Unit 1-Introduction to BM
A business owned and operated by one person who has unlimited liability is called a ________.
Sole trader
The number of people who are directly accountable to a manager is called the ________.
Span of control
Break-even quantity = ______ ÷ ______
Fixed costs ÷ Contribution per unit
Distinguish between market orientation and product orientation with one key characteristic for each.
Market orientation centers on identifying and meeting customer needs and wants through market research; Product orientation focuses on developing high-quality products based on internal production/technical capabilities, with little focus on customer demand.
Unit contribution = ______ − ______
Price − Variable cost
Which of the following is an EXTERNAL stakeholder?
A. Shareholder
B. Manager
C. Supplier
D. Employee
C. Supplier
Which leadership style involves the leader making all decisions independently without consulting employees?
A. Democratic
B. Laissez-faire
C. Autocratic
D. Paternalistic
C. Autocratic
Contribution per unit = ______ − ______
Price − Variable cost
Define niche marketing and mass marketing, and give one simple example for each type of marketing strategy.
Niche marketing: Targets a small, specific, and specialized segment of the market (e.g., luxury handmade skincare for vegan consumers).
Mass marketing: Targets the entire market with a single product and marketing mix, aiming for broad appeal (e.g., a basic bottled water brand sold to all consumers).
Capacity utilization = ______ ÷ ______ × 100
Actual output ÷ Maximum output
According to Ansoff’s Matrix, the growth strategy that involves selling existing products to new markets is called ________.
Market development
According to Herzberg's two-factor theory, factors such as salary, job security, and working conditions are known as ________ factors.
Hygiene
Explain the difference between fixed costs and variable costs.
Fixed costs do not change with the level of output. Variable costs change with the level of output.
Fixed costs are incurred even when output is zero, and variable costs increase as production increases.
Explain two benefits for a business of achieving market leadership in its industry.
1. Market leaders have greater pricing power, as they face less competitive pressure and can set prices.
2. They enjoy higher brand recognition and customer loyalty, which drives repeat sales and reduces customer acquisition costs.
3. Economies of scale from higher sales volume; stronger bargaining power with suppliers/distributors
Explain two differences between job production and mass production.
Job production produces unique, customized products, while mass production produces standardized products.
Job production is labour-intensive, while mass production is capital-intensive.
Job production has high flexibility, while mass production has low flexibility.
Job production has low output, while mass production produces large quantities.
Which of the following is a NEGATIVE impact of multinational corporations (MNCs) on a host country?
A. Transfer of knowledge and technology
B. Repatriation of profits to the home country
C. Creation of new jobs
D. Increased competition for local firms
B. Repatriation of profits to the home country
Which of the following is a disadvantage of external recruitment?
A. Limited pool of applicants
B. Greater degree of uncertainty about candidates
C. No need for induction training
D. Lower cost than internal recruitment
B. Greater degree of uncertainty about candidates
Explain two ways a business can improve its liquidity.
Increase current assets such as encouraging cash payments;
Improve stock control to reduce excess inventory;
Reduce current liabilities such as replacing overdrafts with long-term loans;
Negotiate longer credit terms with suppliers
Draw a product life cycle diagram.
x-axis: time
y-axis: sales revenue
five stages: R&D, launch, growth, maturity, decline
and a curve that first rises slowly, then reaches the highest point, and then descends
Explain two advantages and two disadvantages of JIT (Just-in-time) stock management.
Reduces storage costs
Improves cash flow
Highly dependent on suppliers
No buffer stock so delays disrupt production
In stakeholder mapping, stakeholders who have "high power but low interest" in the organization should be managed using the strategy known as ________.
Keep satisfied
In Hofstede's cultural dimensions, the dimension that measures the extent to which people feel uncomfortable with uncertainty and ambiguity is called ________.
Uncertainty avoidance
Explain why a business can be profitable but still experience cash flow problems.
Profit is based on revenue and costs recorded, not actual cash movement.
Sales made on credit do not generate an immediate cash inflow.
High expenses may require immediate cash outflows.
Timing differences between inflows and outflows can cause liquidity issues.
A smartphone manufacturer has a product in the maturity stage of the product life cycle with a cash cow status in the BCG matrix. Evaluate marketing strategies the business could use to maintain sales and market share for this product.
Strategy 1: Product development/extension
Strategy 2: Price adjustment (e.g., penetration pricing/price skimming for older models)
Explain two limitations of break-even analysis.
Assumes costs and revenues are linear
Assumes all output is sold
Not suitable for businesses with multiple products
Ignores qualitative factors such as market conditions