Download Chapter 1 Quickfire questions

AQA BUSINESS for GCSE
SECTION 1 ANSWERS
Chapter 1 Quickfire questions
1
What is a need?
A need is something which is necessary for an individual’s survival. For example, water, food or shelter.
2
What is a want?
A want is something which an individual would like but they do not need it to survive. Examples
include mobile phones, Coca-Cola and concert tickets.
3
What is meant by specialisation?
To specialise is to focus on a particular skill or strength in order to improve upon it and become
more efficient.
4
What is barter?
Barter is swapping skills or goods with someone who has different skills or goods.
5
What is the difference between a good and a service?
A good is something which is tangible – i.e. can be touched. For example, mobile phones, MP3
players or crisps. A service is something which is intangible – i.e. cannot be touched. Examples
include hairdressing, advice from a travel agent or banking.
6
What is meant by a consumer durable?
Something which is bought by consumers with the intention of using it many times over. For
example, cars, refrigerators and furniture.
7
What is primary production?
Primary is the first stage of production – when raw materials are farmed, quarried or extracted. It
includes industries such as mining, farming, fishing and companies like BP.
8
What is secondary production?
The process of turning raw materials into finished products. Businesses in this sector are called
manufacturers.
9
What is tertiary production?
Tertiary businesses provide services so that other businesses can operate efficiently. In this sector
you will find insurance, transport, distribution (getting goods to shops and customers),
advertising, marketing, banking and finance.
10 What is a social enterprise?
An enterprise whose primary objective is to improve some aspect of society as opposed to
maximise profit. Social enterprises include charities and co-operatives.
Published by Hodder Education © 2009 Neil Denby and David Hamman
Chapter 1 Hit the spot
Give two reasons why someone might want to specialise.
Possible answers include:
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To improve efficiency
● To reduce unit cost
● In order to become more competitive.
Explain the input-process-output model, with at least one example.
Taking a set of inputs (raw materials) and performing a process on them in order to turn them
into an output (a finished product or component). Any relevant example should be credited.
Give three reasons why someone might want to set up in business. Choose which you think is the
best reason. Justify your choice.
Possible reasons include:
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To be their own boss
To increase their wealth
● To gain more respect from peers
● In order to gain freedom and control over their working life
● Because they have a good idea for a business.
●
Published by Hodder Education © 2009 Neil Denby and David Hamman
Chapter 2 Quickfire questions
1
What is a market?
A market is a place where buyers and sellers meet to trade money for goods or services.
2
What forces in a market determine price?
The supply and the demand for a product or service.
3
What is a ‘virtual’ market?
A market with no physical location so buyers and sellers meet to trade over a telephone
connection, or via computer.
4
In which two ways do businesses compete?
Price and non-price competition. Non-price competition includes when the business uses other
means of competition such as promotions and special offers or competes by providing extra or
better goods and/or services.
5
How could a new business protect itself against competition?
●
Using patents, trademarks or copyright.
● Taking over other businesses in the market.
● Pricing competitors out of the market.
6
What is a mass market?
A huge market such as the market for fizzy drinks, televisions or cars.
7
What is a niche market?
A small, usually specialised market, for example the market for left-handed scissors or wheat-free
products.
8
What is a gap in a market?
A part of the market which has not yet been satisfied by an existing product or service.
9
What is a ‘market map’?
This divides the market into four, with each part showing one part of the market at which a
product might be aimed. For example, parts of the market might be men, women, young or old
people, luxury products or everyday necessities, low- or high-priced products, healthy or
‘indulgent’ products, and so on.
10 What is meant by ‘identity theft’?
When one individual steals the identity of another – i.e. uses their information to pretend to be
that person.
Published by Hodder Education © 2009 Neil Denby and David Hamman
Chapter 2 Hit the spot
Give an example of a competitive market. Describe the features that make it competitive.
Any sensible answer should be credited. Features that make a market competitive include:
●
a large number of competitors
● low prices.
Explain why non-price competition might be the main way to compete in a highly competitive
market.
Competing on price could lead to a price war, thus threatening all the competing businesses’
profits.
Thus firms tend to compete using non-price competition.
Suggest three possible problems with markets and new technology. Evaluate ways to limit these
problems.
Possible problems include:
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identity theft
fraud
● you do not meet the person you are dealing with, so the exchange and payment cannot take
place at the same time.
●
Ways to limit the problem of identity theft include:
●
regularly changing passwords
choosing strong passwords
● not using credit cards for internet purchases
● ensuring that you purchase from a reputable internet retailer.
●
Published by Hodder Education © 2009 Neil Denby and David Hamman
Chapter 3 Quickfire questions
1
What is the business quality shown by the entrepreneur?
Enterprise.
2
What do entrepreneurs take? What do they develop?
They take risks and develop ideas.
3
What was Henry Ford’s winning idea?
Factory-led mass production of cars.
4
Entrepreneurs can bring new products to market. How else can they make products
successful?
Finding new ways to produce a product to make it more affordable.
5
Define revenue.
All the money received by a business from sales over a stated period of time.
6
Define profit.
The money that is left once all a business’s costs have been deducted from the revenue.
7
Give three key qualities of an entrepreneur.
Possible answers include:
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willing to take advice
management of risks
problem solving
team working
enthusiastic
hard working
persistent.
Suggest two sources of professional advice for entrepreneurs.
Possible answers include:
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bank
marketing company
● consultant
● accountant.
●
9
Describe what is meant by venture capital.
Capital which comes from successful entrepreneurs who invest in potential entrepreneurs in order
both to help them and to make money.
10 Name one successful entrepreneur and suggest one factor that made him/her a success.
Student’s own answer.
Published by Hodder Education © 2009 Neil Denby and David Hamman
Chapter 3 Hit the spot
Give two reasons why a successful entrepreneur might support other entrepreneurs.
●
In order to give them a chance.
In order to make money.
● In order to be the one to ‘find the next big thing’.
●
Explain how important enterprise skills are to business.
These skills are important for the creation of a new business and the growth of existing
businesses. Without enterprise skills no new products or services would be created.
Which quality of an entrepreneur do you think is most important to success? Explain why you
think this.
Student’s own answer. Any sensible answer with a good explanation should be credited.
Possible answers include:
●
Determination is important as entrepreneurs often suffer numerous setbacks when first starting a
business.
● Team-working skills, as entrepreneurs must be able to get the best out of those around them,
making good use of people’s different qualities.
● Problem-solving skills mean that the entrepreneur can see a way through difficulties that other
people cannot.
● Entrepreneurs need to be willing to take advice from people who can help them to improve their
chances of success.
Published by Hodder Education © 2009 Neil Denby and David Hamman
Chapter 4 Quickfire questions
1
Define ‘franchise’.
When a business sells the right to use its successful business model in order to expand.
2
Explain the difference between the franchiser and the franchisee.
The franchiser is the person or business selling the franchise whereas the franchisee is the person
or business buying the franchise.
3
What is a ‘royalty’?
A royalty is a percentage of an amount of money given to a person or business who owns the
rights to a product or concept.
4
Name five fast-food franchise operations.
Possible answers include McDonald’s, Subway, KFC, Burger King and Chicken Cottage.
5
Name five other franchise operations.
Possible answers include The Body Shop, British School of Motoring and Prontaprint.
6
List five types of support that the franchiser might give to the franchisee.
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Management training
Marketing advice
● Financial advice
● Operations advice
● Recruitment advice.
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7
Give three advantages of franchising to the franchiser.
Possible answers include:
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8
The franchiser is able to carefully select franchisees, and only sell to those who it thinks will add
value to the brand.
The franchiser knows that franchisees, who have risked their own money, will be keen and
enthusiastic to make the business a success.
It is possible to expand more rapidly.
The franchiser receives money from the franchisee, so does not risk its own money on expansion.
Franchising can gain from economies of scale, through being able to buy in bulk (one of the
advantages of expansion).
Give three advantages of franchising to the franchisee.
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They will have a better idea of business costs as some of the financial hard work has been done
in advance.
● The franchisee receives support from the franchiser when setting up and ongoing support in
terms of advice, marketing, advertising, etc.
9
Name at least three disadvantages, to either franchiser or franchisee.
Disadvantages to the franchisee:
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The franchisee may feel that royalties are too high and they are not being rewarded for their
effort.
● The franchisee is unable to sell the franchise on without the agreement of the franchiser.
Published by Hodder Education © 2009 Neil Denby and David Hamman
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The franchisee is restricted in terms of products they can sell, suppliers they can use, etc.
Disadvantages to the franchiser:
●
If one franchisee does not run operations properly, this could have a damaging effect on the
whole business brand.
● They do not receive as much profit as most of the profit goes to the franchisee.
10 Give three things a franchise needs for it to be a success.
●
A competent franchisee
Support from the franchiser
● A strong brand
● Good communication between franchisee and franchiser.
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Chapter 4 Hit the spot
Outline what is meant by a franchise.
When a business sells the right to use its successful business model in order to expand.
What is the difference between a royalty and a fee?
A fee is a one-off payment whereas a royalty is a percentage.
Explain whether you would rather have a royalty charged on turnover or profit, and why.
It is better to have a royalty charged on profit because it will be a smaller payment.
Give three benefits of a franchise to either the franchiser or the franchisee.
Benefits to the franchisee include:
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Existing brand loyalty
Existing brand awareness
Existing customers
Marketing activities will be carried out by the franchiser
Training may be provided by the franchiser
It may be easier to raise finance.
Benefits to the franchiser include:
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Less capital required for expansion
Fewer resources needed for expansion
● Quicker way to expand the business.
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Give three drawbacks of a franchise to either the franchiser or the franchisee.
Drawbacks to the franchisee:
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The franchisee may feel that royalties are too high and they are not being rewarded for their
effort.
● The franchisee is unable to sell the franchise on without the agreement of the franchiser.
● The franchisee is restricted in terms of products they can sell, suppliers they can use etc.
Drawbacks to the franchiser:
●
If one franchisee does not run operations properly, this could have a damaging effect on the
whole business brand.
● They do not receive as much profit as most of the profit goes to the franchisee.
Published by Hodder Education © 2009 Neil Denby and David Hamman
Explain why a franchise start-up might be a better bet than an independent business start-up.
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Existing brand loyalty
Existing brand awareness
Existing customers
Marketing activities will be carried out by the franchiser
Training may be provided by the franchiser
It may be easier to raise finance
Read the information on Subway. Which part of their business model is it that makes the franchise
operation such a success? Give reasons for your answer.
Student’s own answer.
Published by Hodder Education © 2009 Neil Denby and David Hamman
Chapter 5 Quickfire questions
1
What is a business ‘aim’?
A long-term goal or target.
2
What is a business ‘objective’?
A shorter-term target, on the way to reaching an aim.
3
What is a ‘mission statement’?
A ‘what we do and how we do it’ long-term aim of a business.
4
What does SMART stand for?
Specific, measureable, attainable, relevant, time-related.
5
Outline why a business should always have SMART targets.
Because otherwise targets can become too vague and then it is difficult to know whether or not
they have been achieved.
6
Name the three broad types of business objective.
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Being satisfied
Wanting to reach a maximum
● Wanting to reach a minimum
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7
List three things that a business might aim to maximise.
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Sales revenue
Profit
● Productivity
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8
List three things that a business might aim to minimise.
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Costs
Labour turnover
● Absenteeism
● Environmental damage
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9
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List one objective of a small business that may not be appropriate for a larger business.
Survival
10 What is meant by ‘social responsibility’?
Social responsibility is about carrying out business activities with as little negative impact on
society as possible.
Published by Hodder Education © 2009 Neil Denby and David Hamman