Topic 1 - Business Organisation and Environment

Question 1

What is a business?

Answer 1

An organisation that uses resources to provide a product (tangible) or service (non-tangible) that meets the needs and wants of customers whilst adding value (the difference between the selling price and cost of materials and production).

Question 2

Business Inputs?

Answer 2

The factors of production:

Land, Labour, Capital, Enterprise

Question 3

Land

Answer 3

Land not only includes land itself but all of the renewable and non-renewable resources of nature, such as coal, crude oil and timber.

Question 4

Labour

Answer 4

People who work to produce goods or services. Labour is sometimes referred to as Human Resources.

Question 5

Capital

Answer 5

Capital is man-made resources which help to produce other goods and services. Capital includes things such as factories, machinery and delivery vehicles, power stations.

Question 6

Enterprise

Answer 6

the entrepreneur, the person with the business idea. They take the other 3 factors of production and combine them together to start a business.

Question 7

Business Functions

Answer 7

HR, FInance and Accounts, Marketing, Operations Management

Question 8

HR

Answer 8

The process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating, and scheduling employees to achieve organisational objectives.

Question 9

Finance and Accounts

Answer 9

The management of money and credit and banking and investments.

Question 10

Marketing

Answer 10

The processes involved in creating and designing, promoting and selling and distributing a product or service.

Question 11

Operations Management

Answer 11

The management of processes used to design, supply, produce, and deliver goods and services to customers.

Question 12

Economic Sectors

Answer 12

Primary - Extract natural resources
Secondary - Manufacture
Tertiary - Provide Services
Quaternary - Involves service jobs concerned with R&D, management and administration, and processing and disseminating information.

Question 13

Structural Change

Answer 13

A shift in the relative share of national output and employment that is attributed to each business sector; i.e. primary, secondary and tertiary sectors.

Question 14

Advantages and Disadvantages of Industrialisation

Answer 14

Adv - GDP ↑, Imports ↓, Jobs ↑, Tax ↑, Value added to RM

Disadv - Migration, Recruitment, Scarce RMs, Pollution, Multinationals

Question 15

Advantages and Disadvantages of Deindustrialisation

Answer 15

Adv - Incomes ↑, Standards of living ↑, Tertiary sector jobs ↑
Disadv - Imports ↑, Skills shortages/surplus (structural unemployment)

Question 16

Entrepreneur

Answer 16

Risk-taking individuals who combine the other factors of production into a unit that is capable of producing goods and services. It provides a managing, decision-making and coordinating role.

Question 17

Intrapreneurship

Answer 17

The act of behaving like an entrepreneur while working within a large organization where freedom and financial support is given to create new products, services, systems, etc.

Question 18

Goods and Services

Answer 18

Goods are items that are usually tangible.
Services are activities provided by other people.
Both are made and/or provided by businesses

Question 19

Consumer Goods

Answer 19

The physical and tangible goods sold to the general public.

Question 20

Consumer Services

Answer 20

Non-tangible products that are sold to the general public and include hotel accommodation, insurance services and train journeys.

Question 21

Capital Goods

Answer 21

Physical goods that are used by an industry to aid in the production of other goods and services, such as machines and commercial vehicles.

Question 22

Durable Goods

Answer 22

Consumer goods such as cars, washing machines, pencils, etc.

Question 23

Non-durable Goods

Answer 23

Consumer goods such as food, drinks and sweets that can only be used once (are perishable).

Question 24

Value Added

Answer 24

The difference between a product’s price and the total cost of the inputs that went into making it. It is the extra worth created in the production process.

Question 25

Opportunity Cost

Answer 25

Cost measured in terms of the next best alternative forgone when a choice is being made.

Question 26

Division of Labour

Answer 26

The specialization of workers in the provision of goods and/or services by breaking a job down into particular roles or components that are repeated by the same workers.

Question 27

Types of Organisations

Answer 27

Sole Trader, Patnership, Private Limited Company (Ltd), Public Limited Company (Plc)

Question 28

Sole Trader

Answer 28

Self employed person. He or she runs the business on their own and has sole responsibility for its success or failure.

Question 29

Sole Trader

Answer 29

Self employed person. He or she runs the business on their own and has sole responsibility for its success or failure.

Question 30

Patnership

Answer 30

Form of private sector business owned by 1 - 20 people. They share the responsibilities and burdens of running and owning the business.

Question 31

Private Limited Company (Ltd)

Answer 31

Business organization owned by shareholders with limited lability but whose shares cannot be bought or sold to the general public (stock exchange).

Question 32

Public Limited Company (Plc)

Answer 32

Incorporated business organization that allows the general public to buy and sell shares in the company via stock exchange.

Question 33

Private Sector

Answer 33

Part of the economy under the control of private individuals and businesses, rather than the government. (sole traders, partnerships, corporations).

Question 34

Public Sector

Answer 34

Part of the economy under the control of the government.

Question 35

Unlimited Liability

Answer 35

No limit to how much debt a sole trader is legally responsible to pay if failure.

Question 36

Unincorporated

Answer 36

The owner is legally the same as the business (he or she is treated as a single entity) Owner is personally responsible for all debts.