What is meant by the 'primary sector'?
Organisations that are involved in extracting raw materials.
Explain one drawback of globalisation.
- Fierce competition from overseas firms
- UK businesses are under threat of takeover from international firms
- New competitors
What is the difference between a customer and a consumer?
Customers purchase a product.
Consumer use a product.
What is the formula for closing balance?
Net cash flow plus opening balance.
List the four factors of production.
Land, Labour, Capital, Enterprise
- Higher sales: more people employed = increased spending
- Increased employment costs: businesses compete to employ workers, usually by paying them more
Explain two ways to segment a market.
- Gender
- Age
- Location
- Income
- Stage of life cycle
How do you find a business's gross profit?
Gross profit = Revenue - Cost of Sales
Explain the difference between unlimited and limited liability.
Limited liability: there is a limit to how much a business owner can owe.
Unlimited liability: the owner's personal possessions are at risk if there are any problems.
State one reason why a business might decide to use cloud computing services?
- Cloud services allow businesses to analyse data and identify trends
- Cloud services allow businesses to respond quickly to market changes
Explain loss leader pricing.
A business sells one product at a loss in the hope that customers will buy other products as well.
What is the formula for average rate of return?
What is a private limited company? (LTD)
A company that cannot publicly advertise its shares for sale. (Often owned by family members)
Explain the situation which must occur for a monopoly to take place.
When a business does not face any competition in a particular market.
What is the Boston Matrix?
A model that looks at products in terms of their share of the market and the growth of that market.
Identify the margin of safety.
The space between the BEP and current production (total sales).
What is the difference between internal growth and external growth?
External growth: a business expands by joining with another business.
Explain one element of the Consumer Rights Act.
- Product quality
- Returning goods
- Repairs and replacements
- Delivery rights
What is the formula for net profit margin, and what does this compare?
Net profit margin = (net profit / revenue) x 100
This profit ratio compares a business's net profit for a trading period with the revenue figure for the same period.