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Question 1

name three reasons for the importance of cash to a business

Answer 1

-pay its suppliers and other debts
-prevent business failure
-promoting business

Question 2

name two short-term sources of finance

Answer 2

-overdraft
-trade credit

Question 3

name three long-term sources of finance

Answer 3

-retained profit
-loans
-share capital (selling shares of the business)

Question 4

what is limited liability

Answer 4

private companies (LTD) have limited liability. The owner can only lose the amount of money they have invested. Their personal belongings are not liable

Question 5

what is unlimited liability

Answer 5

sole traders have unlimited liability. The owner is legally responsible for any debts. Owners can lose personal belongings to pay debts.

Question 6

what are the 3 benefits of being a sole trader

Answer 6

-makes all decisions
-easy to set up
-keep all profits

Question 7

what are the three disadvantages of being a sole trader

Answer 7

-unlimited liability
-no one to cover when a sole trader is ill
-lots of pressure on one person

Question 8

what are the 3 advantages of being in a partnership

Answer 8

-shared expertise and ideas
-owners share risk
-easier to raise finance

Question 9

what are the 3 disadvantages of being in a partnership

Answer 9

-disagreements over decision making
-profits are shared
-no longer exists if one partner leaves

Question 10

what are the 3 advantages of a private limited company

Answer 10

-limited liability
-easier to raise finance
-customers may trust an ltd more

Question 11

what are the 3 disadvantages of a private limited company

Answer 11

-more info must be reported to the government
-shareholders may disagree
- more complex to set up

Question 12

what are the 3 advantages of running a franchise

Answer 12

-brand image and reputation are already established
-higher chance of survival
-expensive marketing costs are already covered by the franchise

Question 13

what are the 3 disadvantages of running a franchise

Answer 13

-the cost of initial investment is high
-owner has little freedom to make decisions
-franchisee will have to pay royalty (percentage of sales revenue) to the franchisor

Question 14

name 4 factors influencing business location

Answer 14

-labour
-market
-materials
-competitors

Question 15

list 3 ways the nature of a business can affect its location

Answer 15

tourism-may need to be near popular tourist attractions
retailing-may need to be situated on a busy high street

Question 16

what is the impact of the internet on business location

Answer 16

-trading on the Internet (e-commerce) removes the need for a location because they trade online.This saves costs

Question 17

list two ways businesses can adapt to changing needs

Answer 17

-changing the features of a product to incorporate new trends and technology
-adjusting price in response to competitor’s pricing

Question 18

what is the impact of technology on the marketing mix

Answer 18

price-customers can easily compare prices with rivals
place-less need for bricks
promotion-advertising via social media
product-constantly be innovated

Question 19

list three reasons for a business plan

Answer 19

-identify the needs of customers
-minimise risk
-forecast finances

Question 20

what should a business plan contain

Answer 20

-business idea
-aims and objectives
-market research
-financial forecasts
-location
-sources of finance
-marketing mix

Question 21

name all 8 stakeholders

Answer 21

-government
-local community
-customers
-employees
-pressure groups
-managers
-shareholders
-suppliers

Question 22

list three types of technology a business uses

Answer 22

-payment systems
-e-commerce
-social media

Question 23

list and explain three ways technology can affect businesses

Answer 23

costs-huge investment.Can improve efficiency and reduce costs
sales-innovating products with technology can boost sales and demand
marketing mix-can lower costs, make promotions easy, customers can buy products at any time