Unit 1

Question 1

Aims and objectives

Answer 1

Are the things that a business is trying to achieve, such as grow larger, or make more profit

Example sentence: The aims and objectives of the company are to expand into new markets and increase profitability.

Question 2

Backwards vertical growth

Answer 2

When a business merges with, or takes over a business that supplies it with goods or services

Example sentence: The company achieved backwards vertical growth by acquiring its main supplier.

Question 3

Business objectives

Answer 3

What the business aims to achieve, and include survival, profit, growth and providing a service

Question 4

Business plans

Answer 4

A simple plan which sets out details on the products or service being sold and the market research to show there is a need for what is being sold

Question 5

Capital

Answer 5

Money raised to start or develop a business

Question 6

Deed of partnership

Answer 6

A document setting out the operations of the partnership, including amount of capital to be invested and how profits will be shared

Question 7

Diversification

Answer 7

When a business merges with or takes over another business with which there is no connection

Question 8

Dividend

Answer 8

The money paid to a shareholder from the profits of a limited company. This is the reward for the shareholder taking a risk by investing money in the company

Question 9

Entrepreneur

Answer 9

A person who takes the risk of starting and running a business enterprise

Question 10

Enterprising characteristics

Answer 10

The features of an entrepreneur, which include being determined, creative and having the ability to take risks

Question 11

Merger

Answer 11

Where two or more businesses agree to join together

Question 12

Operate

Answer 12

A term used to explain how a business works

Question 13

Organic growth

Answer 13

Growth of a business internally by increasing sales. Sales can be increased in a number of different ways

Question 14

Partnership

Answer 14

A business owned by between two and twenty partners

Question 15

Private limited company

Answer 15

A smaller business owned by at least two shareholders. Shares cannot be sold to the general public. Has Ltd after its name

Question 16

Profit

Answer 16

The difference between revenue and costs

Question 17

Providing a service

Answer 17

Where a business makes sure that the needs of the customers are being met

Question 18

Public limited company

Answer 18

A large business where shares can be sold to the general public enabling vast sums of money to be raised to develop the company. Has PLC after its name

Question 19

Resources

Answer 19

The things a business sells needs to make it work, including finance, staff and materials

Question 20

Satisficing

Answer 20

Making just enough profit to provide the business owner with a decent living. More common in smaller businesses

Question 21

Shareholders

Answer 21

Are the owners of a private or public limited company

Question 22

External growth

Answer 22

Growth of a business by takeover or merger

Question 23

External stakeholders

Answer 23

The local community, suppliers, customers and Government

Question 24

Finance

Answer 24

A business word used instead of money. The finance needed to start a business is the money needed to do so

Question 25

Forwards vertical growth

Answer 25

When a business merges with, or takes over a business that it supplies good or services to

Question 26

Growth

Answer 26

Where a business becomes larger, for example by making more products or opening more places where goods and services are sold

Question 27

Horizontal growth

Answer 27

A merger or takeover where two businesses are involved in a similar operation, e.g. two electrical producers or two shops selling fashion clothing

Question 28

Internal stakeholders

Answer 28

The business owners and people who work in the business

Question 29

Limited liability

Answer 29

Where the responsibility for the debts of a business is limited to the amount invested by a shareholder. A feature of private and public limited companies

Question 30

Limited liability partnerships

Answer 30

Part partnership, part limited company. Owners are members, not partners. They have limited liability and have to make their finances available to the public

Question 31

Markets

Answer 31

Where a business sells its goods and services

Question 32

Market share

Answer 32

The share of the total market for a product or service and is shown as a percentage

Question 33

Sleeping partner

Answer 33

A partner who invests in a partnership but has no part in the running of the business

Question 34

Sole trader

Answer 34

A business owned by one person

Question 35

Spotting an opportunity

Answer 35

The ability to see the need for a particular product or service that customers need

Question 36

Stakeholders

Answer 36

Groups or individuals who have an interest in business

Question 37

Stakeholder group

Answer 37

Owners, employees, customers, suppliers, government, local community

Question 38

Success

Answer 38

For a business, can take many forms, including making profit, surviving and providing a good service to customers

Question 39

Survival

Answer 39

When a business just manages to keep going

Question 40

Takeover

Answer 40

Where a business takes a controlling interest in another business

Question 41

Unlimited liability

Answer 41

Where the responsibility for all the debts of a business rests with the owners of the business. A feature of sole traders and partnerships