Unit 1, Business studies, 10

Question 1

Enterprise

Answer 1

Enterprise - spotting an opportunity to provide a product or service that people are willing to buy.

Question 2

Entrepreneur

Answer 2

Entrepreneur - an individual who has the skills and knowledge to set up and run their own business, and it is willing to take risk.

Question 3

Initiative

Answer 3

Initiative - the ability to use your judgment to make decisions and do things without needing to be told what to do

Question 4

Risks of starting your own business (3)

Answer 4

1. Financial
2. Straight relationship.
3. Health

Question 5

Business aims

Answer 5

Business aims are the overall goals of the business.

Question 6

Business plan

Answer 6

Business plan - the business plan sets out how the owners /managers of a business intened to achieve its objectives. Without such a plan, a business is likely to drift.

Question 7

Business plan include

Answer 7

• the business idea.
• the people running the business.
• market research.
• finance.
• the objective of the business.
• the target market.
• competitor.

Question 8

Sole trader

Answer 8

Sole trader- a sole trader describes any business that is owned and controlled by one person.
(Коли працюєш сам на себе)

Question 9

Disadvantages of sole trader

Answer 9

• Shortage of capital, some sole traders may find it difficult to operate or grow because they do not have enough capital. They may also find it difficult to get a bank loan.
• Illness, if the owner of the business is ill, there may not be anybody else who can run the business.
• Hours of work.
• Continuity.
• Shortage of skills.
• Unlimited liability.

Question 9

Sleeping/ Limited Partner

Answer 9

They invest money into the business but do not take part in the day to day running of the business or any decisions making.

Question 9

Partnership

Answer 9

Partnership - is a business which is owned and controlled by a minimum of 2 partners.

Question 9

Limited Liability Partnerships:
+advantages and disadvantages

Answer 9

• A LLP’s have at least 2 members.
• An advantage of becoming a LLP is that liability is limited.
• A disadvantage is that a LLP has to be registered with companies house which costs money and is time consuming.

Question 10

Shareholders

Answer 10

The owners of private and public limited companies.

Question 11

Shares

Answer 11

Shares - a unit of ownership in a limited company.

Question 12

Limited liability

Answer 12

This is when the responsibility for the depts of the company is limited to the amount that the shareholders has put in.

Question 13

Disadvantage of Private Limited Company

Answer 13

• Shareholders have to agree about how dividends are distributed.
• finance limited to ‘ friends and family’.

Question 13

Advantages of Private Limited Company

Answer 13

• easier to raise finance as can sell shares.
• original owners are likely to retain control.

Question 14

Disadvantages of Public Limited Company

Answer 14

• greater costs to set up and operate then a LTG.
• public can see company information and accounts.
• risk of company being taken oven.

Question 15

Advantages of Public Limited Company

Answer 15

• can raise large sums of finance via the stock exchange
• borrowing money from a bank will be easier because they will be seen as less of risk.

Question 16

Business goals

Answer 16

1. Profit.
2. Increase market share.
3. Growth.
4. Service

Question 17

Stakeholders

Answer 17

Is any individual or organisation who has a vested interest in the activities and decisions making of a business.

Question 18

Business growth

Answer 18

The process of a firm getting bigger

Question 19

Organic / internal growth

Answer 19

Is when the business grows naturally by selling more.

Question 20

Takeover

Answer 20

This is when one business buy another business. In case of a limited company, this means buying more that 50% of shares.

Question 21

External growth

Answer 21

This is growth of a business by take over or manager ( when business buy another business).

Question 22

Advantages of External growth

Answer 22

• costs saving ( i. e. through redundancies).
• gain new costumers and sales.
• eliminate competition.
• more ideas through combining teams.
• spread the risk / reduce reliance on exiting business market.

Question 23

Disadvantages of External growth

Answer 23

• slower decision marketing.
• employees may become demotivated.
• increased costs.

Question 24

Types of External Growth

Answer 24

1.Horizontal.
2. Backwards vertical.
3. Forwards vertical
4. Diversification

Question 25

Types of External Growth, horizontal

Answer 25

Horizontal - a business joins with a business at the same stage of the production process.

Question 26

Types of External Growth,
Backwards vertical

Answer 26

Backwards vertical - a business joins with its suppliers / the previous stage of production.

Question 27

Types of External Growth,
Forwards vertical

Answer 27

Forwards vertical - a business joins with its distributors / the next stage of production.

Question 28

Types of External Growth,
Diversification

Answer 28

Diversification - a business joins with a business in a different market.