Section 1-What is a business?

Question 1

Why set a missions statement?

Answer 1

• Motivates staff
• provides focus
• makes decision making easier

Question 2

What is a corporate objective?

Answer 2

The goals the business has as a whole,depend on size of business

Question 3

What’s a functional objective?

Answer 3

The objectives that each department has specifically for them,each manager of the department looks at how they can help meet the corporate objective

Question 4

What should functional objectives be in order to be affective?

Answer 4

SMART

Question 5

What does SMART mean?

Answer 5

Specific Measurable Agreed Realistic Timely

Question 6

What is a profit objective?

Answer 6

An objective set by a business that may be currently making a loss
-Functional objectives may be set to minimise costs or increase sales

Question 7

What is a growth objective?

Answer 7

May be based on increasing revenue or expanding the business

Question 8

What’s a not for profit organisation?

Answer 8

A shop e.g charity that are set to achieve social do ethical objectives

Question 9

What’s a for profit organisation?

Answer 9

A business that focus’ on making a profit,however social and ethical objectives are becoming more important as more people are now able to view them

Question 10

What is a missions statement?

Answer 10

A qualitative statement of an organisations aims that describes the general purpose of an organisation

Question 11

What is revenue?

Answer 11

The money a business makes from sales before any deductions are made

Question 12

Difference between fixed and variable costs?

Answer 12

Fixed DONT change with output e.g new machinery

Variable DO change as output changes e.g costs of raw materials

Question 13

Characteristics of a publicly owned business?

Answer 13

Owned&run by the government and aims to provide services to the public rather than make a profit

Question 14

Private business characteristics?

Answer 14

Owned and run by private individuals & most aim to make a profit

Question 15

What is unlimited liability?

Answer 15

• When a business and owner are seems as one
• the debts become personal of the owner
• high financial risk

Question 16

What is limited liability?

Answer 16

-Owners aren’t personally
responsible for any debts
-wonders of a private+public limited company have limited liability as it has a spectate legal identity from its owners

Question 17

What are the four external environments that affect costs and demand?

Answer 17

1) political factors
2) labour supply
3) incomes and economic factors
5) seasonal demand & supply

Question 18

What are involved in the political factors that affect cost and demand?

Answer 18

• if demand is low them governments try increase it by cutting taxes so people have more money to spend
• governments try to reduce demand if it’s too high,so people have less money to spend
• government can also influence demand for certain products e.g to reduce carbon emissions,tax on low emission cars is reduced

Question 19

What effect does labour supply have on cost and demand?

Answer 19

• the business’ costs
• when unemployment is high it easy to employ people and high wages don’t have to be paid,compared to if unemployment rate was low which mean a shortage of skilled workers

Question 20

How do Incomes and economic factors effects cost and demand?

Answer 20

• in a recession businesses need to reduce costs e.g through cutting wages,this then leads to lower incomes so people have less to spend on products
• in a economic boom,wages rise and more people are employed,may lead to higher costs as higher wages + people have more money to spend
• changing incomes affects demand for some products more than others e.g holidays

Question 21

How does seasonal demand effects demand and supply?

Answer 21

-weather and holidays such as Christmas produce variations in demand e.g Christmas produces high demand for toys

-variations in supply e.g more strawbs available in summer
O
-food producers can cope with seasonally in supply by preserving food

Question 22

What products are sensitive to changes in interest rates & why?

Answer 22

Products that require borrowing e.g cars,houses,kitchens and high end consumers and when interest rates go up it becomes more expensive to borrow

Question 23

How can environmental factors increase a business cost?

Answer 23

As businesses pollute the environment through production processes the government has to put legislation forces in place to force a business to deal with their environment issues by putting control and measures in place

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