Unit 1 What is Business

Question 1

Acquisition/Takeover

Answer 1

One business takes control and ownership of another.

Question 2

Capital

Answer 2

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

Question 3

Competition

Answer 3

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

Question 4

Costs

Answer 4

The money spent by a business on goods and services. Can be fixed or variable.

Question 5

Deed of Partnership

Answer 5

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

Question 6

Diseconomies of Scale

Answer 6

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

Question 7

Dividend

Answer 7

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

Question 8

E-commerce

Answer 8

Business transactions carried out electronically on the internet.

Question 9

Economies of Scale

Answer 9

The cost advantage of producing on a large scale. As output increases the unit cost decreases. Types include Technical or Purchasing.

Question 10

Enterprise

Answer 10

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 11

Entrepreneur

Answer 11

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 12

Entrepreneurship

Answer 12

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

Question 13

Fixed Costs

Answer 13

The costs that Stay largely the same, regardless of the business’ output.

Question 14

Franchise

Answer 14

Where a business acquires the right to use the name and products of another business

Question 15

Franchisee

Answer 15

The business which runs a franchise in a specific territory or area

Question 16

Franchisor

Answer 16

The seller of a right to operate a franchise

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

Gap in the market

Answer 18

An opportunity for a business to provide a good or service that is not currently available

Question 19

Integration

Answer 19

Businesses joining together through either a Merger or Acquisition / Takeover

Question 20

Intrapreneurship

Answer 20

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

Question 21

Labour

Answer 21

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

Question 22

Land

Answer 22

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

Question 23

Liability

Answer 23

The extent of the owner’s/owners’ responsibility for the debts of the business. Their liability for the business’ debts is the amount they have already invested.

Question 24

Limited liability

Answer 24

The protection enjoyed by shareholders who can only lose the money they have put into the company

Question 25

Location

Answer 25

The place where a firm decides to conduct its business

Question 26

Loss

Answer 26

Where expenditure is greater than income.

Question 27

Merger

Answer 27

When two or more businesses join together

Question 28

Monopoly

Answer 28

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 29

Objective

Answer 29

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

Question 30

Opportunity Cost

Answer 30

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

Question 31

Outsourcing

Answer 31

Contracting another business to carry out some of the business' activities, often to reduce cost

Question 32

Primary Industry

Answer 32

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

Question 33

Private Sector

Answer 33

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

Question 34

Profit

Answer 34

Where income is greater than expenditure.

Question 35

Public Sector

Answer 35

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

Question 36

Purchasing Economies of Scale

Answer 36

Buying in larger quantities enables you to access higher price breaks which leads to a fall in the unit costs.

Question 37

Raw Materials

Answer 37

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

Question 38

Revenue

Answer 38

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

Question 39

Secondary Industry

Answer 39

Industries which manufacture, assemble, process and construct goods.

Question 40

Sleeping Partner

Answer 40

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

Question 41

Special Interest Group

Answer 41

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 42

Stakeholder

Answer 42

An individual or group that is directly or indirectly affected by the actions of a business

Question 43

Technical Economies of Scale

Answer 43

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.

Question 44

Tertiary Industry

Answer 44

Businesses that provide a service

Question 45

Trade Union

Answer 45

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

Question 46

Unit Cost

Answer 46

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

Question 47

Variable Costs

Answer 47

Cost that change in relation to the business’ output

Question 48

Unlimited Liability

Answer 48

If a business goes bankrupt, sole traders and partners are personally liable or responsible for their business’s debt