Topic One, Part 2 - Constraints and Functions

Question 1

What are constraints?

Answer 1

Factors that limit the business operation

Question 2

What are the four constraints for a business?

Answer 2

• Competition
• environment
• legalisation
• economy

Question 3

How can competition be a constraint?

Answer 3

They will innovate their products to surpass yours and increase market share

Question 4

How can environment be a constraint?

Answer 4

Local and national factors concerns for the environment impact operations

Question 5

How can legislation be a constraint?

Answer 5

Investment in equipment and training to keep up with new requirements

Question 6

How can economy be a constraint?

Answer 6

• Inflation and interest rates impact mortgages, loans and finance

Question 7

What is the function of accounting and finance within a business?

Answer 7

• monitors and controls financial resources

- Keeps detailed records

Question 8

What is the function of operations management within a business?

Answer 8

Oversees production for efficiency

Question 9

What is the function of marketing and support within a business?

Answer 9

• Monitor customer behaviour to adjust branding

- Ensure good Customer support and public relations

Question 10

What is the function of human resource management within a business?

Answer 10

• responsible for employee well being

- recruitment and training

Question 11

What is a sole trader?

Answer 11

Someone who owns a business and responsible for all decisions

Question 12

What are the advantages of being a sole trader?

Answer 12

• Sole trader keeps all profit

- Cannot be subject to a hostile takeover

Question 13

What are the disadvantages of being a sole trader?

Answer 13

• Owner is responsible for business debts

- Harder to raise capital

Question 14

What is a partnership?

Answer 14

When two or more people run a business together

Question 15

What are two examples of a partnership?

Answer 15

• Law firms

- estate agents

Question 16

What are the advantages of being in a partnership?

Answer 16

• Easy to establish

- Losses are shared

Question 17

What are the disadvantages of being in a partnership?

Answer 17

• Disagreements

- Partners are equally responsible for debts

Question 18

What is a private limited company?

Answer 18

Cant sell shares on the open market, but requires no minimum share capital

Question 19

What is an example of a private limited company?

Answer 19

Family business

Question 20

what is a public limited company?

Answer 20

Sell shares on the open market, but requires a minimum share capital of £50k

Question 21

What are the advantages of being a company?

Answer 21

• Raise capital through shares

- limited liability

Question 22

What are the disadvantages of being a company?

Answer 22

• Expensive setup

- Public company accounts