1.1 - what is business

What is the primary purpose of business activity?

The primary purpose of business activity is to produce goods or services that satisfy a need or demand in the market.

Define the term goods.

Goods are tangible physical items capable of being stored, such as cars or gaming consoles.

True or False? The ultimate goal of a business is to create products that meet the needs and preferences of customers.

True.

What is labour intensive production?

Labour intensive production is the predominant use of physical labour in the manufacture of goods or services.

What does adding value mean in business?

Adding value means creating features that differentiate products from competitors. This builds a unique selling proposition and increases customer satisfaction or the process of increasing the worth of a product by improving its features or benefits to customers.

What is the transformation process?

The transformation process is where businesses take inputs and process them to produce outputs that customers want to buy.

What are services?

Services are intangible, cannot be stored and are provided to customers when they are needed, such as insurance or hairdressing.

What are the four main types of resource inputs in business?

The four main types of resource inputs in business are financial, human, physical and enterprise.

Define capital intensive production.

Capital intensive production involves the predominant use of machinery in the manufacture of goods or services.

True or False? Materials, equipment, and premises are examples of financial resources used in production.

False. Materials, equipment and premises are examples of physical resources used in production.

What are the four main sectors of industry?

The four main sectors of industry are primary, secondary, tertiary, and quaternary.

What is the primary sector?

The primary sector is concerned with the extraction of raw materials from land, sea or air, such as farming, mining or fishing.

What is the secondary sector?

The secondary sector is concerned with the processing of raw materials, such as oil refinement, and the manufacture of goods, such as vehicles.

Define the term tertiary sector.

The tertiary sector is concerned with the provision of services for consumers and other businesses such as leisure, banking or hospitality.

What is the quaternary sector?

The quaternary sector is concerned with the provision of knowledge-focused services, often related to IT technology, consultancy or research.

What is the chain of production?

The chain of production is the series of steps taken to turn raw materials into a finished product that can be marketed and sold.

True or False? Less developed economies are primarily focused on the tertiary sector.

False. Less developed economies primarily focus on the primary sector, with most people employed in agriculture and the production of food.

What is meant by sectoral change?

Sectoral change occurs when large numbers of firms change their sector of operation as the economy in which they are based grows and develops.

What is the digital service economy?

The digital service economy is the provision of services through online platforms, often replacing traditional brick-and-mortar businesses.

True or False? As economies develop, there is typically a movement from the primary sector towards the secondary and tertiary sectors.

True.

Define the term entrepreneur.

An entrepreneur is a person who is willing and able to take risks in pursuing a business idea or invention.

What are the three main roles of entrepreneurs?

Entrepreneurs organise resources, make business decisions and take risks.

Define the term intrapreneurship.

Intrapreneurship is the promotion of entrepreneurial thinking and behaviour within an existing business.

True or False? Intrapreneurship allows businesses to tap into the creative potential of their employees.

True.

True or False? Entrepreneurs only need financial skills to be successful.

False. Entrepreneurs require a unique set of characteristics and skills, including creativity, resilience, and leadership, as well as financial skills.

Define the term profit satisficing.

Profit satisficing occurs when the entrepreneur is focused on achieving a satisfactory level of profit rather than making as much profit as possible.

What is social entrepreneurship?

Social entrepreneurship aims to create enterprises that address a social or environmental problem while also earning a living.

True or False? Profit is usually the main reward for entrepreneurs who take the risk of starting a business.

True.

What is working capital?

Working capital is the money available to fund day-to-day operations of a business.

What is meant by the term autonomy?

Autonomy is the freedom to make one's own decisions.

What is meant by the term redundancy?

Redundancy occurs when workers lose their job because it is no longer required, usually receiving compensation.

What is crowdfunding?

Crowdfunding is a method of raising finance by asking a large number of people to invest a small amount of money in a business idea, typically via the internet.

Define the term business plan.

A business plan is a detailed document that sets out the objectives of a business, its planned strategy and tactics and the expected cash flow and profits, usually over a period of three to ten years.

What is the most common source of finance for start-up businesses?

The most common source of finance for start-up businesses is owner's funds.

True or False? Market research is not necessary when starting a business.

False. Market research should be carried out to determine the needs of customers and understand the intended market.

Define the term peer-to-peer lending.

Peer-to-peer lending is the practice of lending money to individuals or businesses through online services that match lenders with borrowers.

What is the advantage of initially launching a business on a small scale?

Launching a business on a small scale allows an entrepreneur to establish whether the business idea will be well-received and identify the relative popularity of products at an early stage.

True or False? New businesses rarely face competition from established rivals in the industry.

False. New businesses often face competition from established rivals in the industry, making it difficult to attract customers and establish a foothold in the market.

What are business angels?

Business angels are wealthy individuals who provide capital for business start-ups or expanding firms, usually in exchange for a proportion of ownership.

What are three essential elements that must be determined to successfully launch a business?

Essential elements that must be determined include: Business and product name The location of the business The form of ownership the business will take Equipment required Operational format, such as online or bricks-and-mortar.

State two groups of laws that must be considered when setting up a business.

Laws that must be considered include: Employment law Pay and working conditions Health & Safety law Consumer protection law Company formation.