People in Business

Question 1

Explain Stakeholders

Answer 1

Stakeholders are the people who are affected by how a business is run.

Question 2

Name nine possible stakeholders in a business.

Answer 2

Entrepreneur
Investor
Employer
Employee
Interest Group
Manager
Producer
Consumer
Service Provider

Question 3

Explain entrepreneur (SEEE)

Answer 3

A person who spots an opportunity (gap in the market) and takes the initiative to set up a business to make a profit from that opportunity.

Financial risk- If business fails loses money invested in business
Personal Risk- Loses self confidence if business fails

Example- Mary Ann O Brien created Lily O Briens Chocolates

Question 4

Define an investor as a stakeholder of a business with an example

Answer 4

A person who gives money (capital) to the entrepreneur that they need to set up and run the business in exchange for a return on investment.
Types- Debt Capital and Equity Finance

Example- Bank Loan or LEO Grant.
Mary Ann O Brien received a loan from AIB to start up Lily O Brien’s chocolates.

Question 5

Explain the difference between Debt Capital and Equity Finance.

Answer 5

Debt Capital is a method of investment which the entrepreneur is given capital by the investor to be paid back with interest. Ex: A Bank Loan. AIB and Lily O Briens Chocolates

Equity Finance is a method of investment whereas the investor provides capital for the business in exchange for shares in the business and receives dividends. Ex: Anita Roddick at the body shop sold shares to open a new shop.

Question 6

Explain Employer (SEEE) Summary

Answer 6

Person who hires others to work for them. An entrepreneur may become an employer when the business grows and they cannot complete all tasks alone. The employer rewards the employee for their work. Rewards include: financial and/or non-financial (more holidays etc)

Example: Aer Lingus employs pilots.

Question 7

Explain Employee (SEEE)

Answer 7

Person who works for an employer in return for a wage. They carry out essential tasks needed to make the business a success which the employer cannot or will not do. Ex: Pilots at Aer Lingus

Employers can also give the employer ideas to make the business even more successful. An Intrapreneur. Ex: Microsoft XBox

Question 8

Explain Producer with example

Answer 8

A business that makes finished products to sell to customers. Manufacturers who take raw materials and use manufacturing process to turn them into finished products.
Ex: Tayto turn potatoes into crisps. Cadburys take milk and other ingredients to make chocolate

Question 9

Explain Consumer with example

Answer 9

A person who buys goods or services from the entrepreneur for their own personal use. The customer provides the entrepreneur with a market for the product and therefore a profit.
EX: When a parent pays for childcare they are a consumer.

Question 10

Explain the role of a manager in a business (SEEE)

Answer 10

A manager’s job is to run the business and make sure it achieves it’s objectives. The manager uses the resources of the business (people, money, equipment) in the best way possible so that the business is a success. A successful manager will lead and motivate their team of employees. They should communicate effectively with them.

Example: CEO of Ryanair Michael O’ Leary

Question 11

Explain the term service provider with an example

Answer 11

A business that offers a large range of helpful supports to an entrepreneur. Service Providers do not make products instead they do helpful things.
Example: A solicitor provides the entrepreneur with legal advice if they are sued and will defend them in court.

Question 12

Explain an Interest group and name and example

Answer 12

An organisation of people who come together and campaign for a common goal by pressuring those who make decisions. By joining forces they have more power, money and talents so are more likely to be listened to by decision makers.
Example: Trade Union/ Greenpeace (environmental interest group)

Question 13

Name four types of relationships between stakeholders

Answer 13

Co-operative
Competitive
Dependent
Dynamic

Question 14

Explain Co-operative relationship with an example

Answer 14

Means the parties in the business have the same objective so they work together to achieve their goal. This is a win-win situation as working together produces better than working alone.

Ex: Employer and Investor. Employer provides honest information about how the business is doing and in return the investor cooperates by giving more capital.

Question 15

Explain competitive relationship with an example

Answer 15

Means that one party in the business wants to be more successful than the other. This is a win-lose situation as only one can win. Often the parties fight against each other and become rivals.

Example: Two employees that want a promotion- both trying to work hard and impress their boss.
Example: Walkers and Tayto are competitors as they compete lowering prices to get more customers

Question 16

Explain Dynamic relationship with an example

Answer 16

Relationship between stakeholders is constantly changing. Sometimes it is competitive and sometimes it is cooperative.

Example: Competing businesses in a town might work together to hold a town festival once a year to bring more people to the area, boosting sales for all businesses ex: Rose of Tralee

Question 17

Explain Dependent relationship with an example

Answer 17

Parties need each other in order to be successful. They cannot achieve their goals on their own, the rely on the other party to provide them with what they need so they can be a success.

Example: Consumers and Producers need each other. Consumer need producers to make products and producers need consumers to buy the products.

Question 18

Explain the term contract

Answer 18

A contract is a legally binding agreement between two or more people in which each promises to do something for the other. The agreement is enforceable by law. If party breaks the agreement a judge can order compensation to be paid or force the party to fulfil ther part of the contract.

Question 19

Give an example of a legally binding contract

Answer 19

Mary had a contract to sell her house to John for x amount. John changes his mind but Mary could take him to court over the contract

Question 20

Name eight components of a valid contract.

Answer 20

Offer
Acceptance
Consideration
Intention to Contract
Capacity to Contract
Consent to Contract
Legality of form
Legality of purpose.

Question 21

Explain offer with an example

Answer 21

Offer is made when one person asks another to enter into a contract. For the offer to be valid the terms should by communicated clearly in writing or spoken with out any conditions attached.

Example: When you buy groceries you offer to buy them by placing them on the conveyer belt.

Question 22

Explain indication to treat with an example

Answer 22

An indication that the seller would like to receive offers for its product. The customer asks to buy the goods at the price shown. The customer makes the offer. The seller can accept or reject the offer.

Example: Ad/Price tag/Goods on a shelf

Question 23

Explain acceptance with an example

Answer 23

Acceptance means that the other person agrees to all of the terms of the offer without and conditions. They can accept the offer by speaking, writing or by conduct.
Example: Cashier scanning your groceries (by conduct)

Question 24

Explain consideration

Answer 24

Consideration is the payment that one person gives to the other party as part of the agreement. There must be consideration and it must be real and valuable. The agreement cannot be for free for it to be a valid contract.
Example: Consumer presents cashier with money to pay for groceries

Question 25

Explain intention to contract with an example

Answer 25

Intention to contract means both parties must mean it to be a legally binding contract. Both parties must understand that the agreement is legally binding and that they will end up in court should they break their promise.

Example:Agreements between families are not contracts as there is no ‘intention’. Agreements with businesses are always contracts.

Question 26

Define Capacity to contract

Answer 26

Means that a person has the legal right to make a legally binding contract. If a contract is entered by someone not eligible to enter a legal contract it is not valid.

Question 27

What are the groups of people that are not allowed to enter into a legally binding contract.

Answer 27

People under 18
People who are mentally incapacitated (drunk/drugs)
Diplomats who have immunity
Company directors acting outside was stated in the Memorandum of Association.

Question 28

Explain consent to contract with an example

Answer 28

Consent to contract means that both parties must give genuine, real, voluntary permission to enter into ti. They cannot be forced against their will.
Example: A chairperson of a company threatened to kill the CEO if he did not buy shares- this is not valid.

Question 29

Explain with an example Legality of form

Answer 29

Legality of form means that certain contracts must be drawn up in a certain way if they are to be legal contracts
Example: A contract for buying a house must be in writing for it to be valid.

Question 30

Explain with an example legality of purpose

Answer 30

Legality of purpose means that legally binding contracts can only be for legal transactions. No agreement which involves breaking the law is a contract.
Example: a judge will not award damages to a bank robber whose getaway car did not show up.

Question 31

Name four ways to terminate a contract

Answer 31

Performance, Agreement, Frustration, Breach of contract

Question 32

Explain performance as a way to terminate a contract with an example

Answer 32

A contract ends when each person carries out their side of it exactly as they agreed. Contract is then terminated.
Example: A Seller has a contract to sell shares for €15,000. The buyer in the contract pays the €15,000 euro and the seller gives the buyer the shares. The contract is terminated.

Question 33

Explain agreement as a way to terminate a contract with an example

Answer 33

A contract comes to an end if all the parties involved in it voluntary agree to end it.
May be because: contract allows them to end early or they find a better deal.
Example; An employer hires an employee for a 9 month contract. The employee finishes the project after 6 months. Both agreed to end the contract.

Question 34

Explain Frustration as a way to terminate a contract with an example.

Answer 34

A contract ends if some event happens that was not reasonably foreseeable when the contract was made and was not under the direct control of either party which makes it impossible to carry out the contract.
Example: One party die or becomes bankrupt

Question 35

Explain Breach of contract as a way to terminate a contract with an example

Answer 35

A contract is terminated as soon as the people involved break their part of the deal and fails to carry out her side. Conditions are fundamental to contract if they are broken it ends immediately.
Example: If you have a contract to have a grind and your teacher doesn’t show up the contract ends and you do not have to pay her.

Question 36

Explain damages as a remedy to a breach of contract

Answer 36

Judge can order the other person who broke the contract to pay financial compensation to the innocent party to compensate for any financial loss to them as a result of the breach. This ensure the person doesn’t not suffer financially as a result of the breach.

Question 37

Give an example of damages as a remedy to a breach of contract

Answer 37

Adele agrees to play a concert in London and she is paid an advance of €250,000 by the promoter. She pulls out last minute. Promoter can take her to court for breach of contract and judge could order compensation to be paid.

Question 38

Explain specific performance as a remedy to breach of contract with an example

Answer 38

The judge orders the person who broke the contract to carry out exactly as they promised she would under the terms of the original contract., This ensure no suffering as a result of breach.

Example: The judge orders Adele to perform in London on a later date

Question 39

Explain rescind the contract as a remedy to a breach of contract with an example.

Answer 39

The judge orders the contract be set aside and the two people be returned to the exact position they were in before the contract was agreed. This ensures Innocent people are returned to the situation they were in before the contract and therefore they do no suffer at all as a result of the breach.

Question 40

Give an example of rescind the contract as a remedy to a breach of contract

Answer 40

If Adele cancelled her concert because of serious illness a judge might rescind the contract. The singer would pay back the advance she received to the promoter and both parties are returned to the state they were in before the contract. the contract is set aside.