Unit 1 Business In The Real World

Question 1

Acquisition / takeover

Answer 1

One business takes control and ownership of another

Question 2

Business Environment

Answer 2

The range of external factors that influence a business: PESTLE-C – Political, Economic, Social, Technological, Legal, Environmental and Ethical, and Competition

Question 3

Capital

Answer 3

Investment in machinery, and the money required to start the business. One of the four Factors of Production.

Question 4

Competition

Answer 4

The rivalry between businesses looking to sell their goods/services in the same market

Question 5

Competitive market

Answer 5

Businesses compete for the same customers, no one business has more than 25% market share

Question 6

Conglomerate

Answer 6

A business that owns brands in a range of different industries. For example, easyGroup own easyJet, easyHotel, easyPizza, easyGym, easyMoney, easyEnergy, and more

Question 7

Costs

Answer 7

The money spent by a business on goods and services.
Fixed Costs: The costs that stay largely the same, regardless of the business’ output. Example: rent.

Variable Costs: The costs that vary with the level of trade. Costs

Fixed Costs: The costs that stay largely the same, regardless of the business’ output. Variable Costs

Total costs: These are calculated when all you fixed costs and variable costs are added together. Formular: TC = FC + VC

Question 8

Creditor

Answer 8

These are people or organisations who have supplied goods or services to a firm but have not yet been paid for them.

Question 9

Deed of Partnership

Answer 9

This is a legal document which shows how responsibilities, profits and workload are to be shared

Question 10

Diseconomies of Scale

Answer 10

When a business grows too large, leading to a possible increase in unit cost

Question 11

Dividend

Answer 11

A portion of the after-tax profit that is paid to shareholders according to the number of shares they own

Question 12

E-Commerce

Answer 12

Business transactions carried out electronically on the internet

Question 13

Economies of Scale

Answer 13

The cost advantage of producing on a large scale. As output increases the unit cost decreases.

Technical Economies of Scale: Being a larger organisation allows you access to more capital, with which you can buy larger machines that enable you to increase you output while lowering unit costs.

Purchasing Economies of Scale: Buying in larger quantities enables you to access higher price breaks which leads to a fall in the unit costs.

Question 14

Enterprise

Answer 14

The ability to identify business ideas and opportunities to bring them to fruition and to take risks where appropriate. One of the four Factors of Production

Question 15

Entrepreneur

Answer 15

A person who is willing to take a risk by investing money into a business, organising the resources and hoping to make a profit. e.g. Richard Branson. Usually they do this because; they are ambitious, dissatisfied with working for other people, to pursue an interest, or because they have seen an opportunity.

Question 16

Entrepreneurship

Answer 16

The act of being an entrepreneur – starting your own business and taking risks.

Question 17

Footloose

Answer 17

A business that can be set up virtually anywhere – it has no specific need to be close to any specific resource or set of customers

Question 18

Integration

Answer 18

Businesses joining together through either a Merger or Acquisition / Takeover

Question 19

Intrapreneurship

Answer 19

Encouraging your employees to take risks and act as if they were an entrepreneur – but while working for you

Question 20

Labour

Answer 20

The work done by employees are those running the business. One of the four Factors of Production

Question 21

Land

Answer 21

Land and buildings. One of the four Factors of Production.

Question 22

Liability

Answer 22

The extent of the owner’s responsibility for the debts of the business.

Limited Liability: The owners are not responsible for the debts of the business. The limit of their liability for the business’ debts is the amount they have already invested.

Unlimited Liability: This means that the business and the owner are one legal entity. If the business goes into dept, the owner is in dept and their personal possetions like their car can be taken.

Question 23

Merger

Answer 23

When two or more businesses agree to join together

Question 24

Monopoly

Answer 24

Where a business has a market share of 25% or more. This allows them to dictate prices, their size in the market makes them difficult to compete with as they are able to achieve economies of scale

Question 25

Objective

Answer 25

A specific statement that defines a precise goal that can be measured and delivered within a given time

Question 26

Opportunity Cost

Answer 26

The cost of the next-best alternative that has to be given up when a choice is made

Question 27

Outsourcing

Answer 27

Contracting another business to carry out some of the business’ activities, often to reduce costs

Question 28

Primary Industry

Answer 28

Industries which extract natural resources. e.g. farming, oil drilling & mining

Question 29

Private Sector

Answer 29

Businesses not owned by the state (government) but by individuals or groups

Question 30

Profit / Loss

Answer 30

Profit: Where income is greater than expenditure.

Loss: Where expenditure is greater than income.

Question 31

Public Sector

Answer 31

Organisations where the activities are carried out either by national or local government

Question 32

Raw Materials

Answer 32

Materials and resources that are found / grown / extracted in the form that they will be used

Question 33

Revenue

Answer 33

Income from the sale of goods and services over a period of time

Question 34

Secondary Industry

Answer 34

Industries which manufacture, assemble, process and construct goods

Question 35

Sleeping Partner

Answer 35

A partner who puts in finance but does not take part in running the business. They have limited liability.

Question 36

Special Interest Group

Answer 36

A stakeholder in an organisation with a particular interest, such as the Environmental Lobby – a group with a specific interest in businesses operating in an environmentally friendly way.

Question 37

Tertiary Industry

Answer 37

Industries which provide services both to individuals and other sectors of industry

Question 38

Trade Union

Answer 38

An organisation who work to ensure that the interests and rights of their members (a group of workers) are protected

Question 39

Unit Cost

Answer 39

The costs of the raw materials and components that have been combined to create a product.

Question 40

Stakeholder

Answer 40

A Stakeholder is a person or organisation with a concern (an investment) or an interest in (they might be affected by) a business

Question 41

Common Stakeholder Groups

Answer 41

Internal: Workers, Managers, Owners, Directors

External: Shareholders, Customers, Local Community, Government, Banks / Creditors, Suppliers, Trade Unions, Special Interest Groups