FINANCE
What is the difference between debt finance and equity finance?
Debt is borrowed money that must be repaid; equity comes from owners/investors or internally generated funds and does not create a loan repayment.
Name the three stages of the operations process in order.
Inputs → Transformation → Outputs.
What are the four elements of the marketing mix?
Product, Price, Promotion and Place.
What is recruitment?
The process of attracting suitable applicants to apply for a job vacancy.
Name the four key business functions.
Operations, Marketing, Finance and Human Resources.
A business has unpaid customer invoices but needs cash immediately. What source of finance could it use?
Factoring
At which stage of the operations process is value primarily added?
Transformation.
A new product enters the market at a deliberately low price to quickly attract customers and gain market share. Name the pricing strategy
Penetration pricing.
What is the difference between recruitment and selection?
Recruitment attracts applicants; selection chooses the most suitable applicant.
What is a stakeholder? Provide an example
A person/group with an interest in or affected by the business, e.g. employees, customers, owners, suppliers or government.
Sales are $180,000 and COGS are $68,000. Calculate gross profit.
112,000
A factory tests every 50th finished product to identify defects. Is this Quality Control or Quality Assurance?
Quality Control.
A business changes its packaging, brand name and product features to appeal to a younger target market. Which element of the marketing mix is primarily being changed?
Product.
Give TWO advantages of internal recruitment.
Examples: lower recruitment costs, faster process, employee already knows the business, motivates employees through promotion opportunities.
What is the difference between a sole trader and a partnership?
A sole trader has one owner; a partnership has two or more owners carrying on the business together.
What is a commercial bill and when might a business use one?
A commercial bill is short-term debt finance for a fixed period, often used for relatively large temporary funding needs, such as financing inventory for 90 days.
A manufacturer uses documented procedures, staff training and regular audits to ensure consistent standards. Is this QC or QA? Explain.
Quality Assurance because it focuses on systems and procedures designed to prevent quality problems.
A supermarket charges $4.99 rather than $5.00. What pricing strategy is being used?
Psychological pricing.
Explain ONE benefit of staff training to a business.
Training can improve employee skills/productivity, reduce errors, improve quality/customer service and potentially reduce costs.
Explain ONE way an external influence such as economic conditions could affect a business.
For example, rising interest rates can increase borrowing costs and reduce consumer spending, potentially reducing sales/profit.
A profitable business wants to buy new machinery without borrowing money or bringing in new owners. Identify the most appropriate source of finance AND justify your answer.
Retained profits. They are internally generated funds, avoiding interest/loan repayments and avoiding dilution of ownership.
A manufacturer increases production from 1,000 to 10,000 units and its average cost per unit falls from $9 to $6. Name and explain this concept.
Economies of scale — average cost per unit falls as the scale of production increases, potentially due to bulk purchasing, specialised machinery or spreading fixed costs.
A business sells an environmentally friendly product aimed specifically at environmentally conscious 18–25-year-olds. Identify the concept used to describe this specific group of customers.
Target Market
Employee turnover is high and staff report low motivation. Recommend ONE HR strategy and explain how it could improve the business.
Answers could include training, rewards, improved communication, flexible work or career development; must link the strategy to improved motivation/retention/productivity.
A business has rising sales but falling profits and increasing customer complaints. Identify TWO business functions that should work together to address the problem and explain why.
Several combinations acceptable. For example, Operations should address quality/cost problems while Marketing investigates customer expectations/complaints; Finance can analyse declining profitability; HR can address staff skills/training.