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POB Flashcards

1
Q

What is an entrepreneur?

A

A Person who identifies successful business opportunities, risks time and money to
start and operate a business, bringing resources together with the intention of generating wealth.

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2
Q

List atleast 4 roles of an entreprenuer

A
  1. Conceptualising
  2. Planning
  3. Accessing funds or financing
  4. Organising the business
  5. Operating the business
  6. Evaluating the performance of the business
  7. Risk bearing
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3
Q

*What is the importance of the/an entreprenuer

A
  1. Provide goods and services
  2. Create jobs
  3. Increases the GDP or value of goods produced.
  4. Utilize local raw materials
  5. Earns foreign exchange
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4
Q

List Atleast 4 personal qualities of an entreprenuer

A
  1. The creativity to innovate new product and ideas.
  2. Innovation
  3. The drive and determination to be successful.
  4. The ability to take calculated risks.
  5. The flexibility to adapt to changes in the market and industry.
  6. Very goal- oriented to purposely and aggressively accomplish task and meet objectives.
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5
Q

List and explain atleast 3 reasons why persons establish their own business

A
  1. Financial Independence
    Some persons feel restricted financially with the income received from their job. Starting a
    business would give them the opportunity to be a successful business person and achieve
    financial independence.
  2. Being your own boss
    You are able to make decisions about the direction and operation of the business.
  3. To use your skills and knowledge for yourself
    The skills, knowledge and experience that you have acquired can be put to work for you.
  4. Self-actualization/fulfilment
    Owning and operating a successful business will give a feeling of accomplishment.
  5. To create employment for relatives, friends and community members
    Businesses can assist in providing jobs for persons in communities with high levels of
    unemployment.
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6
Q

List the 6 steps in establishing a business

A
  1. Conceptualization
  2. Research
  3. Identification of resources
  4. Creation of a business plan
  5. Acquisition of funds
  6. Operation of a business
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7
Q

Explain the first step of establishig a business: Conceptualization

A

All business ventures begin with the conceptualization of an idea. At this initial stage the product
or service idea is envisioned. Most Entrepreneurs identify a need in the market i.e. a service that
is not being provided or a product that does not exist. If the product or service already exists then
ideas to make improvements may be conceptualized.

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8
Q

Explain the second step in establishing a business: Reasearch

A

The entrepreneur is a shrewd investor and takes calculated risks. Before investing money in a
business venture a market research must therefore be done to ascertain the extent of the need for
the product or service. This helps to minimize losses. A market research involves gathering
information about a potential market to help an investor make decisions about entering that
market.

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9
Q

Explain the third step in establishing a business: Identification of resouces

A

If the market research is favourable the entrepreneur must now identify the necessary resources
to operate business. The resources required are land, labour and capital. Land refers to location
or place used to set up a business. This may be bought, rented or family home. Labour employed
must be qualified and skilled to efficiently carry out their duties. Capital includes money, raw
material and assets such as machinery and equipment.

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10
Q

Explain the fourth step in establishing a business: Creation of a business plan

A

Preparing a business plan is very important before the start of a business. This will help the
business to ascertain whether or not the business will be profitable. A business plan outlines the
goals of a business and the strategies that will be employed to achieve them. Usually financial
institutions require that a business plan be presented when a loan is requested for business
investment.

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11
Q

Explain the fifth step of establishing a business: Acquisition of funds.

A

There are several ways of acquiring funds to start a business. There are a myriad of financial
institutions that are willing to assist small businesses once their business plans are deemed
workable. The investor must weigh the advantages and disadvantages of acquiring funds from
the various financial institutions. The cost of borrowing i.e. the interest rate charged and the
length of the repayment period are factors to consider.
Funds may be borrowed from friends and relatives that may attract a lower or no repayment cost
and a more flexible repayment schedule. Funds can also be acquired from personal savings.
Encouraging partners or selling shares are ways of avoiding high costs of capital.

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12
Q

Explain the sixth step in establishing a business: Operation of a business

A

A business must be efficiently operated to ensure high quality goods and service. This is
important to keep existing customers and for business growth. Many companies employ an
operation manager to design and oversee its operations. This person develops and manages the
various processes used to create goods and services efficiently to ensure customer satisfaction.

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13
Q

Define ‘Primary data’

A

Primary data is originally collected data. This data will be obtained by interviewing, observing or
distributing questionnaires to the sample population.

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14
Q

Define Secondary data

A

Secondary data is information that has already been collected by someone else originally. This
data will therefore be obtained from books, newspapers, magazines, libraries and publications of
various institutions.

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15
Q

Describe Long term plans as it relates to the process between Planning and the operation of a business

A

Long- term plans are made for 3 to 5 year periods. Long-term plans determine the direction of
the company. These plans set out the firm’s overall strategy to move from its present position to
where it intends to be. Long-term plans include expansion plans and plans to create new products
and services. Long-term plans are made by the directors or persons in senior management
positions of a company.

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16
Q

Describe Short term plans as it relates to the process between Planning and the operation of a business

A

Short-term plans are made daily, weekly and monthly by supervisors or persons in lower level
management positions. These plans are centred on meeting daily, weekly and monthly
production targets.

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17
Q

Describe medium term plans as it relates to the process between Planning and the operation of a business

A

Medium-term plans range from 1 to 2 years. They are made by department managers or persons
in middle management positions. Medium term plans include increasing the efficiency of a
department in order to increase the quality and quantity of output. This would involve
implementing training programmes for staff and identifying equipment that would increase
efficiency.

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18
Q

What are the documents required to comply with requirements made by the companies act

A 
The Memorandum of Association
Articles of Association
Statutory Declaration
Certificate of Incorporation
The Incorporated Company
The Prospectus
Certificate of Trading
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19
Q

Define the term Capital

A

Capital is one of the resources required to set up a business establishment.
Capital mainly refers to those assets that are used to start and continuously operate a business.

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20
Q

What is Fixed Capital? Include some examples

A

Fixed capital includes machinery, equipment and vehicles owned by the company. These assets
are so called because they cannot easily be turned into cash.

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21
Q

What is Circulating Capital? Include some examples

A

Circulating capital includes raw materials, finished and semi-finished, goods, bank and cash
balances. These assets can easily be converted into cash.

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22
Q

List atleast 4 Sources of Capital

A

Sources of Capital

  • Personal savings of the owner or owners
  • Assistance from friends and family
  • Loan from a financial institution
  • Selling shares
  • Forming Partnerships
  • Debentures
  • Venture Capitalist
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23
Q

What is Collateral?

A

money or property that is pledged as security for repayment of a loan.

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24
Q

What is Guarantor

A

someone who gives a legally binding promise to be responsible for the debt of
another person or to carry out some other legal obligation of the other person.

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25
Q

What is the significance of collateral in accessing capital to establish a business

A

Collateral is anything of value that is used to secure a loan. It is required by financial institutions
for the approval of loans. If the loan is not repaid then the financial institution has the authority
to seize the borrower’s collateral. Forms of collateral include: bank balances, motor vehicle,
dwelling house, land, machinery and equipment etc.

26
Q

List atleast 4 types of Collateral

A

Property- used for large loans for a long time
Stocks- Any size loans
Bonds- Any size loans
Money- Any size loans
Cash surrender on insurance policies- Any size loans
Motor Vehicles- small and medium loans for a short period
Other assets (Appliances)- small and medium loans for a short period

27
Q

State the value or importance of Collateral to a business

A

Important to an entrepreneur to raise finance for business.

28
Q

What is a business plan?

A

A business plan is a document outlining the goals of a business and the strategies to achieve
these goals. It is mainly prepared by new businesses or by ones making major changes.

29
Q

List and explain atleast 3 Features of a business plan

A

Executive Summary
The Executive Summary is a synopsis of the full business plan. It presents the salient points of
the plan. It contains information on the purpose of the business, its methods of operation and
future expectations.

History of the business
This section gives full details on previous operations of a business. For a new business it will
explain where the idea came from and the reasons for starting the business.

The Mission Statement gives the overall goal of a business as well as its values. It serves as a
guide to the operation of the business. For example: providing the highest quality goods and
services.

30
Q

List 3 Benefits of a business plan

A
  • Ensures that careful research is conducted into the feasibility of the business.
  • Anticipates needs and problems which can be planned for in advance.
  • Provides a written document that can be used when requesting financing.
31
Q

What is a Feasibility study and what does it analyze?

A 
This is an analysis of the viability of a business idea, and an examination of the different aspects
of operating a business. It will show whether a business venture is worthwhile.
It will analyse:
- Market demand
- Target market
- Profitability
- Production methods
- Operating expenses
- Distribution channels
- Competition
- Promotional requirements
- Cash flow
- Resources required
- Any special legal requirements
32
Q

How should business owners run their business in an ethical way?

A

Environmental awareness – reducing pollution and harmful effluents in the rivers and seas.

  • Avoidingtied selling (marrying of goods)
  • Misleading advertising (untruths about goods advertised)
  • Untrue sale price – For example, writing the word sale on items for which the price remains the
    same.
  • The use of market dominance to squeeze firms out of the industry- For example large firms
    may drop the price of their goods so low that small firms are unable to compete with them.
33
Q

What are some consequences of unethical and illegal business practices

A

View table image for answer

34
Q

Define the term ‘factors of production’

A

The term ‘factors of production’ refers to the resources that are combined in the production
process to create goods and services.

35
Q

List and briefly describe the factors of production

A

Land includes all natural resources such as soil, seas, rivers, forests, minerals, vegetation etc.

Labour is categorized as skilled, semi-skilled, unskilled or professional workers

Capital includes assets such machinery, equipment and vehicle owned by the company. Capital
also includes raw materials, finished and semi-finished, goods, bank and cash balances.

Entrepreneur is the owner and risk taker in a business venture. He is responsible for combining
all the factors of production.

36
Q

State the difference between production and productivity

A

Production is the process of combining units of inputs (natural, man-made and human resources)
to create output (goods and services) capable of satisfying human needs and wants.
Productivity is the increase of output from each unit in the production process. There are several
ways of achieving productivity. These include the training of workers and the introduction of
machinery and equipment into the production process.

37
Q

State the labour productivity equation

A

Labour Productivity = Output / Number of employees

38
Q

Define Migration

A

Migration is the permanent movement of workers from one location to the next in search of
better opportunities.

39
Q

Define Internal Migration

A

Migration within a country e.g rural –urban migration. This is migration of persons from rural
communities to the city areas.

40
Q

Define External Migration

A

Migration of persons from one country to another – For example, the migration of Caribbean
people to developed countries such as the United States and England.

41
Q

What are some effects of Internal (rural - Urban) Migration

A

The loss of persons from rural areas impacts on the level of output and development of these
areas.
 It also impacts negatively on the level of commodities available for export form these
regions.
 The influx of workers in urban areas increases competition for jobs, houses, health facilities,
schools etc.

42
Q

What are some effects of External Migration? (Carribean to developed countries)

A

 Professional and skilled workers who migrate reduce the level of skills available in their
countries resulting in a brain drain effect. This will impact on growth and development.
 They increase competition for jobs, houses, health facilities and schools in their new
territory.
 Money earned by Caribbean nations in foreign countries is sent home to support their
families reducing poverty and making foreign exchange available for their respective
countries.
 Caribbean professional and skilled workers contribute to the growth of developed countries

43
Q

What is Capital?

A

Capital refers to assets such as machinery, equipment, inventory and cash that are used to start
and continuously operate a business.

44
Q

List three level of production

A

Substinence
Domestic Production
Surplus or Export

45
Q

Explain the ‘Substinence’ level of production

A

This is the lowest level of production. Subsistence productions refers to output from the
production process that is just enough for the survival. This amount of production is therefore not
adequate to meet all needs and wants of a family, community or a country.

46
Q

Explain the ‘Domestic’ Level of production. Give 2 examples

A

Domestic production refers to production that is more than survival level. It provides output that
is enough to satisfy domestic needs and wants. Excess is not available for export. However,
production is adequate to supply local demand.

E.g:

 Use of local forest resources to obtain lumber to produce furniture for domestic use.
 Use of daily catchments of fish to prepare local dishes to be consumed by the citizens

47
Q

Explain the Surplus or Export level of production. Give 2 examples

A

This level of production is adequate to supply local demand and for export. Large industries can
produce large quantities of output to satisfy local consumption and earn foreign exchange from
export, for example, the sugar and banana industries.

48
Q

Explain the following types of Production: Primary, Secondary and Teritiary

A

Primary Production: This includes all kinds of extractive industries such as agriculture, mining, forestry and fishing.

Secondary Production
This is the second stage of production after extraction from the natural resources. It involves
converting raw materials into finished goods. This includes manufacturing such as assembling,
baking, refining and construction (building) industries.

Tertiary Production
This is the final stage which can be classified into Direct Services such as hairdressing,
babysitting and secretarial work and Commercial or Indirect services such as banking,
insurance and advertising. Service industries include transportation, communication and tourism.

49
Q

What is the Cottage Industry? Give Some Examples

A

Cottage industry is a generic term for any type of home–based production business. The term is
specifically used to describe industries of a craft nature e.g. basket weaving, carving and pottery, Food Items, pastries, jams and jellies personalized services sewing, hairdressing.

50
Q

List the importance of Cottage Industries

A
  1. Provide employment
  2. Satisfy psychological need of the producer
  3. Adds to family budget
  4. Provides an opportunity to use one’s skills
  5. Uses local materials
  6. Improves skill base
  7. Help to boost foreign exchange
51
Q

List atleast 3 factors required for cottage industries to survive:

A
  1. Materials must be readily available.
  2. Training programmes must be readily available to pass on skills
  3. Financial support through loans with low interest rates.
  4. Supported by trade shows.
52
Q

What are Linkage Industries?

A

This refers to industries that are connected because they depend on each other to obtain or to sell
raw materials i.e. the output of one industry (finished product) is the input (raw material) of the
other industry.

53
Q

Define ‘Contract’

A

A contract is a legally binding agreement between two parties that is enforced
by law.

54
Q

State and define two types of contracts

A

Two types of contracts

  • Simple Contracts
  • Specialty Contracts

Simple contracts do not need a written deed. They may be oral, written, or implied

Specialty contracts must be written, sealed, and deliver.

55
Q

List the characteristics of Simple and Specialty Contracts respectively

A

Simple Contracts:
Consideration: A promise or action made by one party for the promise or action
made by another.
- Competence of parties
- Intention to create legal relations:
binding agreement.
- Offer and acceptance – The offeror is bound in a contract if someone accepts.

Specialty Contracts:

The contract must be signed by both parties and sealed.
- A deed or contract must be delivered by the offeror.

56
Q

Differentiate between Assurance and Insurance

A

Insurance is providing coverage for an unforeseen event. E.g. flood, fire etc wheras Assurance is providing coverage for an event MUST occur. E.g death

57
Q

Explain 2 types of Assurance

A

Whole life/permanent policy out: whenever a person dies regardless of how
long they lived.
- Endowment: pays out a lump sum.

58
Q

List atleast 3 Ways how a contract is terminated

A

Death: one party might die and cause termination to the contract.
- Breach: one party breaks the contract by failing to carry out their side of the
agreement.
- Frustration:
- Lapse of time: by not meeting the deadline, the contract is then terminated
- Performance: one party is not performing up to standard to their side of the agreement

59
Q

List and describe 3 reasons why documentation is necessary for business transactions

A

For providing a written record to prevent confusion in the future.
- As proof of activity as a record that such transaction did take place.
- For providing important statistical data for firms to carry out various calculations for
taxation and auditing purposes.
- The government may require proper documents from the firm to satisfy requirements
for their taxation and auditing process.

60
Q

List and Describe atleast 3 business documents

A

Pro Forma Invoice: an invoice sent by a supplier at the request of a prospective
purchaser.
- Stock Card: once goods are received, the stock cards are updated pr new ones are
added.
- Purchase Requisition: Helps to control the movement of stock. It informs the
organization of how much of the stock is used and who they were used by.
- Statement of Accounts: A summary of a purchaser’s transaction with the supplier
over a set time period.

POB Study meds (1 decks)

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