CH 1 - Business Activity
How many days till the end of Semester Business Test?
22
What are the 3 stages of economic activity?
Extension - Give an example for each
Primary, Secondary, Tertiary
Example
Woodcutter, Furniture Maker, Retailer
What are two disadvantages of being an entrepreneur?
Risk - Chance of Failure
Capital - Have to invest your own money
Lack of Knowledge/Experience
Opportunity Cost (Which is?)
Explain two types of business organisations
Extension - Give advatages & disadvantages of the different types
Sole Trader - A business owned by one person
Partnership - Form of business in which two or more people agree to jointly own a business
Private Limited Company - Business owned by shareholders but they cannot sell shares to the public
Public Limited Company - Business owned by shareholders and can sell shares to the public
What are 3 different business objectives?
Survial
Profit
Growth
Returns to shareholders (dividends)
Market Share
Service to the Community
What is the basic economic problem? And what does this cause?
- There are unlimited wants but limited resources
- This creates scarcity and therefore competition, the marketplace, etc
What is a mixed economy?
Why do almost all countries use a mixed economy?
Extension - What is Vietnam's economy like? What sectors are more common?
Mixed economy - Both private and public (government) business/organisations operate in the economy
Almost all countries use a mixed economy because the government is more efficient at some tasks (such as?) while private business are more efficient at others (such as?)
What are three skills entrepreneurs need?
Explain one of them
Hard working
Risk taker
Creative
Optimistic
Self-confident
Innovative
Independent
Effective communicator
What is an AGM and what is the purpose of an AGM?
Annual General Meeting
Legal Requirement
A chance for the Board and Leaders to present on how the company has done for the last year
A chance for shareholders to ask questions and vote on important topics
What is the formula for market share?
Market Share % = (Company Sales / Total Market Sales) x 100
$133.33million
What are the 4 factors of production? Explain two of them.
Extension - Explain all 4
Land - The natural resources provided by nature (fields, farms, oil, gas, forests, minerals, etc)
Labour - Number of people available to work
Capital - The finance, machinery and equipment needed
Enterprise - Skill & Risk-taking of the entrepreneurs
Which of the three economic sectors do most advanced countries/economies tend to be? Why?
Tend to be more tertiary
More developed countries have
- Higher wages, a higher % of income is spent on services
- Fewer natural resources (they have already been used)
- Tertiary services have higher profit margins
- Cannot compete with low wages of labour in less devolped countries
Why do governments support start-ups?
Extension - How can they support them?
Reduce unemployment
Increase competition
Increase output
Benefit society (social enterprises)
Business Growth
What are 2 advantages and disadvantages of public corporations?
Advantages:
Essential industries kept public (ex water), natural monopolies (ex railway), government can save important businesses (ex banks), public services (ex TV news)
Disadvantage:
Lack of efficiency, lack of competition, using corporation for political reasons
What is a social enterprise?
What 3 goals do they usually have?
Social Enterprise are operated by private individuals aim to support social causes as well as make a profit
Goals- Social
- Environmental
- Financial
What is added value?
How can a business increase added value?
It is the difference between the selling price of a product & the cost of bought-in materials and components
Can increase added value by:
- Increase selling price but keep costs of materials the same
- Reduce costs of materials but keep the price the same
In recent years many countries have privatised businesses (selling government business to private companies), what are potential positives & negatives of this?
Positive
- Private sector may be more efficient (why?)
- More competition leads to more quality
- Increased Investment
Negatives
- Private companies might fire more workers
- Will care less about social objectives
What are 5 sections of a business plan?
Explain 2 of them.
Description of the business
Products & Services
The Market
Business Location & how products can reach customersOrganisation structure and management
Financial Information
Business Strategy
What is the difference between a franchisor and a franchisee?
Which would you rather be?
Franchisor - The business that sells/licenses its name/brand/logos/etc to a a franchisee
Franchisee - The person/group that buys the information from the franchisor
No right answer - share your reasoning with your partner
Give 2 stakeholders and explain their main features (goals/objectives)
- Owners (Internal)
- Workers (Internal)
- Managers (Internal)- Customers (External)
- Government (External)
- Community (External)
- Banks (External)