Unit 1

Question 1

Who controls private sector businesses?

Answer 1

Private individuals and businesses rather than the government.

Question 2

Who controls public sector businesses?

Answer 2

They are under the ownership and control of the government.

Question 3

What do public sector businesses typically provide?

Answer 3

They typically provide essential goods and services that would be underprovided or inefficiently provided by the private sector e.g. Healthcare, education, now social housing and the emergency services.

Question 4

What are sole traders?

Answer 4

A sole trader is an individual who owns his/her personal business. The owner runs and controls the business and is the only person held responsible for its success or failure.

Question 5

What is a partnership?

Answer 5

A partnership is a for-profit private sector business owned by two or more people. (For ordinary partnerships maximum is 20.

Question 6

What are strengths of partnerships?

Answer 6

Financial strength, specialization and division of labour, financial privacy and cost-effectiveness.

Question 7

What are disadvantages of partnerships?

Answer 7

Unlimited liability, a lack of continuity, prolonged decision making and lack of harmony.

Question 8

What is a privately held company?

Answer 8

A privately held company is a limited liability company that cannot raise share capital from general public via stock exchange. Instead shares ave sold to private family members and friends.

Question 9

What are examples of privately held companies?

Answer 9

Aldi, Chanel, Ernst & Young, IKEA, LEGO, and Rolex

Question 10

What are advantages of limited liability companies?

Answer 10

Raising finance, limited liability, economies of scale, productivity and tax benefits.

Question 11

What are disadvantages of a limited liability company?

Answer 11

Communication problems, added complexities, compliance costs, disclosure of information I bureaucracy and loss of control.

Question 12

What is a publicly held company?

Answer 12

A publicly held company is able to advertise and sell its shares to the general public via stock exchange.

Question 13

What are social enterprises?

Answer 13

Social enterprises are revenue-generating businesses with social objectives at the cove of their operations.

Question 14

What are cooperatives?

Answer 14

Cooperatives are for-profit enterprises owned and run by their members, such as employees or customers, with the common goal of creating value for their members by operating a social in responsible way.

Question 15

What are advantages of cooperatives?

Answer 15

Incentives to work, decision-making power, social benefits and public support.

Question 16

What are disadvantages of cooperatives?

Answer 16

Disincentive effects, limited sources of finance, slower decision-making and limited promotional opportunities.

Question 17

What are non-profit social enterprises?

Answer 17

Mon-profit social enterprises are businesses run in a commercial-like manner but without profit being the main goal. Instead, non-profit organizations use their surplus revenues to achieve their goals rather thon distributing the surplus as dividends to its shareholders or owners.

Question 18

What are non-governmental organizations?

Answer 18

The United Nations defines non-governmental organizations as a “private organizations that pursue activities to relieve suffering, promote the interest of the poor, protect the environment, provide basic social services or undertake community development”.

Question 19

What is a stock exchange?

Answer 19

A stock exchange is a market place for trading stocks and shares of publicly held companies. Examples include the London stock exchange and the New York stock exchange.

Question 20

What is unlimited liability?

Answer 20

Unlimited liability is a feature of sole traders and ordinary partnerships who are legally liable or responsible for all monies owed to their creditors, even if this means that they have to sell their personal possessions to pay for their debts.

Question 21

What is a vision statement?

Answer 21

A vision statement outlines an organization’s aspirations in the distant future.

Question 22

Define the term decision tree

Answer 22

A mathematical model used to help managers make decisions when faced with choices, based on estimates and probabilities.

Question 23

Define the term entrepreneur.

Answer 23

People who manage, organize and plan the resources needed for business activity.

Question 24

What are the four different components for a SWOT analysis?

Answer 24

Strengths, weaknesses, opportunities and threats.

Question 25

What are stakeholders?

Answer 25

Individuals, groups or organizations that has an interest or concern in a business. They can be affected e affect an organization’s actions/decisions.

Question 26

What does stakeholder mapping do?

Answer 26

Stakeholder mapping helps businesses see who they need to manage closely and who they just need to have regular contact with.

Question 27

What are the four components of the ansoff matrix?

Answer 27

Market penetration, product development, market development and diversification.

Question 28

What is a joint venture?

Answer 28

An organization created, owned and operated by two or more organizations. The joint venture is legally distinct from two organizations that created it.

Question 29

What are methods of external growth?

Answer 29

Franchises, joint ventures, mergers and takeovers.

Question 30

What can external growth also be known as?

Answer 30

Inorganic growth.

Question 31

What are methods of internal growth?

Answer 31

Ansoff,place-open more stores, promote, price, packaging, people-training, customer service and process- ecommerce.

Question 32

What are advantages of internal growth?

Answer 32

Lower risk, builds on existing activities, is good for high growth markets and is cheaper than external growth.

Question 33

What are advantages of external growth?

Answer 33

Faster, popular in mature or declining markets.

Question 34

What are disadvantages of external growth?

Answer 34

Higher risk and more expensive.

Question 35

What do economies of scale do for business?

Answer 35

Enables a business to benefit from lower average coasts by increasing the size of its operations.

Question 36

What does STEEPLE stand for?

Answer 36

S- social- aging population, increase in retirement age and declining birth rate T- technology- social media automation, web/app developers E- economic- business cycle, interest rates E- environmental factors- electric cars, solar panels and recycling P- political environment- duty, tariffs, taxes and political stability L- legal factors- employment law, health and safety E- ethics- fair trade, fair treatment

Question 37

What are multinational companies?

Answer 37

Any business organization that has operations in overseas markets, irrespective of whether it produces goods and provides services.

Question 38

Define what a business is and explain the role of businesses in combining human, physical and financial resources to create goods and services.

Answer 38

A business is an organization that uses human, physical, and financial resources to produce goods or services to meet customers needs. Businesses combine these resources to add value by producing goods or services.

Question 39

What is the difference between goods and services?

Answer 39

Goods are tangible products that can be touched and stored, while services are intangible goods canbe slice in physical form, whereas services often involve human labour or expertise.

Question 40

Identify and explain the four factors of production. Provide examples of how each is used in a business context.

Answer 40

Land, labour, capital and enterprise. Land is the natural resources used in production. Labour is tro human effort and stills used in production. Capital is the machinery, tools, and buildings used to produce goods. Enterprise is the entrepreneurial ability to combine other factorsof production into A functioning businesses.

Question 41

Explain how businesses add value during the production process.

Answer 41

Businesses add value by increasing the worth of raw materials through the production process. For example, rev coffee beans are turned into a cup of coffee at Starbucks, adding value by providing convenience, taste, and ambiance.

Question 42

Distinguish between consumer goods, capital goods, durable goods, and non-durable goods with examples.

Answer 42

Consumer goods are products said to consumers. Capital goods are products used by businesses is produce other goods. Durable goods are long-lasting goods. Non-durable goods are goods that are consumed quickly.

Question 43

What are the differences between private sector and public sector organizations?

Answer 43

Private sector organizations are owned individuals or shareholders, while public sector organizations are owned and operated by the government.