Business and the environment
What is meant by an entrepreneur?
A person who takes the risk of starting and running a business, usually with the aim of making a profit.
What are the factors of production?
Land, Labour, Enterprise, Capital
What is Start-up capital?
Capital needed by an entrepreneur to start up a business
What is meant by market research?
The collection and analysis of information about a market, including customers and competitors.
What is meant by recruitment?
The process of finding and attracting suitable candidates for a job vacancy.
Name two objectives a business might have.
Profit maximisation, survival, growth, increasing market share, or providing a service.
Name the three main methods of production.
Job, batch and flow production.
What is Capital expenditure?
The money spent by a business for the purchase of non-current assets, that are expected to last longer than a year
What are the 4 Ps of the marketing mix?
Product, Price, Promotion and Place
What is the difference between internal and external recruitment?
Internal recruitment fills a vacancy using an existing employee, while external recruitment looks for candidates outside the business.
What is meant by a stakeholder?
An individual or group with an interest in the activities and decisions of a business.
A bakery makes 500 identical loaves before changing its production to another type of bread. What type of production is this?
Batch production.
A business has fixed costs of $40,000 and a contribution per unit of $20. Calculate the break-even output.
$40,000 ÷ $20 =2,000 units
What is market segmentation?
Dividing a market into groups of consumers with similar characteristics or needs.
According to Herzberg's two-factor theory, name the two categories of factors.
Motivators and hygiene factors.
A business increases its output from 10,000 units to 15,000 units. What type of growth is this?
internal growth
What is the formula for labour productivity?
Labour productivity = Total output ÷ Number of workers
What is the difference between fixed costs and variable costs?
Fixed costs do not change with the level of output in the short run, while variable costs change as output changes.
A company launches a luxury car at a very high price. Which pricing strategy could this be?
Price skimming
Give two examples of financial methods of motivation.
Bonuses, commission, performance-related pay, profit sharing, or overtime pay.
A government increases the minimum wage. Explain one possible impact this could have on a business.
Labour costs may increase, reducing profit margins. The business may respond by increasing prices, improving productivity, reducing staff numbers, or accepting lower profits.
Explain one advantage and one disadvantage of flow production.
Large quantities can be produced quickly, reducing the average cost per unit.
Disadvantage: Workers may perform repetitive tasks, causing low motivation, and a breakdown on the production line can stop the entire process.
A business has revenue of $200,000 and total costs of $150,000. Its capital employed is $250,000. Calculate its ROCE.
Profit = $200,000 − $150,000 = $50,000
ROCE = Profit ÷ Capital employed × 100
= $50,000 ÷ $250,000 × 100
= 20%
Explain why a business might use market segmentation.
allows a business to identify groups with different needs
target its marketing more effectively. This can improve customer satisfaction, increase sales and help the business use its marketing budget more efficiently.
A business has high labour turnover. Give two possible reasons why this might occur.
Low wages, Poor working conditions