Business Basics
What is the main purpose of a business?
To produce goods or services to satisfy customer needs and wants.
What is motivation?
The willingness of employees to work hard and achieve business objectives.
What is market research?
The collection and analysis of information about customers and the market.
What is production?
The process of converting resources into goods or services.
What is revenue?
The money a business receives from selling goods or services.
What is an entrepreneur?
A person who organises and takes the risk of starting and running a business.
What is recruitment?
The process of finding and attracting suitable candidates for a job.
What are the four Ps of the marketing mix?
Product, Price, Place and Promotion.
What is job production?
Producing a single product specifically designed to meet a customer's requirements.
What is profit?
The amount left after total costs have been deducted from revenue.
Give two examples of stakeholders in a business.
Employees and customers. (Other valid answers: owners, suppliers, government, local community.)
Give two methods of training employees.
On-the-job training and off-the-job training.
What is market segmentation?
Dividing a market into groups of customers with similar characteristics or needs.
What is batch production?
Producing a quantity of identical products together before production switches to another batch.
A business has revenue of $80,000 and total costs of $55,000. Calculate its profit.
$25,000
A business wants to increase its market share. What does this mean?
It wants to increase its percentage of total sales in the market
What is a hierarchical organisational structure?
A structure where there are different levels of authority, with employees reporting to managers above them.
A company lowers the price of a product to attract more customers. Which part of the marketing mix has changed?
Price
What is break-even output?
The level of output where total revenue equals total costs.
What is a cash-flow forecast used for?
To predict the cash inflows and outflows of a business and identify possible cash shortages or surpluses.
A sole trader wants to expand but needs a large amount of finance. Explain one advantage and one disadvantage of changing to a limited company.
It can raise more capital by selling shares, but the owners may lose some control because shareholders become involved.
A business has high employee turnover. Explain one possible reason and one way it could reduce turnover.
Employees may be poorly motivated or paid. The business could improve pay, working conditions or promotion opportunities.
A new company has a small budget and wants to promote its product to teenagers. Explain why targeted social-media promotion could be suitable.
It can reach a specific target market at relatively low cost and allows the business to target people based on characteristics and interests.
A business has a high break-even point. Explain why this could be a problem.
The business must sell more products before it starts making a profit, so there is a greater risk of making a loss if sales are low.
A business has strong sales but regularly runs out of cash. Explain why this could happen.
Customers may buy on credit and pay later, while the business has to pay its suppliers immediately. This creates a timing problem between cash inflows and outflows.