Topic 1 Purpose And Nature Of A Business

Question 1

Goods

Answer 1

A physical product

Question 2

Service

Answer 2

An intangible item (something you cannot physically touch) e.g financial advice.

Question 3

Customer

Answer 3

Someone who buys a product from a business.

Question 4

Consumer

Answer 4

Someone who uses goods and services produced by businesses.

Question 5

Social enterprise

Answer 5

A business that is set up, but is not meant to make profit.

Question 6

Entrepeneur

Answer 6

Someone who takes a risk of starting their own business.

Question 7

Business

Answer 7

An organisation set up to make profit.

Question 8

What is survival?

Answer 8

How long the business can be maintained operated by keeping it successful.

Question 9

Profit maximisation

Answer 9

A process which a business undergoes to ensure that they determine the best price levels and input/output levels that lead to the highest profit

Question 10

Aim

Answer 10

A general goal of a business

Question 11

Objective

Answer 11

A specific target that turns the aim into something that is easier to measure and assess progress

Question 12

Growth

Answer 12

Expanding your business e.g sellingmore products, open more stores, increase business’ revenue

Question 13

Domestic growth

Answer 13

Getting business known locally within different regions

Question 14

International growth

Answer 14

Business being operated worldwide

Question 15

Market share

Answer 15

This measures the sales of one product/business as a percentage of the total market sales

Question 16

Customer satisfaction

Answer 16

When the business satisfies the customers with selling their products to them

Question 17

SMART

Answer 17

Specific, Measurable, Achievable, Realistic, Time-bound

Question 18

Internal growth

Answer 18

It happens when a business gets bigger by selling more of its products

Question 19

External growth

Answer 19

Occurs when a business expands by joining or buying other businesses

Question 20

Franchise

Answer 20

Occurs when a franchisor sells the rights of its products to a franchisee. This is usually in return for a fee and percentage of turnover

Question 21

Franchisee

Answer 21

Buys a franchise usually in return for a fee and percentage of turnover

Question 22

Franchisor

Answer 22

Sells a franchise usually in return for a fee and percentage of turnover

Question 23

Interest rates

Answer 23

The cost of borrowing money or the reward for saving money, expressed as a percentage

Question 24

Sole trader

Answer 24

Someone who sets up a business on his/her own

Question 25

Profit

Answer 25

Measures the difference between the values of a business’ revenue (sales) and its total costs.

Question 26

Unlimited liability

Answer 26

The personal possessions of the owners of a business are at risk if there are any problems. There is no limit to the amount of money the owners may have to pay out.

Question 27

Partnership

Answer 27

Occurs when two or more people set up a business with a common purpose such as profit

Question 28

Stakeholder

Answer 28

Individuals and organisations that are affected by a, and affect, the activities of a business.

Question 29

Private limited company (ltd)

Answer 29

Cannot publicly advertise its shares for sale and is often owned by family members

Question 30

Public limited company (plc)

Answer 30

Can advertise its shares and can be listed on the stock exchange (a market for buying and selling shares.)

In a plc it’s not possible to place restrictions on whom shares are sold to, meaning if you own some shares of a plc, then you can sell them to whoever you want and other people can buy them easily via the stock exchange

Question 31

Flotation

Answer 31

Occurs when a private limited company decides to become a public limited company.

To do this the firm must meet the regulations of the stock exchange