Unit 1.1-1.2

Question 1

What is a business?

Answer 1

A business is an organisation that combines the inputs of production in order to provide outputs (in the form of goods and services) to satisfy the needs and wants of their customers.

Question 2

Factors of production

Answer 2

Factors of production are the resources that are combined in the production of goods and services. These are;
Land- Natural resources
Labour- Workforce and human effort
Capital- non natural resources (machinery, tools)
and enterprise

Question 2

Factors of production

Answer 2

Factors of production are the resources that are combined in the production of goods and services. These are;
Land- Natural resources
Labour- Workforce and human effort
Capital- non natural resources (machinery, tools)
Enterprise- the skill and knowledge needed for the combination of inputs

Question 3

Value Added

Answer 3

Value added is the process of creating a product worth more than the cost of inputs used to produce it.

Question 4

Human resources

Answer 4

Human resources oversees the human capital within an organisation. This includes processes such as recruitment as well as the overall well being of the workforce.

Question 5

Finance and Accounts

Answer 5

Finance and accounts oversees the financial resources ad accounts of a business organisation. This can include annual budgeting, forcasting and final accounts like balance sheets.

Question 6

Marketing

Answer 6

Marketing oversees researching and appealing to the needs of consumers and customers.

Question 7

Operations

Answer 7

Operations oversees the processes involved in the production of an organisations product.

Question 8

Primary Sector

Answer 8

The sector that extracts natural resources. Most common economic Sector in LEDC’s. Least added value across all sectors.

Question 9

Secondary Sector

Answer 9

This sector manufactures products by processing natural resources.

Question 10

Tertiary Sector

Answer 10

This Sector comprises of businesses that provide services to consumers as well as other businesses.

Question 11

Quaternary Sector

Answer 11

The Sector that is characterized by the sharing and creation of knowledge.

Question 12

Entrepreneurship

Answer 12

Characterizes the activity that entails having the skill and the ability to take risks and initiative in starting a business.

Question 13

Entrepreneurs

Answer 13

A person who possess the skill, knowledge and risk taking ability need to start a business.

Question 14

Intraprenuer

Answer 14

A person who is employed, typically by a large corporation, who has the skills and knowledge and is given the freedom to to develop new products for the organisation.

Question 15

Sole trader

Answer 15

A sole trader is a type of organisation that is mainly owned and occasionally operated by one individual.

Question 16

Advantages of Sole trader

Answer 16

Limited liability
Autonomy over business decisions
A sense of motivation that is inspired by self employment
Can collect a larger shared of profit generated by the business

Question 17

Disadvantages of Sole Trader

Answer 17

No continuity in the owners absence
Unlimited liability
Limited finance resources

Question 18

Partnership

Answer 18

A partnership is a type of business organisation in which there are two or more owners.

Question 19

Advantages of partnerships

Answer 19

Access to a greater pool of finances
Division of labour
More knowledge and skill base

Question 20

Disadvantages of partnerships

Answer 20

Profits must be divided
More prone to conflict
Unlimited liability

Question 21

Companies/Corporations

Answer 21

Are organisations that have limited liability and are owned by shareholders.

Question 22

Limited liability

Answer 22

Limited liability separates the legal identity of a business from its owners. Thus protecting business owners from the debt accumulated by a business.

Question 23

Unlimited liability

Answer 23

Unlimited liability means that the owner of the business is directly accountable for the debts of a business.

Question 24

Private limited companies

Answer 24

Usually smaller than public limited companies.
Shares can only be sold privately on approval of the board.
Typically shares are owned to family members.
Shares cannot be sold publicly on the stock exchange.

Question 25

Public limited companies

Answer 25

Large corporations.
Shares can be acquired by members of the public.
Typically enlisted on the stock exchange.
Are legally required to publish their financial reports.

Question 26

Advantages of private limited companies.

Answer 26

Control of the corporation can be maintained.
More privacy as compared to public limited companies.
Limited liability.

Question 27

Disadvantages of private limited companies.

Answer 27

Restriction on sources of finance.

Question 28

Advantage of public limited companies.

Answer 28

More sources of finance for growth.
Limited liability
Benefits of operating at a large scale etc. economies of scale market dominance.

Question 29

Disadvantages of public limited liability companies.

Answer 29

Susceptible to takeover.
Owners risk the loss of control of the business.
Lack of privacy due to the publication of financial reports.
High cost of being enlisted on the stock exchange.

Question 30

Cooperatives

Answer 30

Cooperatives are for profit organisations that are owned and operated by members. These organisations are characterized by business activity that benefits members.

Question 31

Advantages of Cooperatives

Answer 31

All members must be active and exercise ownership and control over the organisation.
Limited liability
Financial assistance from the government in the form of grants.

Question 32

Disadvantages of Cooperatives

Answer 32

Difficulty in attracting members.
Limited financial resource due to the reliance on member contributions.
Distribution of responsibility within the organisation may be unbalanced.
Members may lack skill and knowledge needed to operate organisation.

Question 33

Micro finance providers

Answer 33

Micro finance providers provide financial resources to unemployed or low income earners. Who would fail to gain access these resources on the basis of multiple reasons.

Question 34

Public-private partnerships

Answer 34

Are organisations that are a partnership between the government and at least one private sector business. These partnerships cater to a service need in local communities that the government would lack the financial resources to complete.

Question 35

Non profit organisation

Answer 35

non profit organisations are organisations that do not strive to generate profit off of their organisational activity but strive to achieve and attain their organisational mission and vision.
Charities and Non governmental organisations.