Purpose And Nature Of Business

Question 1

What is a business

Answer 1

A business is an organisation that uses resources to produce a product and make a profit

Question 2

Define goods

Answer 2

Physical products eg cars and medicine

Question 3

Define services

Answer 3

Intangible products produced by organisations eg insurance healthcare

Question 4

Define wants

Answer 4

Products people desire not essential for day to day life eg makeup

Question 5

Define needs

Answer 5

Things required for survival eg food and shelter

Question 6

Name and define the Factors of production
C
E
L
L

Answer 6

Capital- man made products eg buildings, machinery
Enterprise- managers/people who perform the organisational roles to coordinate the other factors of production.
Land- natural resources eg oil and water
Labour- Human Resources(workers)

Question 7

Operations, hr, marketing and finance

Answer 7

Operations: delivering and producing products
Human Resources: staff working for business to reach objectives/ anything to do with staff
Marketing- relationship/ communicating with customers
Finance- to do with money, responsible for ensuring business has sufficient cash to operate

Question 8

Reasons for starting a business

Answer 8

To be own boss
Flexible working hours
Keep all profits

Question 9

Other reasons for starting a business

Answer 9

Producing goods, providing services, distribution, benefiting society, filling market gaps

Question 10

Define opportunity cost

Answer 10

The value of the next best alternative foregone

Question 11

Define added value

Answer 11

The difference between cost of materials and price changed for output

Question 12

Name and define the three sectors
P S T

Answer 12

Primary sector- extract raw materials, mining, fishing farming
Secondary sector- manufacturing, bakery , factory
Tertiary sector- provides services, hairdressers, Tesco.

Question 13

Define external influences and name them
TELE+C

Answer 13

External influences: factors that affect a business but that has no control over:
Technological
Ethical/environmental
Legal
Economic
Competition
These external factors mean that business operate in a dynamic envi

Question 14

Define entrepreneur

Answer 14

A person who uses their enterprise skills and takes risk to start a business.

Question 15

Name and explain entrepreneur characteristics

Answer 15

Hard working- putting in loads of effort ensuring success
Organised- involves careful planning
Innovative- problem solving/ coming up with new ideas
Risk taking- dealing with uncertainty

Question 16

Reasons why to become an entrepreneur

Answer 16

Being own boss, pursuing an interest, dissatisfaction with current job, finding gap in market, flexible hours, keep all profit