Business in the real world
What's covered
Key facts
Business location
Moving to e-commerce with home delivery lets a business reach customers nationally without paying for town-centre premises in every city.
Business ownership
A cooperative is a business owned and run by its members for their shared benefit (e.g. the Co-op, John Lewis Partnership employee model). Members typically have an equal vote regardless of investment.
Business planning
A business plan is a written document setting out a new or existing business's aims, the market it serves, its operations, and its financial forecasts.
Business resources
Capital is the man-made resources a business uses in production, such as machinery, equipment, vehicles and buildings.
Expanding a business
Acquiring an existing local business gives the fastest access to a new geographic market — the buyer inherits premises, staff, customers and brand recognition in one step.
Key characteristics of entrepreneurs
A successful entrepreneur takes calculated risks — weighing the likely costs and rewards first — rather than reckless gambles.
Risk and reward
Independence as a reward means the entrepreneur is their own boss, with more flexible hours and more choice over the type of work they do.
Setting business aims and objectives
A business aim describes a broad goal ("become the UK's leading online clothing retailer"); an objective is a measurable, time-bound target that supports the aim.
Stakeholders
One way to balance conflicting demands from shareholders and employees is to link a share of profits to performance-based pay — staff share in rising profits, shareholders accept a smaller dividend.
The purpose and nature of businesses
The main commercial purpose of most private-sector businesses is to make a profit through trading goods or services — revenue must exceed costs over time.
Sample questions
A taste of the 124 questions in this topic, answers marked. Sign up to practise the full set with spaced repetition.
What does e-commerce mean?
- •Advertising a business online
- •Emailing offers to existing customers
- ✓Selling products or services online
- •Using social media to build a brand
Which form of ownership is run by a single owner who has unlimited liability?
- •Ltd company
- •Partnership
- •Plc company
- ✓Sole trader
Why is a business plan particularly important for a new start-up?
- •It allows the business to avoid paying any tax
- •It guarantees the new business will make a profit
- ✓It helps secure funding from banks or investors
- •It removes any need to research the market further
What are the four factors of production?
- •Buyers, sellers, owners and managers
- •Cash, stock, premises and customers
- ✓Land, labour, capital and enterprise
- •Profit, revenue, costs and turnover
What is organic growth?
- •Growth achieved by merging with a direct rival
- •Growth achieved by taking over another business
- ✓Growth from within, such as opening new outlets
- •Growth funded entirely by a large bank loan
Which best describes the entrepreneurial characteristic of innovation?
- •Copying exactly what rival businesses already sell
- ✓Creating something new, such as a fresh product idea
- •Keeping the same product unchanged for many years
- •Working long hours without ever taking a break
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