Topic 1.4

Question 1

Sole trader:

Answer 1

a business run by one person; that person has unlimited liability for any business debts.

Question 2

Private limited company:

Answer 2

a small family business in which shareholders enjoy limited liability.

Question 3

Limited liability:

Answer 3

restricting the losses suffered by owners/shareholders to the sum they invested in the business.

Question 4

Unlimited liability:

Answer 4

treating the business and the individual owner as inseparable, therefore making the individual responsible for all the
debts of a failed business.

Question 5

Franchising:

Answer 5

paying a franchise owner for the right to use an established business name, branding and business methods.

Question 6

Royalties:

Answer 6

percentage of the sales revenue to be paid to the overall franchise owner.

Question 7

Fixed premises:

Answer 7

buildings that have to be where they are (for example, the high
street); e-commerce buildings can be located anywhere.

Question 8

Proximity:

Answer 8

nearness; whether or not a business wants to be close to a factor such as ‘materials’.

Question 9

Business plan:

Answer 9

a detailed document setting out the marketing and financial thinking behind a proposed new business.

Question 10

Place:

Answer 10

how and where the supplier is going to get the product or service to the consumer; it includes selling products to retailers and getting the
products displayed in prominent positions.

Question 11

Price:

Answer 11

setting the price that retailers must pay, which in turn affects the consumer price.

Question 12

Product:

Answer 12

targeting customers with a product that has the right blend of functional and aesthetic benefits without being too expensive to produce.

Question 13

Promotion:

Answer 13

all the methods that a business uses to persuade customers to buy, for example branding, packaging, advertising to boost the long-term
image of the product and short-term offers.