Role of Business
What is the basic nature or purpose of a business?
To produce and provide goods and services that satisfy people’s needs and wants.
What does SME's stand for?
Small to Medium Enterprises
Distinguish between an internal influence and an external influence.
An internal influence comes from within the business and can generally be controlled. An external influence comes from outside the business and is usually beyond its direct control.
Identify the four stages of the business life cycle in the correct order.
Establishment, growth, maturity and post-maturity
Distinguish between a good and a service.
Goods are physical, tangible items that you can touch, own, and store, while services are intangible tasks or expertise performed by someone for you
How many employees would generally make a business small, medium or large?
Small: fewer than 20. Medium: 20–199. Large: 200 or more employees.
Identify four external influences on a business.
Economic, financial, geographic, social, legal, political, institutional, technological, competitive situation and markets. Accept any four.
Identify two challenges faced during the establishment stage.
Building a customer base, managing cash flow, obtaining finance, controlling costs and becoming known in the market.
Identify three roles of business
Earning a profit, creating employment, paying incomes, providing consumer choice, encouraging innovation, creating wealth and improving quality of life.
Distinguish between a local, national and global business.
A local business operates in one area, a national business operates across a country, and a global business operates in several countries.
Identify five internal influences
Products, location, resources, management and business culture.
Explain one challenge a business may experience during the growth stage.
The business may need extra finance to pay for new staff, stock or equipment.
Rapid growth can make it difficult to maintain product quality and customer service.
The business may struggle to recruit and train enough skilled employees.
Increased demand may place pressure on production capacity and stock levels.
Explain how businesses contribute to employment and income.
Businesses create jobs and pay employees wages or salaries, allowing people to purchase goods and services.
Identify the four legal structures
Sole trader, partnership, private company, public company
The government introduces a new environmental law requiring a factory to purchase cleaner technology. Identify two external influences affecting the factory.
Legal and technological influences. Political and financial influences may also be accepted with justification.
Identify three factors that can contribute to business decline.
Increased competition, changing customer preferences, outdated technology, poor management, economic downturn, falling sales or failure to innovate.
Explain how innovation and consumer choice can improve quality of life.
Innovation produces new or improved products and services, while choice allows consumers to select products that best meet their needs and budgets.
Explain three factors that influence a business’s choice of legal structure.
Size: larger businesses may require a company structure. Ownership: the desired number of owners and level of control affect the choice. Finance: businesses requiring more finance may choose a company structure to attract investors.
Identify three business stakeholders and state one interest of each.
Accept any three: owners – profit; employees – wages and job security; customers – quality and fair prices; suppliers – prompt payment; government – tax and legal compliance; community – responsible business behaviour.
Distinguish between voluntary and involuntary cessation and explain liquidation.
Voluntary cessation occurs when the owner chooses to close or sell the business. Involuntary cessation occurs when the business is forced to close. Liquidation involves selling a company’s assets to repay creditors before the company is closed.