Unit 1 Business Management Questions and Answers ( 100% pass)

Unit 1 Business Management Questions and Answers ( 100% pass) four basic factors of production (business inputs) - ANS- - land - labor - capital - entrepreneurship/enterprise four main functional departments of businesses - ANS- - human resource management - finance and accounts - marketing - operations management four main sectors of industry- explain each - ANS- - primary: extract natural resources - secondary: factories, creates products/production - tertiary: sell the products - quaternary: lawyers, doctors, etc. three benefits of industrialization - ANS- - total national output (GDP) increases and this raises average standards of living - increasing output of goods can result in lower imports and higher exports of such products - expanding and profitable firms will pay more tax to the government three disadvantages of industrialization - ANS- - expansion of manufacturing industries may make it difficult for a business to recruit and retain sufficient staff - pollution from factories will add to the country's environmental problems - much of the growth of manufacturing industry is due to the expansion of multinational companies deindustrialization - ANS- a general decline in the importance of secondary sector activity and an increase in the tertiary sector two reasons for deindustrialization - ANS- - rising incomes associated with higher living standards have led consumers to spend much of their extra income on services rather than goods - employment patterns change- manufacturing workers may have a hard time finding work in another sector (aka structural unemployment) entrepreneur - ANS- someone who takes the financial risk of starting and managing a new venture intrapreneur - ANS- someone within a large corporation who take direct responsibility for turning an idea into a profitable finished product through using 'entrepreneurial talents' such as risk-taking and innovation six qualities/skills needed to be an entrepreneur - ANS- - innovative -commitment and self-motivation - multi-skilled - leadership skills - belief in oneself - risk-taker three steps in starting a business - ANS- - sourcing capital (finance) - determining a location - building a customer base 5 problems faced with start-up businesses - ANS- - competition - lack of record-keeping - lack of finance and working capital - poor management skills - changes in the business environment the contents of typical business plan - ANS- - the executive summary - description of the business opportunity - marketing and sales strategy - management team and personnel - operations - financial forecasts two reasons why the business plan benefits stakeholders - ANS- - the financial forecasts in a business plan can act as budgets and control benchmarks for the internal stakeholders such as business managers - employees will find that planning helps identify specific objectives and targets and gives focus to their work, which aids motivation two differences between public and private sector businesses - ANS- - public: controlled by local or central gvt; private: controlled by individuals - public provide certain important goods and services that are too significant for private businesses. limited liability - ANS- the only liability- or potential loss- a shareholder has if the company fails is the amount invested in the company, not the total wealth of the shareholder definition of incorporated (business) - ANS- incorporated (business) is one which has been registered with the state in which it is headquartered in order to provide it with a separate legal status from its officers and staff three advantages of being a sole trader - ANS- - easy to set up- no legal formalities - owner has complete control - owner keeps all profits three disadvantages of being a sole trader - ANS- - unlimited liability- all of owner's assets are potentially at risk - difficult to raise additional capital - long hours often necessary to make business pay three advantages of forming a partnership, rather than being a sole trader - ANS- - shared decisionmaking - additional capital injected by each partner - business losses shared between partners the name of the document that partners in a business are advised to sign - ANS- deed of partnership three advantages of converting an unlimited liability business (sole trader or partnership) to a private limited company - ANS- - shareholders have limited liability - separate legal personality - greater status that an unincorporated difference between a public sector business and a public limited company - ANSthree advantages of converting a very large limited company to a plc ( - ANS- - limited liability - separate legal identity - continuity