The Purpose & Nature of Businesses (AQA GCSE Business): Flashcards
Exam code: 8132
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Businesses exist to obtain and process ____ so that they can provide goods and services that meet customer needs and wants.
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Businesses exist to obtain and process ____ so that they can provide goods and services that meet customer needs and wants.
Businesses exist to obtain and process inputs so that they can provide goods and services that meet customer needs and wants.
What is the primary purpose of business activity?
The primary purpose of business activity is to produce and sell goods or services that satisfy a demand in the market.
True or False?
Goods are intangible products, such as hairdressing and tourism.
False.
Goods are physical, tangible products, such as bicycles and T-shirts. Hairdressing and tourism are services, which are intangible.
How does meeting customer needs benefit a business?
Meeting customer needs helps a business build customer loyalty, increase brand awareness and generate revenue.
How can adding value help a business compete?
Value-added features can differentiate products from competitors and increase customer satisfaction. This can give the business a competitive advantage.
One reason for starting a business is identifying an opportunity to produce a ____ product.
One reason for starting a business is identifying an opportunity to produce a unique product.
Why might a business be set up to focus on the distribution of products?
It may be set up to make sure customers can buy products that they may otherwise be unable to obtain.
What does fulfilling a business opportunity mean as a reason for starting a business?
It means having a business idea that has the potential to make a profit.
True or False?
A business can be set up to meet a social need that is currently overlooked.
True.
Some businesses are set up to provide a good product to benefit others, by meeting a social need that is currently overlooked.
Define goods.
Goods are tangible products that are physically transferred from businesses to consumers.
What is the difference between durable and non-durable goods?
Durable goods can be used time and again, such as fridges. Non-durable goods are consumed soon after they are purchased, such as chocolate bars.
Define services.
Services are intangible products that are provided and consumed at a particular time or place to consumers or businesses.
True or False?
Office cleaning is an example of a consumer service.
False.
Office cleaning is a commercial service because it is provided to businesses. Consumer services include train journeys and hairdressing.
Define needs.
Needs are essential goods and services, such as shelter, warmth or food.
True or False?
Some essential needs, such as health and education services, may be accessed through the public sector.
True.
Essential needs are goods and services that individuals expect to afford themselves or access through the public sector, such as health and education.
True or False?
Branded trainers are a need because many consumers consider them essential.
False.
Branded trainers are a want. Wants are non-essential desires, even if consumers consider them to be essential.
Consumers do not need wants to survive, but wants improve their _____________.
Consumers do not need wants to survive, but wants improve their quality of life.
Define opportunity cost.
Opportunity cost is the loss of the next best alternative when making a decision.
Why do consumers face an opportunity cost when they spend?
Consumers have limited financial resources, so they must make choices between their competing needs and wants.
A business decides to focus on producing electric vehicles. What is the most likely opportunity cost of this decision?
The opportunity cost is the petrol vehicles the business is now unable to produce.
Define trade-off.
A trade-off occurs when two things cannot be fully achieved, so having more of one thing may mean having less of another.
What is the trade-off when a business skips market research?
The product may get to market more quickly, but it may not have the features or qualities the market wants.
Define factors of production.
The factors of production are the resources used by businesses to produce goods and services.
Define capital.
Capital is any man-made resource used to produce goods and services, such as tools, buildings, machines and computer equipment.
True or False?
Land only includes the physical site on which a business is located.
False.
Land includes physical locations used for production and natural resources that are not man-made, such as oil, wood, fish and iron ore.
Regions with vast supplies of a particular natural resource are able to ________ in its production.
Regions with vast supplies of a particular natural resource are able to specialise in its production.
Define enterprise.
Enterprise involves taking risks when setting up or running a business.
What decision does an entrepreneur make about the factors of production?
An entrepreneur decides on the combination of the factors of production needed to produce goods or services, with the aim of generating profit.
Define labour.
Labour is the human input into the production process, involving mental or physical effort.
What determines the effectiveness of labour?
The effectiveness of labour is determined by the education, training and experience that workers have.
True or False?
The production of any good or service requires a combination of all four factors of production.
True.
Every good or service needs capital, enterprise, land and labour working in combination.
Why are businesses classified by sector of industry?
Classifying businesses by sector aids comparisons between firms in the same sector.
True or False?
Some businesses operate across more than one sector of industry.
True.
Large oil companies, for example, extract, refine and sell fuel, so they operate in all three sectors.
Define primary sector.
The primary sector is concerned with the extraction of raw materials from land, sea or air, such as farming, mining, forestry and fishing.
True or False?
Over the last two decades, employment in the primary sector has risen globally.
False.
There has been a global trend away from employment in primary sector industries over the last two decades.
Why does the primary sector employ a high proportion of workers in the least developed nations?
This is partly due to lower participation rates in education and a lack of infrastructure to support manufacturing or service provision.
True or False?
Only less developed economies have significant primary sectors.
False.
Some developed economies still have significant primary sectors, such as Australia (wine production) and Norway (forestry and oil extraction).
Define secondary sector.
The secondary sector is concerned with the processing of raw materials and components, such as oil refinement and the manufacture of vehicles.
Why has employment in the secondary sector risen in emerging economies?
Improved technology means less labour is needed in the primary sector. Many businesses have also relocated production to take advantage of lower average wage rates.
Define tertiary sector.
The tertiary sector is concerned with the provision of services for consumers and other businesses, such as leisure, banking or hospitality.
The ________ sector is a sub-sector of the tertiary sector that provides knowledge-focused services, such as IT, consultancy or research.
The quaternary sector is a sub-sector of the tertiary sector that provides knowledge-focused services, such as IT, consultancy or research.
Why do the most developed economies have a very high proportion of workers in services?
They use their wealth to fund advanced education and higher-level skills training, which supports the growth of service industries.
Define entrepreneur.
An entrepreneur is a person who is willing and able to create a new business idea or invention and takes risks in pursuing success.
An entrepreneur must be able to gather and ________ the resources needed to start and operate a business.
An entrepreneur must be able to gather and coordinate the resources needed to start and operate a business.
What can happen if an entrepreneur makes the wrong business decisions?
Wrong decisions can lead to wasted resources, lost opportunities and, ultimately, business failure.
True or False?
The only risks that entrepreneurs take are financial risks.
False.
Entrepreneurs also take personal and professional risks, such as quitting a secure job to start a business.
What role might an entrepreneur take on once they employ staff?
The entrepreneur may become a mentor, supporting new staff to carry out their tasks in a particular way.
Why is the ability to communicate persuasively an important skill for an entrepreneur?
It helps them persuade financial backers to support their idea and encourage people to join them. It also helps them convince customers of the value of their product.
Define resilience.
Resilience is the ability to recover quickly and move on from setbacks.
True or False?
Entrepreneurs are often prepared to work long hours for little financial reward.
True.
Being prepared to work hard, often for long hours with little financial reward, is an important characteristic of entrepreneurs.
True or False?
People always become entrepreneurs as the result of a carefully planned decision.
False.
Entrepreneurship can be accidental. A side business may show potential for growth, or a person may invest their redundancy compensation in a business instead of seeking a new job.
What does being their own boss allow an entrepreneur to do?
Running their own enterprise allows an entrepreneur to make all of the decisions.
Entrepreneurs may pursue a great idea when they believe they can fill a gap in the ____ that rivals are not satisfactorily filling.
Entrepreneurs may pursue a great idea when they believe they can fill a gap in the market that rivals are not satisfactorily filling.
Why are profits a reason for an entrepreneur to start a business?
Profits are the financial reward for taking a risk, and the entrepreneur can choose to keep them for themselves.
How might starting a business help an entrepreneur achieve a change of lifestyle?
It can improve their quality of life, for example by reducing the hours they work, working more locally or balancing work with personal commitments.
Why is the business environment described as dynamic?
The external environment in which businesses operate is constantly changing.
How do new business ideas emerge from changes in the market?
New business ideas emerge as entrepreneurs recognise opportunities created by changes in the market.
True or False?
Changes in the business environment only ever create opportunities for businesses.
False.
Change can also create threats, such as reduced demand for the products a business sells.
How do successful businesses respond to change?
They identify opportunities, plan for changes that could have a negative effect and develop innovative solutions that meet customers' changing needs.
Products and services can become ______ due to changes in technology or changes in consumer demand.
Products and services can become obsolete due to changes in technology or changes in consumer demand.
How can advances in technology create opportunities for businesses?
New technology lets businesses develop innovative products and services. For example, smartphones and social media created new ways to reach customers through apps and digital marketing.
True or False?
Growing consumer demand for environmentally responsible products has created opportunities for new businesses.
True.
More people are making green buying choices, so businesses can develop new products that are less damaging to the natural world, such as plant-based foods.
Interest rates rise. What is the likely impact on a business that sells electrical consumer durables?
Demand is likely to fall, because consumers normally buy these products using credit.
How can a change in the law affect a business?
New or amended laws can change consumer behaviour and require businesses to make changes to their operations.
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