lesson 1

Question 1

Sole trader benefit (5)

Answer 1

-sole traders are the only owners of a business
-therefore, they can maintain full control of day-today operations
-maintain consistency
-build strong brand image
-like to PED

Question 2

Sole trader drawback (6)

Answer 2

-unlimited liability
-increased risk of investment (bank loan)
-if business debt exceeds business assets
-may need to sell personal possessions
- less willing to take risky decisions
-limited business growth

Question 3

Product orientation benefit (5)

Answer 3

-Product orientation involves focusing on developing the product
-lots of investment into R&D of the function of the product
-improved innovation by having unique features
-differentiate from competitor’s
-more price inelastic

Question 4

Product orientation drawback (4)

Answer 4

-However product orientation can be expensive
-Lots of investment into R&D is needed in order to innovate
-Increased fixed costs
-E.g paying high wages of scientists/engineers