Topic 1 - Role of business

Question 1

Economic and social importance of business

Answer 1

Wealth creation, employment, innovation, quality of life, choice, entrepreneurship, profit, income.

Question 2

4 ways to classify businesses

Answer 2

Size, geographical spread, industry sector, legal structure

Question 3

Micro business

Answer 3

less than 5

Question 4

Small

Answer 4

5-19

Question 4

Medium

Answer 4

20-199

Question 5

Large

Answer 5

200+

Question 6

Primary industry

Answer 6

Businesses involved in collection of raw materials and resources

Question 7

Secondary industry

Answer 7

Taking raw material, making it into a finished or semi finished produce

Question 8

Tertiary

Answer 8

Performing a service for other people

Question 9

Quaternary

Answer 9

Services that involve transfer and processing of information and knowledge.

Question 10

Quinary

Answer 10

All services that have traditionally been performed in the home.

Question 11

Incorporation

Answer 11

Process companies go through to become a separate legal entity from the owners.

Question 12

Sole trader

Answer 12

Unlimited liability

Question 13

Partnership

Answer 13

Owned and operated between 2-20 people. Unlimited liability. Partnership act - agreement

Question 14

Private company (Pty Ltd)

Answer 14

2- 50 private shareholders, limited liability

Question 15

Public company (Ltd)

Answer 15

At least 1 shareholder, limited liability, must publish financial accounts each year.

Question 16

Government enterprises

Answer 16

Gov operated businesses.

Question 17

External influences

Answer 17

Economic, Financial, Geographical, Social, Legal, Political, Institutional, technological,

Question 17

Market concentration

Answer 17

number of competitors

Question 18

Monopoly

Answer 18

Complete concentration by one business in the industry

Question 19

Oligopoly

Answer 19

Small number of larger businesses that dominate the market e.g. banks

Question 20

Molopolistic competition

Answer 20

Goods and services sold are differentiated from competitors through packaging, quality etc.

Question 21

Perfect competition

Answer 21

Large number of small businesses that sell same or similar products.

Question 22

Internal influences

Answer 22

Product, Location, Management, Resource management, business culture.

Question 23

Stakeholders

Answer 23

Individual or organisation that has an interest in a business.

Question 24

Four stages of business life cycle

Answer 24

Establishment, growth, maturity, post-maturity

Question 24

Vertical integration

Answer 24

supply chain is owned by the company selling the product e.g. apple

Question 25

Horizontal integration

Answer 25

When a company creates or buys a company making a complimentary product