UNIT 1 THE BUSINESS ENVIRONMENT
QUESTIONS WITH ANSWERS.
BUSINESS ACTIVITIES ANS - Tasks completed by a business to achieve its objectives, e.g. buying, selling
and producing products or services.
RETAIL CUSTOMERS ANS - Customers who buy finished products, e.g. frozen peas from a supermarket.
BUSINESS CUSTOMERS ANS - Businesses that purchase products or services from another business.
UNLIMITED LIABILITY ANS - When the owners of a business are personally liable for all debts incurred
by the business if the business itself does not have the funds to repay them.
LIMITED LIABILITY ANS - When the owners of a business are liable for the debts incurred by the
business only to the value of their investment in the business.
DISECONOMIES OF SCALES ANS - When a business becomes too large, the cost per unit may increase
and the business may become more inefficient, e.g. communication becomes slower as more employees
join the hierarchy.
BUSINESS AIMS ANS - A summary of what the business wants to achieve in the future.
RECESSION ANS - A period of economic decline where demand and output fall.
ECONOMIES OF SCALE ANS - Cost advantages gained when the size of a business increases,
e.g.suppliers may offer discounts to those placing larger orders.
UNIQUE SELLING POINT (USP) ANS - A specific factor that makes a business stand out from its
competitors, e.g. excellent customer service.
, FUNCTIONAL AREA ANS - A division of a business where employees have similar roles, skills and
expertise, e.g. marketing function, human resource function.
STATEMENT OF FINANCIAL POSITION ANS - A summary statement on a particular date that shows a
business's assets, liabilities and owner's equity.
INCOME STATEMENT ANS - A financial statement that shows the revenue and expenses a business has
received and paid over a period of time; the statement will show the profit the business has made
during this time.
CASH FLOW FORECASTING ANS - Estimating the expected cash inflows and outflows for a period of
time in the future to identify likely surpluses or shortages.
PRICING STRATEGY ANS - The method used to determine the price of a product/service, taking into
consideration the market, competitors pricing, customer incomes, etc.
DISCIPLINARY PROCEDURE ANS - A specified process for dealing with alleged employee misconduct,
e.g. poor performance.
GRIEVANCE PROCEDURE ANS - A specified process for dealing with a complaint made by an employee
about their treatment at work, e.g. discrimination or receiving lower pay than stated in their
employment contract.
FLAT STRUCTURE ANS - A company structure containing few levels.
HIERARCHICAL/TALL STRUCTURE ANS - A pyramid-shaped structure with many levels.
CENTRALISED STRUCTURE ANS - A structure where decision making is kept at the top of the hierarchy.
DECENTRALISED STRUCTURE ANS - A structure where decision making is more spread out and filtered
down the hierarchy.
QUESTIONS WITH ANSWERS.
BUSINESS ACTIVITIES ANS - Tasks completed by a business to achieve its objectives, e.g. buying, selling
and producing products or services.
RETAIL CUSTOMERS ANS - Customers who buy finished products, e.g. frozen peas from a supermarket.
BUSINESS CUSTOMERS ANS - Businesses that purchase products or services from another business.
UNLIMITED LIABILITY ANS - When the owners of a business are personally liable for all debts incurred
by the business if the business itself does not have the funds to repay them.
LIMITED LIABILITY ANS - When the owners of a business are liable for the debts incurred by the
business only to the value of their investment in the business.
DISECONOMIES OF SCALES ANS - When a business becomes too large, the cost per unit may increase
and the business may become more inefficient, e.g. communication becomes slower as more employees
join the hierarchy.
BUSINESS AIMS ANS - A summary of what the business wants to achieve in the future.
RECESSION ANS - A period of economic decline where demand and output fall.
ECONOMIES OF SCALE ANS - Cost advantages gained when the size of a business increases,
e.g.suppliers may offer discounts to those placing larger orders.
UNIQUE SELLING POINT (USP) ANS - A specific factor that makes a business stand out from its
competitors, e.g. excellent customer service.
, FUNCTIONAL AREA ANS - A division of a business where employees have similar roles, skills and
expertise, e.g. marketing function, human resource function.
STATEMENT OF FINANCIAL POSITION ANS - A summary statement on a particular date that shows a
business's assets, liabilities and owner's equity.
INCOME STATEMENT ANS - A financial statement that shows the revenue and expenses a business has
received and paid over a period of time; the statement will show the profit the business has made
during this time.
CASH FLOW FORECASTING ANS - Estimating the expected cash inflows and outflows for a period of
time in the future to identify likely surpluses or shortages.
PRICING STRATEGY ANS - The method used to determine the price of a product/service, taking into
consideration the market, competitors pricing, customer incomes, etc.
DISCIPLINARY PROCEDURE ANS - A specified process for dealing with alleged employee misconduct,
e.g. poor performance.
GRIEVANCE PROCEDURE ANS - A specified process for dealing with a complaint made by an employee
about their treatment at work, e.g. discrimination or receiving lower pay than stated in their
employment contract.
FLAT STRUCTURE ANS - A company structure containing few levels.
HIERARCHICAL/TALL STRUCTURE ANS - A pyramid-shaped structure with many levels.
CENTRALISED STRUCTURE ANS - A structure where decision making is kept at the top of the hierarchy.
DECENTRALISED STRUCTURE ANS - A structure where decision making is more spread out and filtered
down the hierarchy.
