Principles of Business for CSEC Practice Flashcards

These flashcards cover the fundamental principles of business based on the CSEC Study Guide, including economic systems, business organization, management, marketing, the role of government, and international trade.

What is 'barter'?

The exchange of goods or services for other goods and services without the use of money.

Explain the concept of 'double coincidence of wants'.

A situation where two people each want what the other has to offer, which is necessary for bartering to work effectively.

What is 'surplus production'?

Output in excess of what a producer requires for his or her own use, which can then be traded.

What are the common characteristics of items used as money?

Scarcity, acceptability, portability, durability, and divisibility.

What are the four functions of money?

As a medium of exchange, a unit of account ($values expressed in units$), a store of value (retaining value for future use), and a standard for deferred payments (calculating the value of a debt).

Define a 'bill of exchange'.

A written order by one party (the drawer) to another (the drawee) to pay a given sum of money on a set date, typically used in international trade.

Who are the three parties involved in a cheque transaction?

The drawer (the person writing the cheque), the drawee (the bank), and the payee (the person receiving the payment).

What is 'm-money' or mobile money?

The use of a cellphone to transfer money between bank accounts, make deposits, withdraw funds, or pay bills via a mobile wallet.

Differentiate between the private sector and the public sector.

The private sector is owned by individuals or shareholders for profit, while the public sector is owned by the government to benefit the whole community.

What is 'limited liability'?

A limitation where owners of a business only have to pay out up to the amount they invested to meet business debts.

What is a 'sleeping partner' in a partnership?

A partner who provides capital to the business but is not involved in day-to-day decision-making and benefits from limited liability.

Define a 'franchise'.

A business arrangement where a franchisor grants a license to a franchisee to use the franchisor's trade name and methods in a specific area.

Explain the difference between a command economy and a free market economy.

In a command economy, the government makes key economic decisions and owns industries; in a free market economy, private individuals make decisions based on supply and demand.

What are the five main functional areas of a business?

Production, Marketing, Finance, Human Resources (HR), and Research and Development (R&D).

What is a 'stakeholder'?

An individual or group that has a direct interest in the decisions that a business makes, such as owners, employees, consumers, and the community.

Define 'money laundering'.

Concealing the origins of illegally obtained money so that it appears to have come from a legitimate source.

What are the seven main functions of management represented by the mnemonic PODSCORN?

$P$ for Planning, $O$ for Organizing, $D$ for Directing and Delegating, $S$ for Staff/employee motivation, and $CORN$ for Coordinating and Controlling.

What is the 'span of control' in an organization?

The number of people an individual manages or supervises directly.

Describe 'laissez-faire' leadership.

A style where the leader gives subordinates the freedom to manage their own work within given guidelines, effectively leaving them to 'sink or swim'.

Identify four strategies used by employees during periods of conflict.

Strike (withdrawal of labour), work to rule (working strictly to the letter of the contract), go slow (reducing tasks speed), and 'sick out' (phoning in sick as a group).

Distinguish between 'mediation' and 'arbitration'.

Mediation is an informal process with a third party to reach a non-binding agreement; arbitration is a formal process where an independent party makes a fair and legally binding solution.

What is 'self-actualization' in the context of an entrepreneur?

Meeting inner needs and aspirations to feel creative and reach one's full potential through independence.

What are the elements typically included in a business plan?

Executive summary, operational plan, business opportunity description, marketing plan, and financial forecast.

Differentiate between 'primary research' and 'secondary research'.

Primary research is new data collected directly by the researcher (e.g., questionnaires); secondary research uses existing, published information from other sources.

What is 'collateral'?

An asset, such as property or stocks, that a borrower provides as security to get a loan from a lender.

What are the characteristics of a 'specialty contract'?

A contract that must be written and is 'signed, sealed and delivered', carrying more weight in law than a simple contract.

List the four factors of production and their respective rewards.

Land (Rent), Labour (Wages), Capital (Interest), and Enterprise (Profit).

State the formula for 'productivity'.

$$\text{Productivity} = \frac{\text{Quantity of outputs produced}}{\text{Quantity of inputs used}}$$

What are 'linkage industries'?

Industries connected along a production chain; backward linking connects to raw material suppliers, and forward linking connects to firms involved in later stages like distribution or retail.

What is represented by 'The Four Ps' of the marketing mix?

Product, Price, Place, and Promotion.

Explain the concept of 'comparative advantage' in international trade.

When one country can produce goods at a lower opportunity cost than its trading partner, making it more efficient to specialize and trade.

What is the 'Human Development Index' (HDI)?

$A$ summary measure created by the United Nations based on standard of living (national income), life expectancy at birth, and education (years of schooling).