1. how do you calculate revenue?

Unit price x Quantity

2. how do you calculate total costs?

Variable costs + Fixed Costs

3. how do you calculate profit?

Revenue - Total Costs

4. what opportunities/threats does globalisation present for a business's?

Opportunities Threats
 access to lower cost production  environmental damage to the host
 competitive markets reducing monopoly country which could give the business a
profits bad reputation.
 gains from the sharing of ideas/ skills/
technologies across national boarders
 larger customer base

5. can you calculate exchange rates and the impact of appreciation and depreciation of
exchange rates on importers and exporters?

C= A x B

A= Money you have

B= Exchange rate

C= Money after exchange

If the value of a currency has increased, the currency is stronger

>> strong pound, imports cheap, exports dear (SPICED) >> business that imports will see a reduction
in costs.

>> weak pound, imports dear, exports cheap (WPIDEC) >> business that imports will see a increase in
costs.

UK exports are products made in the UK and sold overseas, while UK imports are products made
overseas and sold in the UK.

6. unincorporated vs. incorporated businesses - how do they differ?

Unincorporated businesses such as sole traders and partnerships are very common so little legal
requirements are required. They do not have a "legal personality" of its own. Therefore the Partners
are liable for any debts of the business. Unlimited liability
 Incorporated businesses have 2 kinds of incorporations: 1. Private Limited company (PLC), 2. Public
Limited company (LTD). The most important point to understand about share ownership is that an
“incorporated” business (i.e. a company) is a separate legal entity. The owners of a company are the
shareholders - those who own the share capital. Limited Liability.

7. can you identify advantages and disadvantages associated with different business types?

(Business revision 1 booklet)

8. financial and non-financial business objectives, how do they differ?

Financial Objectives Non-Financial Objectives

 Survival  Social objectives
 Profit  Environmental awareness and wellbeing
 Sales  Challenge
 Revenue  Independence/ Control
 Market share  To expand sales to existing customers (current
 Financial security customers)
 To increase customer loyalty to the weaker brands
 To increase turnover to over $5 million in the (current customers)
next 8 years  To develop new products for current and potential
 To increase total revenue by 15% annually for customers (current and potential customers)
the next 5 years  To become international by setting up an online
 To decrease marketing expenses by 5% annually ordering service (current and potential customers)
for the next 7 years  To improve customer satisfaction with customer
 To increase net profit by 15% annually services (customer services)

The overall objective of many organizations is to make a profit, because profits are passed on to
shareholders or owners, which is called maximizing shareholder wealth.

Some organizations are not focused on profit - such as non-profit organizations. Some non-financial
objectives relate to the current customers, potential customers or customer services.

9. why do businesses set objectives?

SMART Objective setting:

 Specific – objectives are aimed at what the business does

 Measurable - the business can put a value to the objective
 Achievable and attainable
 Realistic and relevant – the objective should be challenging, but it should also be able to be
achieved by the resources available.
 Time bound – they have a time limit of when the objective should be achieved

Setting SMART objectives can help:

o Decision making and prioritizing

o Pushes the company to get better as the achieve goals
 o Makes staff motivated and active >> empowers employees
o Shows future plans to investors
o Gives clear purpose
o Give results to compare improvements
o Organized and coordinated within objectives
10. is a shareholder the same as a stakeholder?

A shareholder is a person that has a dividend in a company and invests in a business to generate
profit for themselves.

A stakeholder is anyone that gets affected by the companies actions these could include: employees,
customers and shareholders

Shareholders - owners of a business

Stakeholders - an individual that affects and is affected by the activities of an organization - has an
interest in the operations of the business. E.g. suppliers, customers, shareholders, employees, the
government.
11. how does the primary sector differ to the secondary and tertiary sectors?

The primary sector has agricultural production such as the farming of goods or the extraction of oil,
coal and natural gas.

12. what impact can interest rates have on a business and consumers?

When interest rates are high consumers have less disposable income, therefore they do not spend
their money on leisurely things. When interest rates are low, consumers have more disposable
income therefore they do spend money on leisurely things. Albeit, when consumers do not spend
money on leisurely goods businesses make less revenue and profit.

13. how could communication differ between a small and large business?

Large businesses usually have a larger employee count therefore naturally making business
communication slower.

Small businesses usually have faster communication between employees due to the number of
employees being smaller

14. what are the four functions of a business? and how do they differ?

HR: Responsible for all aspects of managing people who work in a business

Marketing: Responsible for understanding the needs and wants of customers

Production: organises the transformation process that turns inputs in finished goods or services

Finance: Manages the financial recourses of the business and reports on the financial position and
performance

15. Just-in-time and Kaizen are the same? True or false? If false, why?
Just in time production is a type of lean production where a business produces their products just as
they need to or when they run out. Supplies are delivered right to the production line only when
they are needed. For example, a car manufacturing plant might receive exactly the right number and
type of tyres for one day’s production, and the supplier would be expected to deliver them to the
correct loading bay on the production line within a very narrow time slot.

Kaizen or continuous improvement is an approach of constantly introducing small incremental

changes in a business in order to improve quality or efficiency.

16. tall vs. flat structure - how do they differ, span of control, chain of command and delegation?

 Tall structures generally have a small span of control and a long chain of command.
Delegation is very likely and there are also opportunities for promotion.
 Flat structures generally have a big span of control and a short chain of command.
Delegation is unlikely as there is little opportunity for promotion.
17. what are the stages in recruitment and selection?

1. job description

2. job specification

3. job advertising

4. reject, short list or long list applicants

5. job interview applicants

6. ability tests

18. why would a business use internal or external recruitment?

Internal recruitment
Advantages
Cheaper and quicker to recruit
People already familiar with the
business and how it operates
Provides opportunities for
promotion with in the business
– can be motivating
Business already knows the
strengths and weaknesses of
candidates
Disadvantages
Limits the number of potential
applicants
No new ideas can be
introduced from outside
May cause resentment
amongst candidates not
appointed
Creates another vacancy which
needs to be filled

External recruitment Outside people bring in new Longer process

ideas More expensive process due to
Larger pool of workers from advertising and interviews
which to find the best required
candidate Selection process may not be
People have a wider range of effective enough to reveal the
experience best candidate
 19. what methods can a business use to motivate its workers? what might this depend on?

Maslow: Hierarchy of needs is a theory of human

motivation. The needs are presented in a five level
sequence, where basic needs (e.g. for food and
shelter) have to be met before psychological needs
(e.g. for esteem and self actualisation)

Taylor: Scientific management was an understanding

of how production could be done in the most efficient
and most productive way. Taylors motivation theory
mainly focused on the idea that financial rewards
motivated workers and their performance. Taylor's
theory also encouraged the idea of piece rate,
rewarding employees based on their output

Hertzberg: 2 factor theory motivators - Hygiene or

maintenance factors. When hygiene factors are not met,
they become de-motivators.

20. can you identify external factors (PEST) that affect

business decisions?

Political, economical, social, technological

21. why could it be argued that large businesses will

be better positioned to deal with the effects of
external factors?

22. how might a business measure success? and what could be reasons for a business failing?

Business can measure their success by making SMART objectives and seeing if they achieve them.

Businesses may fail due to: cash flow problems and lack of competitiveness. This may be because:

 There is little demand for the good or service. This may be due to poor research, or an
aggressive response from competitors.
 The business plan is not executed well enough. This is largely down to poor management.
 Failure to adapt to changes in the market
 Businesses may fail because they cannot adapt well enough to external changes in the
market. Changes include:
 Losing key clients or customers.
 A decline in market demand.
 A rise in competitors.
  New legislation.

23. induction, on-the-job and off-the-job training - how do they differ?

Induction training:

 Introducing a new employee to their business/management/co-workers/facilities

 Lasts one to several days
 Makes employee feel confident in doing their jobs and therefore they are less likely to make
mistakes

On-the-job training:

 Employees are trained by watching a professional do their job

 Only suitable for unskilled and semi-skilled jobs
 Cuts travel costs and is cheap
 The trainee does work and learns
 The trainers productiveness is decreased because they have to show things to the trainee
 The trainers bad habits may be passed onto the trainee

Off-the-job training:

 Workers to another place to learn (e.g. school)

 Methods are varied and usually complex
 Usually classroom training
 Employees still work during the day
 Employees may learn many skills

24. How do governments use spending and taxation to provide public services, why might
governments constrain public spending (and what is the impact of this) and how can
governments affect business activity?

Governments use spending and taxation to provide public services that are cheap, affordable and
effective. Governments may constrain public spending due to social and political reasons. Such as
the outbreak of a virus or disease may need more care and more money will be directed towards
solving this problem. Another example of this is when a country is in depth or war with another
country. The government will put more money into military uses and cut back on spending to pay off
debts. The impact of this is that public services loose quality and attention therefore more people
stop spending money on public services or choose to spend money on services provided by
businesses. Such as transport that would have been provided by government buses. This would help
businesses gain more revenue as now more customers are approaching businesses for their needs
rather than the services provided by the government.

25. what could influence the location of a business?

  Market - the cost of transporting and the convenience for the customers
 Proximity to raw materials
 Cost of land
 Cost of labour
 Safety
26. What are examples of waste in a business? how could it reduce waste and increase
efficiency?

27. Economies of scale (internal and external) vs. diseconomies of scale?

28. Factors of production - land, labour, capital (fixed and working) and .............................?

29. Job, batch and flow production method?

30. Labour vs. capital intensive? what might this depend on?
31. How do we calculate productivity and what impact does improvements in it have?
32. Quality - can you contrast quality control and quality assurance?
33. Can you analyse total quality management (TQM) as an approach of quality assurance?