Role of Business
How is profit calculated?
sales revenue – business expenses = profit
Define national business.
a business that only operates within one country
What is the difference between external influences and internal influences?
External influences (business have little to no control)
Internal influences (business has some degree of control)
What are the four stages of business cycle?
establishment, growth, maturity, post-maturity
What is the form of income received by a shareholder called?
dividend
What are the five main industry sectors?
primary, secondary, tertiary, quaternary, quinary
Give an example of an external influence.
economic, financial, geographic, social, legal, political, institutional, technological, competitive situation, markets
What are the three possible outcomes of a business at post-maturity stage?
steady, decline, renewal
What is the main role of business?
produce goods and services that satisfy individuals’ needs and wants
Hospitality, tourism, craft-based activities, and childcare are examples of __________ industry.
Quinary
Give an example of an internal influence.
products, location, resources, management and business culture
In 2021, a group of university graduates launched a startup that produces plant-based snacks. The company faced high fixed costs for premises, equipment, and raw materials, and sales were slow and inconsistent. To survive, all profits were reinvested into the business. The founders focused on inexpensive promotion strategies, such as social media marketing, and worked to establish a customer base large enough to sustain future viability.
Establishment
What are the two main risks of an entrepreneur?
not being paid, lose part or all of the money they put into the business
List one advantage and one disadvantage of being a sole trader.
advantage (low cost of entry, simple form, complete control, less costly to operate, no partner disputes, owner keeps all profit, less government regulations, no tax on profit)
disadvantage (unlimited liability for business debts, need to carry all losses, burden of management, need to perform wide variety of tasks, difficulty in raising finance for expansion)
Name the four types of market concentration.
Monopoly, Oligopoly, Monopolistic Competition, Perfect Competition
Kodak was once the leader in the photography industry, dominating the market for film and cameras. However, with the rise of digital photography and smartphones, Kodak failed to adapt quickly. As competitors such as Canon and Nikon embraced digital technology, Kodak’s market share declined significantly. Despite attempts to restructure, the company filed for bankruptcy in 2012.
Post-maturity decline
How do businesses improve our quality of life?
job opportunities to build self-esteem, sense of belonging with the business, sense of contributing to the needs of society, businesses have the responsibility to help provide what consumers want and to minimise what consumers do not want
A manufacturing business that now operates in more than 50 countries and has over 550 employees. Identify how this business would be classified according to its size, geographical spread, industry sector, and legal structure.
size (large business), geographical spread (global), industry sector (secondary), legal structure (public company)
Julie runs a small busy restaurant. She recently introduced technology that allows wait staff to electronically send orders to the kitchen. This means better service to customer because the order is taken more efficiently and more time can be devoted to other tasks such as the prompt delivery of food and drinks.
External: technological, competitive situation, markets
Rolex has been a dominant brand in the high-end watch industry for decades. While it no longer experiences rapid growth, it continues to maintain strong sales and profitability through brand prestige, product innovation, and a loyal customer base. Rather than aggressively, expanding into new markets or making drastic changes, Rolex focuses on sustaining its existing business model and maintaining its reputation for quality and exclusivity.
Post-maturity steady state