The Purpose And Nature Of Business

Question 1

I understand what a business is and the reasons for starting a business.

Answer 1

Business - An entity that provides goods or services to consumers with the aim of making a profit.

Reasons for starting a business - Financial independence, Personal passion or interest, Market opportunity, Desire to be one’s own boss

Question 2

I understand the difference between goods, services, needs and wants.

Answer 2

Goods - Tangible items (e.g., clothes, cars)

Services - Intangible offerings (e.g., haircuts, legal advice)

Needs - Essential items required for survival (e.g., food, water)

Wants - Non-essential items desired for comfort or pleasure (e.g., smartphones, vacations)

Question 3

I can define the three sectors of primary, secondary and tertiary and give examples of types of businesses that operate in each sector.

Answer 3

Primary Sector - Involves extraction of natural resources (e.g., agriculture, mining)

Secondary Sector - Involves manufacturing and processing (e.g., factories, construction)

Tertiary Sector - Involves providing services (e.g., retail, healthcare)

Question 4

I understand the meaning of factors of production.

Answer 4

Land - Natural resources

Labor - Human effort

Capital - Machinery, buildings, and tools

Enterprise - The initiative to combine the other factors

Question 5

I can define opportunity cost

Answer 5

Giving up 1 opportunity to take another 1, and the comprise taken

Question 6

I understand the term enterprise and what is meant by an entrepreneur.

Answer 6

Enterprise - The activity of setting up a business

Entrepreneur - An individual who starts and runs a business, taking on financial risks

Question 7

I can outline the characteristics of an entrepreneur

Answer 7

Innovative, Risk-taker, Proactive, Resilient, Leadership qualities

Question 8

I can outline the objectives of an entrepreneur.

Answer 8

Profit maximisation, Business growth, Personal satisfaction, Social impact

Question 9

I can explain 4 external influences

Answer 9

Political - Government policies, regulations, trade tariffs

Economic - Inflation, unemployment, economic growth

Social - Demographic changes, lifestyle changes

Technological - Technological advancements, automation

Question 10

I understand that businesses face a constantly changing business environment, giving examples

Answer 10

Technological innovation (e.g., AI, e-commerce)

Economic shifts (e.g., recessions, booms)

Social changes (e.g., increasing environmental awareness)

Political changes (e.g., new regulations)

Question 11

I can explain the role of each functional area and explain how external factors affect these departments

Answer 11

Marketing - Promotes and sells products/services, Affected by social trends and technological changes

Finance - Manages the company’s money, Influenced by economic conditions and political regulations

Operations - Produces goods/services, Impacted by technological advancements and economic conditions

Human Resources - Manages employee-related processes, Affected by social trends and economic conditions