What is the difference between financial and non-financial reasons for setting up in business?

Financial reasons are motivated by money , such as profit or financial independence. Non-financial reasons are motivated by personal goals , such as passion or making a difference.

Define capital growth .

Capital growth is building the value of a business over time with the aim of selling it at a profit in the future.

True or False? Being resilient means being willing to take chances without knowing the outcome.

False. This describes being a risk taker . Being resilient means being able to recover from setbacks and failures without giving up.

What does it mean for an entrepreneur to be adaptable ?

An adaptable entrepreneur is able to adjust plans and strategies in response to changing circumstances .

Why do new businesses often find it difficult to raise finance ?

Banks and investors are reluctant to lend to unproven businesses with no trading record . As a result, entrepreneurs often rely on personal savings, which increases their personal financial risk.

True or False? A new business can be profitable on paper yet still run out of cash.

True. Start-up costs, such as premises and equipment, are often paid before sufficient revenue is generated , so a profitable business can still face a cash shortage .

Why do established competitors make it hard for a new business to succeed?

Established businesses already have loyal customers, brand recognition and cost advantages such as economies of scale . This makes it difficult for new entrants to compete on price or quality.

How does an entrepreneur's role change as a business grows?

The entrepreneur's role shifts from doing the work themselves to leading and directing others , with attention moving to long-term strategy.

As a business grows, the entrepreneur hands over operational tasks to employees and managers, a process known as ________.

As a business grows, the entrepreneur hands over operational tasks to employees and managers, a process known as delegation .

True or False? The qualities that make a strong entrepreneur are always the same as those needed to lead a large organisation.

False. Qualities such as risk-taking and passion are not always the same as those needed to lead a large organisation effectively, which can create a skills gap as the business grows.

Define business plan .

A business plan is a written document that sets out a business's objectives, strategies and financial projections .

Why do lenders and investors usually require a business plan before committing funds?

A business plan shows that the entrepreneur has researched the market and assessed the viability of their idea.

How does the planning process help an entrepreneur manage risk ?

The planning process can reveal potential problems early , giving the entrepreneur time to develop contingency plans .

How can a business plan be used as a performance benchmark ?

Actual results are compared against planned targets to assess whether the business is on track and where adjustments may be needed.

Why might the financial projections in a business plan prove inaccurate ?

Projections are based on estimates and assumptions , which may be wrong, particularly for a new business with no trading history .

Why can a business plan become outdated quickly?

In fast-moving markets , a plan written at start-up may no longer reflect current conditions within months.

True or False? A business plan can reduce uncertainty but cannot eliminate the risks of starting a business.

True. Planning reduces uncertainty , but it cannot eliminate the risks involved in starting and running a business, so even a well-written plan does not guarantee success.

Define competitiveness .

Competitiveness is the ability of a business to offer greater value to customers than its rivals , enabling it to attract and retain customers in its market.

What are the five sources of competitive advantage ?

The five sources of competitive advantage are price, quality, innovation, customer service and brand strength .

Why is competitiveness important for a business's survival ?

Businesses that fail to remain competitive lose customers to rivals and risk closure .

What is a strategic business decision?

A strategic decision is a long-term, high-impact choice about the overall direction of the business, such as whether to enter a new international market.

Day-to-day choices involved in running the business, such as scheduling staff rotas, are known as _________ decisions.

Day-to-day choices involved in running the business, such as scheduling staff rotas, are known as operational decisions.

Define opportunity cost .

Opportunity cost is the value of the next best alternative given up when a choice is made.

How do resources influence business decisions?

The availability of financial, human and physical resources limits what a business can realistically do, often forcing difficult prioritisation .

What is the relationship between risk and reward in business decisions?

There is generally a positive relationship between risk and reward. Higher potential rewards tend to come with higher levels of risk .

Define risk appetite .

Risk appetite is the level of risk a business is willing to accept when making decisions.

True or False? Start-ups are typically more willing to accept high risk than mature businesses.

True. Start-ups often accept high risk to establish themselves, while mature businesses are typically more cautious .

Why can being too risk-averse harm a business?

Being too risk-averse can prevent a business from innovating or growing , allowing competitors to gain an advantage .

Define ethical dilemma .

An ethical dilemma arises when a business must choose between options that conflict with one another on moral grounds .

What is the central ethical dilemma most businesses face?

The central ethical dilemma is the tension between maximising profit and doing what is morally right .

True or False? Tax avoidance raises no ethical concerns because it is legal.

False. Tax avoidance is legal and increases profit for shareholders, but it reduces the funds available for public services .

How can acting ethically improve employee motivation and retention ?

Employees are more engaged and loyal when they believe their employer acts with integrity. Unethical behaviour can reduce morale and increase staff turnover .

Define business objectives .

Business objectives are specific, measurable targets that define what a business wants to achieve over a given time period.

Give two examples of non-financial objectives.

Non-financial objectives include improving customer satisfaction , reducing environmental impact and developing employee skills .

How do clear objectives help to coordinate the different business functions?

Clear objectives ensure that marketing, finance, operations and HR all work towards the same goals rather than pursuing conflicting priorities.

How can clear objectives motivate employees ?

Specific targets give employees something meaningful to work towards and a sense of achievement when goals are met.

Objectives provide ________ against which actual results can be compared, making it easier to measure performance.

Objectives provide benchmarks against which actual results can be compared, making it easier to measure performance.

True or False? Clearly defined objectives can make it easier for a business to attract investment.

True. Clear objectives show that the business has a coherent strategy , which increases the confidence of investors and lenders .

What does the acronym SMART stand for?

SMART stands for Specific, Measurable, Accountable, Realistic and Time specific .

What does it mean for an objective to be accountable ?

An accountable objective identifies who is responsible for achieving it, so specific individuals or teams take ownership of the goal.

True or False? Setting a very ambitious but unrealistic objective is the best way to motivate employees.

False. An unrealistic target will demotivate employees and damage confidence when it is not met.

A time-specific objective has a clear ______ by which it must be achieved.

A time-specific objective has a clear deadline by which it must be achieved.

Why might SMART objectives encourage a narrow focus ?

Teams may concentrate solely on hitting measurable targets while neglecting harder-to-quantify areas, such as employee well-being or long-term brand reputation.

A LevelBusinessAQAFlashcardsWhat is Business?Business & Objectives

Business & Objectives (AQA A Level Business): Flashcards

Exam code: 7132

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What is the difference between financial and non-financial reasons for setting up in business?

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Cards in this collection (43)

What is the difference between financial and non-financial reasons for setting up in business?
Financial reasons are motivated by money, such as profit or financial independence. Non-financial reasons are motivated by personal goals, such as passion or making a difference.
Define capital growth.
Capital growth is building the value of a business over time with the aim of selling it at a profit in the future.
True or False?
Being resilient means being willing to take chances without knowing the outcome.
False.
This describes being a risk taker. Being resilient means being able to recover from setbacks and failures without giving up.
What does it mean for an entrepreneur to be adaptable?
An adaptable entrepreneur is able to adjust plans and strategies in response to changing circumstances.
Why do new businesses often find it difficult to raise finance?
Banks and investors are reluctant to lend to unproven businesses with no trading record. As a result, entrepreneurs often rely on personal savings, which increases their personal financial risk.
True or False?
A new business can be profitable on paper yet still run out of cash.
True.
Start-up costs, such as premises and equipment, are often paid before sufficient revenue is generated, so a profitable business can still face a cash shortage.
Why do established competitors make it hard for a new business to succeed?
Established businesses already have loyal customers, brand recognition and cost advantages such as economies of scale. This makes it difficult for new entrants to compete on price or quality.
How does an entrepreneur's role change as a business grows?
The entrepreneur's role shifts from doing the work themselves to leading and directing others, with attention moving to long-term strategy.
As a business grows, the entrepreneur hands over operational tasks to employees and managers, a process known as ________.
As a business grows, the entrepreneur hands over operational tasks to employees and managers, a process known as delegation.
True or False?
The qualities that make a strong entrepreneur are always the same as those needed to lead a large organisation.
False.
Qualities such as risk-taking and passion are not always the same as those needed to lead a large organisation effectively, which can create a skills gap as the business grows.
Define business plan.
A business plan is a written document that sets out a business's objectives, strategies and financial projections.
Why do lenders and investors usually require a business plan before committing funds?
A business plan shows that the entrepreneur has researched the market and assessed the viability of their idea.
How does the planning process help an entrepreneur manage risk?
The planning process can reveal potential problems early, giving the entrepreneur time to develop contingency plans.
How can a business plan be used as a performance benchmark?
Actual results are compared against planned targets to assess whether the business is on track and where adjustments may be needed.
Why might the financial projections in a business plan prove inaccurate?
Projections are based on estimates and assumptions, which may be wrong, particularly for a new business with no trading history.
Why can a business plan become outdated quickly?
In fast-moving markets, a plan written at start-up may no longer reflect current conditions within months.
True or False?
A business plan can reduce uncertainty but cannot eliminate the risks of starting a business.
True.
Planning reduces uncertainty, but it cannot eliminate the risks involved in starting and running a business, so even a well-written plan does not guarantee success.
Define competitiveness.
Competitiveness is the ability of a business to offer greater value to customers than its rivals, enabling it to attract and retain customers in its market.
What are the five sources of competitive advantage?
The five sources of competitive advantage are price, quality, innovation, customer service and brand strength.
Why is competitiveness important for a business's survival?
Businesses that fail to remain competitive lose customers to rivals and risk closure.
What is a strategic business decision?
A strategic decision is a long-term, high-impact choice about the overall direction of the business, such as whether to enter a new international market.
Day-to-day choices involved in running the business, such as scheduling staff rotas, are known as _________ decisions.
Day-to-day choices involved in running the business, such as scheduling staff rotas, are known as operational decisions.
Define opportunity cost.
Opportunity cost is the value of the next best alternative given up when a choice is made.
How do resources influence business decisions?
The availability of financial, human and physical resources limits what a business can realistically do, often forcing difficult prioritisation.
What is the relationship between risk and reward in business decisions?
There is generally a positive relationship between risk and reward. Higher potential rewards tend to come with higher levels of risk.
Define risk appetite.
Risk appetite is the level of risk a business is willing to accept when making decisions.
True or False?
Start-ups are typically more willing to accept high risk than mature businesses.
True.
Start-ups often accept high risk to establish themselves, while mature businesses are typically more cautious.
Why can being too risk-averse harm a business?
Being too risk-averse can prevent a business from innovating or growing, allowing competitors to gain an advantage.
Define ethical dilemma.
An ethical dilemma arises when a business must choose between options that conflict with one another on moral grounds.
What is the central ethical dilemma most businesses face?
The central ethical dilemma is the tension between maximising profit and doing what is morally right.
True or False?
Tax avoidance raises no ethical concerns because it is legal.
False.
Tax avoidance is legal and increases profit for shareholders, but it reduces the funds available for public services.
How can acting ethically improve employee motivation and retention?
Employees are more engaged and loyal when they believe their employer acts with integrity. Unethical behaviour can reduce morale and increase staff turnover.
Define business objectives.
Business objectives are specific, measurable targets that define what a business wants to achieve over a given time period.
Give two examples of non-financial objectives.
Non-financial objectives include improving customer satisfaction, reducing environmental impact and developing employee skills.
How do clear objectives help to coordinate the different business functions?
Clear objectives ensure that marketing, finance, operations and HR all work towards the same goals rather than pursuing conflicting priorities.
How can clear objectives motivate employees?
Specific targets give employees something meaningful to work towards and a sense of achievement when goals are met.
Objectives provide ________ against which actual results can be compared, making it easier to measure performance.
Objectives provide benchmarks against which actual results can be compared, making it easier to measure performance.
True or False?
Clearly defined objectives can make it easier for a business to attract investment.
True.
Clear objectives show that the business has a coherent strategy, which increases the confidence of investors and lenders.
What does the acronym SMART stand for?
SMART stands for Specific, Measurable, Accountable, Realistic and Time specific.
What does it mean for an objective to be accountable?
An accountable objective identifies who is responsible for achieving it, so specific individuals or teams take ownership of the goal.
True or False?
Setting a very ambitious but unrealistic objective is the best way to motivate employees.
False.
An unrealistic target will demotivate employees and damage confidence when it is not met.
A time-specific objective has a clear ______ by which it must be achieved.
A time-specific objective has a clear deadline by which it must be achieved.
Why might SMART objectives encourage a narrow focus?
Teams may concentrate solely on hitting measurable targets while neglecting harder-to-quantify areas, such as employee well-being or long-term brand reputation.

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