Definitions

Question 1

Define Average Cost

Answer 1

Cost per unit of production. Total Cost/Number of units produced. As a business grows, average cost decreases due to economies of scale.

Question 2

Define challenge

Answer 2

Any internal or external factors that hinder the operations and profitability of an organization

Question 3

Define company

Answer 3

A business owned by shareholders who have limited liability

Question 4

Define contracts

Answer 4

Legally binding agreements between two parties. The contract sets out specific terms and conditions established for work-related matters

Question 5

Define cost

Answer 5

Items of expenditure by a business when producing goods/services

Question 6

Define directors

Answer 6

Senior executives in an organization who hold autonomous decision-making, responsibility and power. Appointed to oversee and manage the operations of a company

Question 7

Define employees

Answer 7

A type of internal stakeholder, employees are the people who work for a business

Question 8

Environmental sustainability

Answer 8

The ability of a business to maintain the use of its renewable and non-renewable resources for future generations. This means production does not jeopardize the resources for successive generations. Depletion of the earth’s scarce resources is not sustainable as they cannot be used indefinitely

Question 9

Define expansion

Answer 9

This refers to the growth of a business due to an increase in the size of the organization itself and/or growth in the market.

Question 10

Define fee

Answer 10

These are payments made to a professional body in exchange for advice or services. The price a customer pays.

Question 11

Define finance

Answer 11

The money required for business operations. Finance for business can come from internal or external sources.

Question 12

Define location

Answer 12

The geographical position of a business. The location decision is crucial and will depend on both quantitative and qualitative data. The location of a business can have profound implications on the profitability and survival of the organization.

Question 13

Define permanent employees

Answer 13

Workers who have an employment contract on a continual basis. There is no expiry date on the employment contract unless the workers resign or the employer terminates the contract due to redundancies or dismissals.

Question 14

Define private limited company

Answer 14

An incorporated business owned by shareholders who have limited liability. The shares of a private limited company cannot be bought by or sold to the public.

Question 15

Define public limited company

Answer 15

An incorporated business owned by shareholders who have limited liability but with the shares being openly traded on a public stock exchange

Question 16

Define temporary workers

Answer 16

Employees hired for a limited time period or until the completion of a project.