Key Words

Question 1

Mission statement

Answer 1

A short way of a business expressing their main intent

Question 2

What is the purpose of a mission statement?

Answer 2

• sets purpose and primary objectives of a business
• memorable
• inspiring
• looks towards the future and where the business would like to be

Question 3

Corporate objectives

Answer 3

Using the mission statement to create bigger objectives

Question 4

What is the purpose of a corporate objective?

Answer 4

Aimed to satisfy shareholders (could relate to profit or dividends)

Question 5

Entrepreneur

Answer 5

A person with a willingness to take a risk in order to achieve business success

Question 6

What are the 4 factors of production?

Answer 6

1) land- location eg field
2) labour force
3) capital- money, assets
4) enterprise- entrepreneur makes the decisions

Question 7

What are the four rewards for the four factors of production?

Answer 7

Land- rent
Labour- wages/salaries
Capital- interest
Enterprise- profit

Question 8

What are some incentives for being an entrepreneur?

Answer 8

• money
• control over working life
• opportunity
• becoming redundant
• balance work with home life
• build on experience as an employee
• couldnt find a job

Question 9

What is an intrapreneur?

Answer 9

A manager within a company who promote innovative product development and marketing

Question 10

What is a patent?

Answer 10

The exclusive right to an inventor to manufacture, use and sell an invention (physical)

Question 11

What is copyright?

Answer 11

The exclusive legal right given to the originator to publish and perform etc the material (e.g. Writing, music)

Question 12

What do you understand about management?

Answer 12

Planning
Leading
Organising
Controlling

Question 13

What are some management activities of an entrepreneur?

Answer 13

• problem solving
• manage people
• writing business plan
• research
• marketing/advertising
• production
• finance
• purchasing

Question 14

What are the positives and negatives of becoming a partnership?

Answer 14

+each person specialises
+easier to raise capital
+more experience/help

• share profit
• share control
• unlimited liability

Question 15

What are the positives and negatives of becoming a sole trader?

Answer 15

+keep profit
+control
_have to do all work
_unlimited liability

Question 16

What are the positives and negatives of becoming a private limited company?

Answer 16

+can control number of shareholders
+limited liability
_lack of shareholders/public not involved
_little growth

Question 17

What are the positives and negatives of becoming a public limited company?

Answer 17

\+anyone can buy shares
\+limited liability 
\+greater potential for expansion 
-takeover from shareholders/lack of control 
-hard to come to agreement/decisions

Question 18

Mass market

Answer 18

The dominant market, aimed at the general population. There is lots of competition in this market. E.g Colgate toothpaste aimed at everyone.

Question 19

Niche market

Answer 19

A subset of the main market that addresses a specific type of person. They can charge higher prices as the is less competition. E.g sensodyne sensitive toothpaste

Question 20

Pros of a mass market

Answer 20

• large scale production- economies of scale
• straight forward
• large volume sales- high revenue
• revenue can be used for r & d

Question 21

Cons of a mass market

Answer 21

• competition
• marketing expensive
• high volume production not flexible to demand changes
• homogenous (all the same) products need to be differentiated

Question 22

Pros of niche market

Answer 22

• charge premium price
• easier to target customers
• small scale production can he flexible and follow trends
• less competition

Question 23

Cons of niche market

Answer 23

• very risky- demand not constant

* higher unit costs so no economies of scale