.

Question 10

Franchise

Answer 10

It is a form of business whereby a person or business buys a
licence to trade using another firm’s name, logo, brand and trademarks.

Question 11

Workforce Planning

Answer 11

This is the management process of anticipating an organisation’s
current and future staffing needs.

Question 12

Recruitment

Answer 12

This is the process of stimulating candidates to apply for a job in a given organisation.

Question 13

Selection

Answer 13

It is the process of eliminating candidates who do not satisfy the needs of the organisation

Question 14

Job Description

Answer 14

It is a document that outlines the details of a particular job such as the job title, the roles and duties to be undertaken

Question 15

Job Specification

Answer 15

It is a business document that gives the profile of an ideal
candidate in terms of skill, qualification and experience required for the job.

Question 16

Job Analysis

Answer 16

This entails both job description and specification.

Question 17

Appraisal

Answer 17

It refers to the formal process of evaluating the contribution
and performance of an employee in order to motivate the employees through suitable incentives and training

Question 18

Organisation Chart

Answer 18

It refers to the diagrammatic representation of a firm’s formal
organisational structure.

Question 19

Span of control

Answer 19

It refers to the number of subordinates a manager can
effectively manage

Question 20

Chain of command

Answer 20

It refers to the formal line of authority, shown in a firm’s
organisation chart through which orders are passed down in an organisation.

Question 21

Delegation

Answer 21

It refers to passing on of authority by a superior to a subordinate in the organisational structure

Question 22

Decentralisation

Answer 22

This occurs when the decision-making authority and
responsibility is passed on to others in the organisation

Question 23

Capital Expenditure

Answer 23

It is the long term investment on purchase of fixed assets
which can be repeatedly used over a period of time.

Question 24

Revenue Expenditure

Answer 24

It refers to payments for the daily running of a business such
as wages, raw materials, electricity etc.

Question 25

Retained Profits

Answer 25

It is the value of profit that the business keeps after paying tax to the government and dividends to the shareholders to use within the business.

Question 26

Share Capital

Answer 26

It is the permanent source of capital raised through sale of shares by limited companies.

Question 27

Overdraft

Answer 27

It is a facility provided by bank to the business to temporarily overdraw on its account.

Question 28

Debt Factoring

Answer 28

It is a financial service that allows a business to raise funds based on the value owed by their debtors

Question 29

Venture Capital

Answer 29

It is high risk capital, usually in the form of loans or shares, invested by venture capital firms or individuals, usually at the start of a business idea

Question 30

Working Capital

Answer 30

It is the cash available for payment of day to day expenses. It is calculated as the difference between a firm’s liquid assets and its short term debts.

Question 31

Budget

Answer 31

It is a financial plan for expected revenue and expenditure for an organisation or a department within an organisation, for a given period of time.

Question 32

Intangible Assets

Answer 32

It is the non-physical assets such as patents, copyrights goodwill etc owned by a business which generates income and add value to business.

Question 33

Co-operatives

Answer 33

Co-operative businesses are owned, run by and for their members, whether they are customers, employees or residents

Question 34

Laissez-faire leadership

Answer 34

A relaxed approach where employees are given little instructions and are trusted upon to make desicions

Question 35

Autocratic Leadership

Answer 35

controlled by one leader who has total power, and who does not allow anyone else to make decisions

Question 36

Democratic Leadership

Answer 36

is a leadership style in which members of the group participate in the decision-making process