Unit 1: Business Organization
Which business entity is owned by a single individual who has unlimited liability for the business's debts?
Sole Trader
This term refers to the number of subordinates who report directly to a specific manager.
Span of Control.
What is the formula for calculating Gross Profit?
Sales Revenue - Cost of Goods Sold (COGS)
This type of market research involves collecting "second-hand" data that has already been published by others.
Secondary Market Research (Desk Research).
This production method involves creating a large volume of identical, standardized products on a continuous assembly line.
Mass (or Flow) Production
When two businesses join together to form a completely new legal entity, this external growth method is known as a what?
Merger
Which leadership style is characterized by the leader making all decisions with little to no input from subordinates?
Autocratic Leadership.
This internal source of finance consists of the profits kept by the business for future investment rather than being paid out as dividends.
Retained Profit.
This distribution strategy involves a manufacturer selling its products directly to the consumer without using any intermediaries like wholesalers or retailers
Direct Marketing (or Zero-level Channel).
At the Break-even point, the Total Revenue is exactly equal to what?
Total Costs.
What is the primary difference between a Mission Statement and a Vision Statement?
A Vision Statement outlines what the business aspires to be in the distant future, while a Mission Statement explains the current purpose and values of the business.
In Maslow’s Hierarchy of Needs, which level is reached when an employee feels they have achieved their full potential?
Self-actualization.
In a Balance Sheet, which category includes items owned by the business that are expected to be converted into cash within one year (e.g., Debtors or Stock)?
Current Assets.
Which pricing strategy involves setting the price of a product below its cost of production to attract customers to a store, hoping they will buy other profitable items?
Loss Leader Pricing.
This term describes the gap between a firm's current level of output and its break-even point.
Margin of Safety.
In the context of a Joint Venture, explain one key difference between it and a Strategic Alliance.
A Joint Venture involves the creation of a new, separate legal entity owned by the founding companies, whereas a Strategic Alliance is a formal agreement to cooperate without forming a new company.
What is the difference between Internal and External recruitment?
Internal recruitment fills a vacancy from within the existing workforce; External recruitment brings in new talent from outside the organization.
This liquidity ratio measures a firm's ability to pay its short-term debts without relying on the sale of its stock (inventory).
Acid Test (Quick) Ratio.
What is the main disadvantage of using a Wholesaler?
It adds another "link" to the chain, which can increase the final price for consumers and reduce the manufacturer's control over how the product is sold.
What is the formula for Contribution per Unit?
Price - Variable Cost per Unit
These stakeholders do not work for the company but provide loans and are interested in the business's ability to repay interest.
Creditors
According to Herzberg, factors like "Company Policy" and "Salary" do not motivate but prevent dissatisfaction. What are these called?
Hygiene Factors.
Explain the difference between Capital Expenditure and Revenue Expenditure.
Capital expenditure is spending on fixed assets (long-term); Revenue expenditure is spending on day-to-day running costs (short-term, e.g., wages, electricity).
n the Product Life Cycle, during which stage do sales reach their peak and the business focuses on "extension strategies"?
Maturity.
Explain the difference between Offshoring and Outsourcing in a global operations context.
Offshoring involves moving a business process to another country (but the company still owns/controls it), while Outsourcing involves hiring a third-party provider to handle a task, regardless of where they are located.