Business Prelim content recall Prelim Study

What is the nature of a business?

The activities involved in producing goods and/or services to satisfy needs and wants, while pursuing business objectives such as profit, growth and quality of life.

What are the main roles of a business?

Producing goods and services; generating profit; providing employment and incomes; providing choice; encouraging innovation and entrepreneurship; accepting risk; creating wealth; contributing to quality of life.

What is a good?

A tangible product that can be produced and sold to customers.

What is a service?

An intangible activity or benefit provided to customers.

What is profit?

The amount remaining when total revenue exceeds total costs.

What is employment?

The provision of jobs for people by businesses.

What is entrepreneurship?

The process of identifying opportunities, developing ideas and taking risks to establish or grow a business.

What is business risk?

The possibility that a business will experience an unfavourable outcome because of uncertainty.

What is innovation?

The development or introduction of new or improved products, processes or ideas.

What is wealth creation?

The generation of income and economic value through business activity.

What is quality of life?

The overall wellbeing and standard of living experienced by individuals and communities.

How can businesses provide choice?

Businesses offer different goods and services, allowing consumers to choose between alternatives.

What is a small to medium enterprise (SME)?

A business classified as small or medium in size.

How can businesses be classified by size?

As small to medium enterprises (SMEs) or large businesses.

How can businesses be classified geographically?

As local, national or global businesses.

What is a local business?

A business that primarily operates within a limited local area.

What is a national business?

A business that operates across a country.

What is a global business?

A business that operates across multiple countries.

What are the five industry classifications?

Primary, secondary, tertiary, quaternary and quinary.

What is the primary industry?

The industry involved in extracting or harvesting natural resources.

What is the secondary industry?

The industry involved in manufacturing and processing raw materials into goods.

What is the tertiary industry?

The industry involved in providing services to consumers and businesses.

What is the quaternary industry?

The industry involving knowledge, information and specialised services.

What is the quinary industry?

The industry involving high-level decision-making and services associated with senior management and government.

What are the five main legal structures?

Sole trader, partnership, private company, public company and government enterprise.

What is a sole trader?

A business owned and controlled by one person.

What is a partnership?

A business structure involving two or more owners who operate the business together.

What is a private company?

A company owned by private shareholders whose shares are not publicly traded.

What is a public company?

A company whose shares can be offered to the public and traded on a stock exchange.

What is a government enterprise?

A business owned and operated by government.

What factors influence the choice of legal structure?

Size, ownership and finance.

What are external influences?

Factors outside the business that can affect its operations and decision-making.

What are the external influences in the syllabus?

Economic, financial, geographic, social, legal, political, institutional, technological, competitive situation and markets.

What are internal influences?

Factors within the business that can affect its operations and decision-making.

What are the main internal influences?

Products, location, resources, management and business culture.

What are stakeholders?

Individuals or groups that have an interest in or are affected by a business.

What is the business life cycle?

The stages a business passes through from establishment through growth and maturity to post-maturity.

What are the four stages of the business life cycle?

Establishment, growth, maturity and post-maturity.

What happens during the establishment stage?

The business is newly established and focuses on becoming viable and establishing itself in the market.

What happens during the growth stage?

The business expands its operations, sales and/or market presence.

What happens during the maturity stage?

The business has become established and growth generally becomes slower or more stable.

What happens during the post-maturity stage?

The business may experience renewal, steady performance or decline.

What should a business do at each stage of the business life cycle?

Respond to the challenges and changing circumstances associated with that stage.

What factors can contribute to business decline?

Internal and external factors that reduce the business's ability to operate successfully and remain competitive.

What is voluntary cessation?

When a business owner voluntarily chooses to stop operating the business.

What is involuntary cessation?

When a business is forced to cease operating, often because it can no longer meet its obligations.

What is liquidation?

The process of ending a business by selling its assets and using the proceeds to pay debts.

What is effective management?

Management that successfully coordinates people and resources to achieve business goals.

What are important skills of management?

Interpersonal skills, communication, strategic thinking, vision, problem-solving, decision-making, flexibility, adaptability to change and reconciling conflicting stakeholder interests.

Why are interpersonal skills important for managers?

They help managers build effective relationships and work with employees and stakeholders.