Understanding Business

Question 1

Needs

Answer 1

Needs are something that you must have and are very important to live and survive. eg water, heat, shelter

Question 2

Wants

Answer 2

Wants are something that you desire but you do not have to have them to survive. They are extras to spice up your life. eg phone, car, laptop.

Question 3

Service

Answer 3

Something you cannot touch and when someone does something for you for money.

Question 4

Goods

Answer 4

Goods are objects you buy and things you can touch.

Question 5

How do businesses satisfy wants and create wealth?

Answer 5

Business produce goods and services to satisfy the wants of humans and in return gain profit for producing/supplying the business.

Question 6

Land

Answer 6

Natural resources

Question 7

Labour

Answer 7

Human effort in a business. Human resources

Question 8

Capital

Answer 8

Man-made goods to produce other goods and services

Question 9

The Four Factors of Producton

Answer 9

The factors of production are land, labour, capital and enterprise. Various resources which contribute to the producing of goods and services.

Question 10

The Business Cycle

Answer 10

1. Consumers have WANTS
2. Market research finds out what consumers want.
3. Business produce goods and service
4. Costumers buy goods and services
   And then back to the beginning

Question 11

The Three Sectors of Industry

Answer 11

Primary - Business extract natural goods from the earth. eg Fisherman, farmers, coal miners
Secondary - Business that are involved with making things (manufacturing). eg shipbuilding, construction, factories.
Tertiary - Businesses that do not produce goods but provide services. eg Shops, window cleaners, hairdressers.

Question 12

The Three Sectors of Economy

Answer 12

Private - Businesses that are set up by individuals called sole traders, a group or a couple of people called partnerships or a Private Limited company that is owned by shareholders and run by a board of directors.
Public - Everything that is in the economy controlled by the state that is given to their citizens for free regardless if they pay for it or not. eg police, fire brigade, schools, army.
Third - The part of the economy that is run by people voluntary and has no profit intake. eg Charities, voluntary organisations.

Question 13

Sole Trader

Answer 13

A business in the private sector of economy which is run by an individual to make as much profit as possible but is funded mostly by themselves and can be in any of the sectors of industry.

Question 14

Partenrship

Answer 14

A business in the private sector of economy which is run by 2-20 people to make as much profit as possible to be shared between them and is funded by everyone in the partnership and can be in any of the sectors of industry.

Question 15

Private Limited Company

Answer 15

A business in the private sector of economy which is owned by shareholders and run by a board of directors and its aim is to make as much profit as possible to be shared out to the shareholders depending on how big their stake is in the business. It is funded by shareholders, as they give the company some money to start or run the business in exchange for a stake in the business. It can be in any of the sectors of industry.

Question 16

Charaties

Answer 16

A business in the third sector of economy. A company that has no profit intake and its goal is to raise as much money for things in need as possible. It is run by people called trustees which have the same liability as shareholders. It is funded by bank loans, the general public, etc. It is in the tertiary sector of industry.

Question 17

Social Enterprises

Answer 17

A business in the private sector of economy. A social enterprise is a business that is set up, often as a limited company, and run for social and/or environmental purposes rather than to make shareholders or owners wealthier. It is funded by the profits of the company, selling shares, banks loans, government grants and loans. It can be in any of the sectors of industry.

Question 18

Public Organisations

Answer 18

Public sector organisations are things such like your local council or government that are elected by the public. They appoint managers or directors of services to run the council departments. Local councils are large employers therefore making them a very large business. They are financed partly through local taxation called council tax and also partly from central government, they also receive money from services that they run such as local swimming pools and sport centres. They are in the third sector of economy and the tertiary sector of industry.

Question 19

Skills and Qualities of an Entrepreneur

Answer 19

Determined, Negotiative, Organised, Persuasive, Risk Taking, Creative. Able to take an idea and turn it into a business.

Question 20

Enterprise

Answer 20

The entrepreneur who combines land, labour and capital together to run a business to meet our needs and wants.

Question 21

What are the definitions for the business objectives Profit, Survival and Growth?

Answer 21

Profit - To maximise how much profit you can make out of the business.
Survival - This is were you want to make enough profit to keep your business going and not to be taken over by larger businesses. This is the most important aim for small businesses.
Growth - This aim is to become larger and to increase your market share.

Question 22

What are the definitions for the business objectives Provision of a Service, Customer Satisfaction and Enterprise?

Answer 22

Provision of a Service - This is were you aim to provide help and a good service to your customers at all times. Normally businesses have skilled workers to ensure that their provision of a service is high.
Customer Satisfaction - This is the amount of satisfaction gained from a customer after buying or using a good or service from a business. This is also measured in how many times a customer revisits a business.
Enterprise - This objective means to be original and willing to take on new ventures.

Question 23

How do businesses maximise customer service?

Answer 23

Businesses maximise customer service by making sure they are attentive to their customers at all times and that they provide the help or information that the customer needs immediately. Businesses also maximise customer service by making sure they are on time and presentable for the customers when they are asked for. Businesses also can maximise customer service by making sure they have the rightly skilled employees to help out the customers in various areas.

Question 24

How is customer service important to business success?

Answer 24

Customer service is key to business success because if you don’t have good customer service then you will make a much less profit than you could have if you had good customer service. If you don’t have good customer service then customers are less likely to come back and recommend your business to others, they might in fact make a bad reputation for your business. This is turn will lower your sales and you will make less profit.

Question 25

What are the PESTEC factors?

Answer 25

P - Political Factors - Government Legislation (Laws). eg minimum wage, taxation.
E - Economic Factors - Inflation rate, exchange rates(imports and exports), interest rates, recession/boom impact.
S - Social Factors - Trends , tastes/fashion. eg more working woman.
T - Technology Factors - eg advances in technology - need to stay up to date to be competitive.
E - Environmental Factors - Weather:causes delays in deliveries = bad reputation.
C - Competitive - What are your competitors doing?

Question 26

What is the impact of PESTEC factors on a business?

Answer 26

A business has to be aware of all of these factors and try and maximise their effort towards these factors. These factors will change a lot in the business as the business will have to adapt to the different changes that happen in all of them. eg The business is on a loan from bank and the interest rate increases for all banks.

Question 27

How do employees affect the operation of and decisions made an organisation?

Answer 27

The employees affect the operation because if the employees are not working hard then the operation of the business will be slower. The employees affect the decisions because the managers will have to take in account how the decisions they make might affect the working hours/effort/enthusiasm of the employees. The managers are also employees and therefore they have to make a lot of different decisions everyday.

Question 28

How does finance affect the operation of and decisions made in an organisation?

Answer 28

If the business does not have enough money to buy something that would increase production or speed something else up in the business then it effects the operation of the business. Finance effects the decisions made in an organisation because if the organisation hasn’t got enough money to buy something they want then they have to decide on if they should save up their money or buy something else that has lesser value to them but would still help the business.

Question 29

How does management affect the operation of and decisions made in an organisation?

Answer 29

If the management of an organisation is good then production and other key factors of the organisation will be running smoothly and improving, but if the management of the organisation is bad then the rate of things will be slow, there will be no order and the key factors that the organisation needs will go horribly wrong.

Question 30

How does technological systems affect the operation of and decisions made in an organisations?

Answer 30

If the organisation has poor technological systems then the rate at which they do things will be much slower compared to their competitors that have good or even fair technological systems. The decisions made in the organisation might be affected by technological systems because if they have good technological systems then it may be easier to communicate and decide on things even though the two people negotiating may be on the opposite ends of the world to each other. Also if the organisation has good technological systems then they may have to make less decisions or even more depending on what type of technology they buy to enhance their company. eg if they bought a production machine or bot, then they may have to decide on sacking some employees.

Question 31

What are the internal stakeholders of a business?

Answer 31

Owners, Shareholders, Managers and Employees.

Question 32

What influence and interest do different stakeholders have on a business?

Answer 32

(Try and remember as much as you can and then check you book to see if your right or wrong, or to see what the answer is if you couldn’t remember).