Introduction to Business Management

Question 1

Reason for starting up a business (7)

Answer 1

• earning
• growth
• transference and inheritance
• challenge
• autonomy
• security
• hobbies

Question 2

Factors to consider when starting a business (7)

Answer 2

• business idea
• finance
• marketing
• human resource
• fixed assets
• enterprise
• customers

Question 3

Problem with new businesses (8)

Answer 3

• cash flow problem
• lack of finance
• people management problem
• marketing problem
• production problem
• high production cost
• unestablished customer base
• poor locatoin

Question 4

Define Cost and Sales revenue (2)

Answer 4

Cost: product expenditures

Sales revenue: money earned from selling its product

Question 5

Define sole trader (1)

Answer 5

self employer person who runs and control the business and is the sole person held responsible for profit and limited liability

Question 6

Advantage of sole trader (5)

Answer 6

• few legal formalities
• profit taking
• being your own boss
• personalized service
• privacy

Question 7

Disadvantage of sole trader (6)

Answer 7

• high risk
• limited source of finance
• limited economies of scale
• workload and stress
• lack of continuity
• unlimited liability

Question 8

Define partnership (1)

Answer 8

type of private sector business made up of 2-20 people

Question 9

Advantage of partnership (4)

Answer 9

• financial strength
• financial privacy
• specialization and division of labor
• cost effective

Question 10

Disadvantage of partnership (4)

Answer 10

• lack of continuity
• lack of harmony
• prolong decision making
• unlimited liability

Question 11

Define companies (1)

Answer 11

business that is owned by shareholders

Question 12

Define limited liability (1)

Answer 12

restriction on the amount of money an owner can lose if its business goes bankrupt

Question 13

Define unlimited liability (1)

Answer 13

legally liable for all monies owned to its creditors

Question 14

Define private limited liability (1)

Answer 14

business that is owned by shareholders with limited liability but whose share cannot be bought by or sold to the general public

Question 15

Define public limited liability (1)

Answer 15

the general public can buy or sell share in the company

Question 16

Advantage of companies (6)

Answer 16

• large capital
• productivity
• continuity
• limited liability
• economies of scale
• tax benefit

Question 17

Disadvantage of companies (5)

Answer 17

• communication problem
• disclosure of information
• compliance cost
• added complexities
• loss of control

Question 18

Advantage of cooperatives (3)

Answer 18

• more incentive to work
• social benefits
• decision making power

Question 19

Disadvantage of cooperatives (3)

Answer 19

• slower decision making
• limited source of finance
• limited promotional opportunities

Question 20

Advantage of microfinance (3)

Answer 20

• social well-being
• job creation
• accessibility

Question 21

Disadvantage of microfinance (3)

Answer 21

• immortality
• limited finance
• limited eligibility

Question 22

Advantage of charity (3)

Answer 22

• social benefit
• limited liability
• public recognition and trust

Question 23

Disadvantage of charity (3)

Answer 23

• charity fraud
• ineffective
• disincentive effect

Question 24

Vision Statement (1)

Answer 24

long term aspiration

Question 25

Mission statement (1)

Answer 25

organization overall purpose

Question 26

aims (1)

Answer 26

state what an organization wants

Question 27

objectives (1)

Answer 27

state what an organization needs to achieve in order to get what they want

Question 28

strategies (1)

Answer 28

action that facilitate an organization to achieve its goals

Question 29

Types of strategic objectives (4)

Answer 29

- profit maximization - growth - market standing - image and reputation

Question 30

Internal factors (6)

Answer 30

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