Business Activity
What are the 4 factors of production?
Land, Labour, Capital, Enterprise
What are the sectors of industry categorised by activity?
Primary, Secondary, Tertiary
Name any 5 traits in a entrepreneur.
Self confident, creative, innovative, independent, effective communicator, hard worker, risk taker, optimistic.
Define Sole Trader
A business owned and operated by one person. The owner is known as the sole trader.
What is opportunity cost? Give an example of it in real life
What are the sectors of industry categorised by ownership?
Private and Public
What is a business plan?
A business plan is a document containing the business objectives and important details about the operations, finance and owners of the business. (Any other valid answer also accepted)
Give 2 advantages of a Partnership
1- More capital can be invested
2- Responsibilities are shared
3- Both partners are motivated ot work
Why is specialisation common nowadays? Give any 2 reasons.
- Increasing Competition means businesses have to keep costs low.
- Specialised machinery and technologies is widely available and employees are needed to regulate them
- Higher living standards can come from being specialised in one thing.
Give 2 examples of activities done in each sector which is categorised by type of activity.
Primary- Mining, Natural Resources extraction or any other
Secondary- Services like baking, construction, manufacturing or any other
Tertiary- Baking, Insurance, Transport or any other
Give 2 ways of external growth.
Merger, Takeover.
Which type of company out of sole trader, partnership, public, private limited companies have shareholders?
Public and Private Limited Companies.
Why is added value important?
Can pay other costs
May make other profits if other costs' total is less than added value
Why do governments privatise?
They privatise because private sector companies are more efficient than public sector companies. Private sector company owners may invest more capital in the business than government can afford. Competition can help improve product quality.
Give 2 ways of how business size can be measured? Give a limitation of each way.
Number of Employees- Some firms use less employees to produce high level output which can give inaccurate results.
Value of Output- A high level of output doesn't mean that a business is large when measuring with other methods.
Value of Sales- Misleading if a company sells a variety of products.
Value of capital employed- A company with many employees may use labour intensive methods of production where less capital is used and less output is there.
Give 2 advantages and 2 disadvantages of a private limited company.
Advantages-
Raise capital from sale of shares, limited liability, separate legal identity, Continuity
Disadvantages-
Cannot sell shares, legal formalities, accounts are available for public, not easy to transfer shares
2 Possible opportunity costs of a person starting a start up.
The person does not get a steady job
Their income is not constant, it depends on business' success.
The Government of country B plans to build a new airport. A Government spokesperson said: 'There will be external costs, but I think there will be more benefits for the local community. We have to support businesses such as airlines in the private sector'. RU Air is one of the world's most profitable airlines. RU has announced plans on its website that it will operate flights to and from country B in the future. RU is a public limited company.
Identify two ways the Government might support RU Air and other private sector business activity (other than by building a new airport).
Ways could include: financial help such as grants OR subsidies, low tax rates, cheap rent areas, low interest rates, provide training, offer advice, organise business fairs, improve infrastructure, reduce regulations.
Homeright is a company that makes furniture such as tables and chairs. The company is successful and has grown rapidly in recent years. However the directors have found it difficult to manage the speed of growth. The Managing Director recently said that even more growth is planned for next year. The product range will be doubled and foreign markets entered.
Identify two possible reasons why the directors want Homeright to grow.
Higher Profits, More status for owners, Lower costs. Larger market share
Dmit is a partner in a small retail clothing business. The business has been successful, but it is finding it difficult to compete against larger retailers. The partners are thinking of converting the partnership into a private limited company.
Identify and explain three methods of promotion that the partnership could use to increase sales.
Advertising/Marketing
Sponsorship
Merchandising
Trade shows/events
Public relations
Special offers