Section 1- What Is Business?

Question 1

What is the difference between aims and objectives?

Answer 1

A business aim is the overall long-term target or goal of the business, whereas business objectives are the short-term steps a business needs to take to meet its overall aims.

Question 2

What is a mission statement?

Answer 2

A businesses overall purpose and their intentions for the future of the company. They can also reveal a businesses values, standards and strategies.
i.e. Google: “To organize the world’s information and make it universally accessible and useful.”

Question 3

What is a corporate objective?

Answer 3

The goals of the business as a whole. These depend on the size of the business.
i.e. A new business = to survive
vs.
A big international company = growth

Question 4

What are functional objectives (departmental objectives) ?

Answer 4

Detailed objectives that are specific to each department.

Question 5

What are functional objectives (departmental objectives) ?

Answer 5

Detailed objectives that are specific to each department.

Question 6

What is a SMART objective?

Answer 6

A specific, measurable, agreed, realistic and time-bound objective.

Question 7

What is revenue?

Answer 7

Money a business makes from sales before tax or costs have been subtracted.

Question 8

What is the equation for revenue?

Answer 8

revenue = selling price per unit x quantity of units sold

Question 9

What is a fixed cost?

Answer 9

They don’t change with output.
e.g. salaries or rates

Question 10

What are variable costs?

Answer 10

They rise and fall as output changes.
e.g. wages, raw material costs or packaging costs

Question 11

What is the equation for variable costs?

Answer 11

Total variable cost = variable cost per unit x number of units sold

Question 12

What is profit?

Answer 12

The surplus money left over after costs have been payed.

Question 13

What is the ‘private sector’?

Answer 13

The part of the economy that is made up of private enterprises- owned or controlled by individuals or groups of individuals.

Question 14

What is a ‘ corporate business’ ?

Answer 14

A business with a legal identity separate to that of the owner/s.

Question 15

What does it mean to have ‘limited liability’ ?

Answer 15

The financial responsibility is restricted to the amount an individual has invested.

Question 16

What is a private limited company ( Ltd)?

Answer 16

Relatively small companies that tend to be family owned. Shares to the business cannot be sold via the stock market.
e.g. plumber or hairdresser

Question 17

What is a public limited company (plc)?

Answer 17

Tend to be larger companies that are able to sell their stock on the market. Plc’s have to publish much of their data and information to the public as per government demands.
e.g. Royal Mail Plc or Tesco Plc

Question 18

What is a sole trader?

Answer 18

Businesses owned by an individual ( unlimited liability). The owner is able to receive all the profits.

Question 19

What is a partnership?

Answer 19

A group of 2-20 people, there are many people capable of contributing expertise and capital. Disagreement is common.

Question 20

What is a partnership?

Answer 20

A group of 2-20 people, there are many people capable of contributing expertise and capital. Disagreement is common.

Question 21

What is meant by the ‘public sector’?

Answer 21

Organisations that are owned and run by the government.
e.g. the NHS

Question 22

What is a ‘not-for-profit’ ( social enterprise) business?

Answer 22

A business that has objectives other than making a profit.
Charities= British Red Cross

Question 23

What is a mutual?

Answer 23

Businesses run for the benefit of their members.
e.g. Yorkshire Building Society