Unit 1 - Business in the Real World

Define the term 'goods'.

Physical items that are produced and can be touched.

Describe the difference between needs and wants.

Needs are essential items required for survival, while wants are non-essential items desired for comfort or pleasure.

Give an example of a type of business that you would find in: a) the primary sector. b) the secondary sector.

a) Farming. b) Manufacturing.

What is enterprise?

The act of creating, organizing, and managing a business venture along with its risks.

Describe two reasons why someone might decide to become an entrepreneur.

1) To pursue a passion or interest. 2) To achieve financial independence.

State two qualities that you would expect an entrepreneur to have.

1) Risk-taking ability. 2) Creativity.

Name the four factors of production.

Land, Labour, Capital, Enterprise.

What is meant by the term 'opportunity cost'?

The value of the next best alternative that is given up when making a choice.

True or false? A sole trader is responsible for all the debts of a business.

True.

What is meant by the term 'limited liability'?

Owners are only responsible for business debts up to the amount they invested in the business.

State two types of business ownership structure that have limited liability.

1) Private Limited Company (Ltd). 2) Public Limited Company (PLC).

Describe one difference between a private limited company and a public limited company.

Private limited companies cannot sell shares to the public, while public limited companies can.

Give two disadvantages of being in a public limited company rather than in a private limited company.

1) Risk of hostile takeovers. 2) More regulatory requirements.

What is not-for-profit organisation?

An organization that operates for purposes other than making a profit, such as charities.

Why might a social enterprise have more control over how much money it can spend on projects, compared to charity?

Social enterprises generate their own income through trade, giving them more control over their finances.

Describe two aims a business might have.

1) Profit maximization. 2) Growth.

Describe the difference between business aims and objectives.

Aims are long-term goals, while objectives are specific, measurable steps to achieve those goals.

Explain how objectives of start-up businesses are likely to be different from those that are larger, more established businesses.

Start-ups may focus on survival and market entry, while established businesses may focus on growth and market share.

State what is meant by stakeholder.

A person or organization with an interest or concern in a business.

State four possible stakeholders in businesses.

1) Employees. 2) Customers. 3) Suppliers. 4) Shareholders.

Explain why it can be hard to calculate revenue using sales figures and price.

Revenue calculations can be complicated by discounts, returns, and varying prices.

Describe what you would expect to happen to firm's variable costs if it expanded its output.

Variable costs would increase as more units are produced.

Name one objective that cost businesses could have.

Cost minimization.

State one advantage writing business plan.

Helps secure funding from investors or banks.

State one disadvantage writing business plan.

Time-consuming process.

State one advantage using business plan.

Provides a clear roadmap for business operations.

State one disadvantage using business plan.

May become outdated quickly in a dynamic market.

List three factors may influence location chosen for businesses.

1) Proximity to customers. 2) Availability of skilled labor. 3) Transportation links.

What economies scale?

Cost advantages gained by increasing production levels.

Describe diseconomies scale?

Increased costs per unit when a company becomes too large and inefficient.

Give example diseconomy scale might experience grows.

Communication breakdowns leading to inefficiencies.

Give advantage disadvantage expanding e-commerce.

Advantage: Access to global markets. Disadvantage: Increased competition.

Describe factor consider use outsourcing expand.

Quality control over outsourced work.

What franchising?

A business model where a franchisor grants a franchisee the right to operate using its brand and business model.

Explain franchisee state disadvantage franchising franchisor.

Franchisee: Limited control over business operations. Franchisor: Risk of brand reputation damage by franchisee actions.

Explore differences takeovers mergers.

Takeover: One company acquires another. Merger: Two companies combine to form a new entity.

Explain disadvantages external expansion.

Cultural clashes and integration challenges.