What is a Business?
What is the main purpose of a business?
To produce goods or provide services to satisfy customer needs and wants.
What are business objectives?
Goals that a business aims to achieve.
What does business growth mean?
An increase in the size or scale of a business.
What is marketing?
Identifying and satisfying customer needs and wants profitably.
What is a shareholder?
An individual or organization that owns shares in a company.
What are the four factors of production?
Land, labour, capital, and enterprise.
What is the difference between a mission statement and a vision statement?
A mission statement explains the business's current purpose, while a vision statement describes what it hopes to become.
What is the difference between internal and external growth?
Internal growth happens through a business's own operations, while external growth happens through mergers or acquisitions.
What are the four Ps of the marketing mix?
Product, Price, Place, and Promotion.
What is a dividend?
A portion of a company's profits distributed to shareholders.
What is the difference between the primary, secondary, and tertiary sectors?
Primary extracts raw materials, secondary manufactures goods, and tertiary provides services.
What does SMART stand for when setting objectives?
Specific, Measurable, Achievable, Relevant, and Time-bound.
What is a merger?
When two businesses combine to form one business.
What is market segmentation?
Dividing a market into smaller groups of customers with similar characteristics or needs.
What is the difference between shareholders and stakeholders?
Shareholders own part of a company, while stakeholders are anyone affected by its activities.
What is the difference between a sole trader and a partnership?
A sole trader is owned by one person, while a partnership is owned by two or more people.
What is the difference between profit maximization and revenue maximization?
Profit maximization aims to achieve the highest possible profit, while revenue maximization aims to generate the highest possible sales income.
What is the difference between horizontal and vertical integration?
Horizontal integration combines businesses at the same stage of production, while vertical integration combines businesses at different stages of production.
What is the difference between market share and market growth?
Market share is a business's percentage of total market sales, while market growth is the increase in the total size of the market over time.
What is limited liability, and how does it protect shareholders?
Shareholders can generally only lose the amount they invested in the company, protecting their personal assets from business debts.
A business takes raw materials, transforms them into finished products, and sells them to customers. Explain the process it is using.
The transformation process, where inputs are converted into outputs that create added value.
A company changes its objective from maximizing profit to improving employee satisfaction. What is one potential advantage and disadvantage?
Advantage: Higher employee motivation and productivity. Disadvantage: Higher costs could reduce short-term profits.
Explain one advantage and one disadvantage of external growth through acquisition.
Advantage: Rapid expansion and increased market share. Disadvantage: Integration difficulties and potential cultural clashes.
A company lowers its prices to attract more customers and increase sales volume. Identify the pricing strategy and explain one possible disadvantage.
Penetration pricing. A disadvantage is that lower prices can reduce profit margins and may create expectations of permanently low prices.
A company decides to reinvest all its profits instead of paying dividends. Explain why shareholders might disagree with this decision.
Shareholders may prefer receiving immediate financial returns through dividends rather than waiting for potential future growth and capital gains.