Introduction To Business

Question 1

Franchise

Answer 1

When you buy the right to sell the established product

Question 2

Enterprise

Answer 2

Another word for a business

Question 3

Entrepreneur characteristics

Answer 3

Risk taker
Persistence
Self belief and confidence
Creative
Comfortable with risk
Leadership skills

Question 4

Private sector

Answer 4

Run for profit owned by individuals and companies

Question 5

Public sector

Answer 5

Run on behalf of public, not run for profit
Eg teachers army police NHS

Question 6

Third sector

Answer 6

Value driven
Eg charities ,cooperatives ,community groups

Question 7

Unincorporated

Answer 7

The owner is the business
Soletrader, partnership

Question 8

Incorporated

Answer 8

Legal difference between business and owners
PLC, LTD

Question 9

Limited liability partnership

Answer 9

Partnership with limited liability
Owners are called members

Question 10

Unlimited liability

Answer 10

If a business fails and goes into debt, personal assets can be taken to pay for debt

Question 11

+ - for franchiser

Answer 11

+
Low cost to expand
Products under franchiser control
Carefully selected applicant

• Control issues
  Cost of supporting
  Possibility of conflict

Question 12

+- to franchisee

Answer 12

+lower risk
+advice and training
+marketing
+easier to obtain finance

-profit is shared
-fees (royalty payments)
-supplies have to be bought from franchiser
-less independence
-can’t sell franchise

Question 13

4 factors of production

Answer 13

Land
Labour
Capital
Enterprise

Question 14

Adding value

Answer 14

Difference between price of finished product and cost of inputs in making it
Output - inputs

Question 15

How to add value

Answer 15

Building a brand
Delivering excellent service
Product features and benefits
Offering convenience
Reduce costs

Question 16

Benefits of adding value

Answer 16

Charge a higher price
Create a point of difference from competition
Focus on target market

Question 17

Accounting and finance

Answer 17

Manage money in and out, set budgets, chase debt

Question 18

Operations management

Answer 18

Managing the process of creation of goods and services

Question 19

Marketing

Answer 19

Communicate product to potential customers

Question 20

HRM

Answer 20

Job analysis and staffing, training, organisation

Question 21

Customer service

Answer 21

Meet expectations of customers

Question 22

Sales and support services

Answer 22

Support customer before and after product is purchased

Question 23

Constraints of a business

Answer 23

Environment
Legislation
Competition
Economy

Question 24

Cooperatives

Answer 24

A business owned and run by its members (employees and customers)
Profits are shared between members

Question 25

Cooperatives advantages

Answer 25

Legally straightforward to establish Limited liability Higher quality of service Loyal customers

Question 26

Cooperatives disadv

Answer 26

Capital is limited Weak management Slower decision making Employees may want more

Question 27

Benefits of multinationals

Answer 27

Significant employment and training Adds to GDP Increased competition and consumer choice Increased tax rev

Question 28

Drawbacks of multinationals

Answer 28

Domestic business may not be able to compete Tax avoidance Could damage domestic business Too powerful

Question 29

How do small businesses still survive

Answer 29

Low costs Good quality of service Unique More manageable No DEOS

Question 30

Organic growth

Answer 30

Growth within the business

Question 31

Organic growth adv

Answer 31

Lower risk Slower - sensible rate Builds on existing activities Good for high growth markets Rewards innovation Financed through internal funds

Question 32

Organic growth disadv

Answer 32

Growth dependant on growth of overall market Hard to build market share Slow growth

Question 33

External growth

Answer 33

Growth from outside the business

Question 34

External growth adv

Answer 34

Higher risk Faster Transformational Higher potential returns Open new markets

Question 35

External growth disadv

Answer 35

Greater risk Greater cost Lose control

Question 36

Forward integration

Answer 36

Acquiring business further up supply chain Supplier buys business

Question 37

Backward integration

Answer 37

Acquiring business operating earlier in supply chain Business buys supplier

Question 38

Horizontal Intergration

Answer 38

Acquire business in same stage in supply chain

Question 39

Conglomerate (diversification)

Answer 39

No clear connection to the business buying it

Question 40

Merger

Answer 40

Two businesses join together to form new business

Question 41

Merger adv

Answer 41

Increase market share Eos New markets More knowledge

Question 42

Merger disadv

Answer 42

Loss of control Extra costs Redundancies if needed Split profits Demotivation

Question 43

Joint ventures

Answer 43

Two or more businesses pooling their resources and expertise to achieve particular goal - new entity is formed

Question 44

Joint venture adv

Answer 44

Share costs Share skills Eos

Question 45

Joint venture disadv

Answer 45

Conflict Risk of losses Objectives may change

Question 46

Strategic alliance

Answer 46

Arrangement between 2 companies to undertake mutually beneficial project while each retains its independence - separate entities

Question 47

Strategic alliance adv

Answer 47

Gain new client base Competitive skills New business markets Additional income Increase capital Reduce risk Affordable

Question 48

Strategic alliance disadv

Answer 48

Often better off at end Legal disputes over who owns what Expensive Difficult to coordinate

Question 49

Synergy

Answer 49

Value of two businesses brought together is higher than sum of two individual businesses

Question 50

Aims

Answer 50

Overall target - long term

Question 51

Mission statement

Answer 51

Overriding goal of the business and reason for its existence

Question 52

Corporate objectives

Answer 52

Cover range of key areas

Question 53

Functional objectives

Answer 53

Specific functions of business

Question 54

Business unit / individual target

Answer 54

More focused on individual