Chapter 1
Provide an example of a tangible product and an intangible product.
Answers will vary
Tangible product = can be physically touched (good)
Intangible product = cannot be physically touched (service)
What is the most common type of business entity in the U.S.?
Sole trader (proprietorship)
List the four common business objectives.
Profit
Growth
Ethical objectives
Protecting shareholder value
Define stakeholder.
a person or organization with an interest in a business
This type of external growth occurs when a business purchases at least 50% of another business's stocks.
Acquisition
Which of the following is in the tertiary sector?
a) A fishing business
b) A newspaper
c) A car dealership
d) A lab research company
C) A car dealership
Which type of business is a for-profit social enterprise owned and managed by its members?
a) Microfinance providers
b) Cooperatives
c) Public-private partnerships
d) Public sector corporations
b) Cooperatives
1) New entrants enter the market
2) An inexperienced management team
1) Threat (competition)
2) Weakness (internal)
Provide an example of stakeholder conflict.
Answers will vary
Provide an example of a strategic alliance.
Answers may vary
Identify the four sectors of business and identify in which sector is value added to the product.
Primary, secondary, tertiary and quaternary
Secondary (manufacturing)
Which term describes the first time the shares of a publicly held company are available for sale on a stock exchange?
Initial Public Offering (IPO)
Discuss how growth differentiates from profit as a business objective.
Growth = measured by an increase in sales and/or market share
Profit = is the company profitable? Revenues-Expenses
Give four examples of stakeholder groups
Employees
Customers
Managers
Pressure groups
Shareholders
Suppliers
Competitors
Government
Provide an example of purchasing economies of scale.
Bulk purchasing
Explain the role of business. (You must identify all inputs and outputs)
To meet the needs and wants of individuals or organizations. They do this by combining human, physical, financial and enterprise resources (inputs) to create a good or a service (outputs). The transformation process from inputs to outputs is known as production. This is the stage in which businesses must add value.
Distinguish between the main goal of a business that operates in the private sector and a business that operates in the public sector.
Private sector = make a profit
Public sector = provide essential goods and services to people
Define corporate social responsibility (CSR).
Distinguish between an internal stakeholder and an external stakeholder. (You must also provide examples)
Internal: individuals or groups who are part of the organization (employees, managers, shareholders)
External: individuals or groups who are not part of the business but have a direct interest (customers, competitors, government, etc.)
Explain two reasons why a business would want to remain small and two reasons why a business would want to grow as large as possible.
Answers will vary
Examine how the four functions of business work together in an organization such as a school.
HR
Marketing
Finance
Operations management
What does it mean for a corporation to be incorporated (Inc.)?
There is a legal difference between the owners of the business and the business itself
Compare and contrast the roles of vision statements and mission statements.
Vision: some day (what an organization strives to be, or wants to achieve, in the distant future)
Mission: every day (why the business exists, who they are and what they do)
As stakeholders, what are the main interests of competitors?
Competitors are the rival businesses of an organization who compete with other organizations for the same opportunities in the same market.
Distinguish between internal and external growth of a business.
Internal: organic growth by means of opening new branches, shops or factories. It is slow, but not risky
External: inorganic growth achieved by means of merging with or taking over another business. It is quick, but risky.