Business Explain: April 2020

Explain the purpose of marginal cost analysis.

It accounts for the increase and decrease cost of production which helps a company see how much they pay to produce one more unit.

How might a business increase its profitability?

They could develop new products or expand there availability or increase productivity increase efficiency even reducing costs.

What are some examples of capital?

Electronics such as a camera for film crew.
Tools such as construction tool or restaurant utensils.
Software such as accounting software for a business.
Infrastructure such as privates roads.

What do you need to start a successful business?

Give me an example for each category of the factors of production.

You need the intelligence, Imagination, and also the ability to take the risks that are needed to to start and maintain the business EX of this would be starting a new business.

What market structure is most visible in our daily lives and why?

Monopolistic competition because businesses are trying to make more and more money and get more customers.

When might a monopoly be acceptable, even desirable?

It would be accepted if someone was in need of higher money income or if they wanted high profits and desired when someone needs to take control of supply and or demand.

What do you think is the best form of business organization and why? Can you give me a local example?

Sole Proprietorship because it's the most popular form of business and only one person makes all business decisions but doesn't protect against losing personal assets.

Ex single person studio or a local grocery store.

How has entrepreneurship helped shape American society? Give a specific example.

It pushes innovation, if you're more inventive or have a good business idea, you make more money. It's self-motivating Ex. Bill Gates Steve Jobs they help advance and improve society by making computers.

How do contingency plans work?

A set of plans that ensures that an organization will run as smoothly as possible during an unexpected disruption.

Details internal and external communication for such an event.

Determines which departments are most vital to an organization during a crisis.

Difference and similarities between general partnership and limited partnership?

General - Default arrangement for a partnership and is, therefore, the simplest of all partnerships to form, each partner has unlimited liability for the debts and obligations of the partnership, meaning every partner is liable for his or her own actions as well as the actions of the other partners and the actions of the employees.

Limited - Encourages investors to contribute capital to a business without risking more capital than they have contributed, invests money in the business but has minimal control over daily business decisions and operations.

Explain the difference between a charity and a social enterprise.

Social enterprise is a business with mainly social benefits, in other words they operate in socially responsible ways. The difference between charity and social enterprise is that the core purpose of a charity is social, whereas social enterprise has other aims such as economics.

Explain what is meant by the term "triple bottom line".

The term triple bottom line means the 3 objectives of social enterprise which are economic, social, and environmental.

What is meant by the term 'social enterprise'?

Social enterprise simply means business activity's main focus is on benefiting the society rather than make profit for their own. For instance, hospital established by the government. Their aim is to ensure their citizen is healthy. This is usually in public sector business.

Explain the concept of opportunity cost and give 3 examples of it.

Opportunity cost means the second best choice that is given up. This is due to the shortage of products and resources hence unable to satisfy all of our wants. Therefore we must choose the best choice and give up the other. The first example would be the government choosing between building roads and building hospitals. The second example is choosing between two locations for a new factory. The third example would be a business considering labor intensive or capital intensive.

Using an example of a small business/recently established new business, explain how its owners overcame the three challenges - New businesses, Economic growth and Innovation.

Finance:

A newly opened restaurant will need to have sufficient finance. They will need start-up capital to spend on equipment, and working capital to pay for day-to-day operations and maintain liquidity. They will also need a budget planned out for marketing in order to increase their sales.

Human resources:

The restaurant will need to hire an expert manager, who will be able to make strategic decisions that will affect efficiency and effectiveness of the business. The restaurant can also partner with the manager to reduce the monthly salary cost, and share the profit instead.

Production:

Quality control in the restaurant is vital. If the quality control is good, the business will gain good brand image for customers. On the other hand, they might lose sales if quality control is poor. Also, maintaining inventories efficiently is also important. The restaurant will be able to reduce expensive cost if inventories are managed well, if not they might face opportunity cost where too much money is tied up in inventories.

List 3 benefits of entrepreneurship to the economy of your country and explain why they are important.

New businesses:

New businesses create jobs hence national level of unemployment will decrease. This is important because it creates wealth to society. They also bring more choices to consumers in the country. New businesses will also create competition with larger firms. This keeps the price low and prevents monopoly from big firms.

Economic growth:

Entrepreneurs also seek to increase outputs and efficiency, hence increasing the country's gross domestic product, which is a sign of economic growth. This means that the living standards of people will increase and the government will receive more tax to spend on social projects and infrastructure.

Innovation:

Entrepreneurship will also bring innovation ideas and technological change to their businesses, thus giving the economy more dynamic. These changes can create a domino effect and make businesses change altogether to be more competitive and advance in their sector of production.

Explain why there are so many new business enterprises in the tertiary sector of industry, such as hairdressing and car servicing.

Tertiary sector is the most profitable sector. Firstly, they create job opportunities which would reduce the unemployment rate. This will increase the living standard as people have more disposable income to spend on products and services.

Next, tertiary sector compete with each other the most. Hence, they will try to supply the products with good quality, design that captivates other people, and set the reasonable price. This would benefit the society as competition lower the price of products and offer more choices for consumers.
Lastly, services often have lower start-up cost than primary or secondary sector. This increase their profit margin, thus the government could gain more tax from them to spend on infrastructure or social projects.

What do you understand by the term "entrepreneur"?

Entrepreneur means someone who takes risks of starting a new business. They can take risks by opening a business based on a new idea, or by extracting ideas from existing businesses and make it their own. Entrepreneurs have to accept the risk of failing, add value to products, and assess opportunity cost.

Explain how a supermarket could add value to the food and other stock it buys in.

Supermarket could add value to their products by placing of the products. For example, products that are displayed on the counter are more expensive than other products. Secondly, the location of the supermarket can also add value if it is more convenient than others.

A new business selling computer software has just opened in your town. Explain 3 needs that this business will have if it is to be successful.

Location:

The location should be affordable and close to the city center, where it is more convenient for customers.

Finance:

With sufficient finance, the firm would be able to avoid cash flow problems. The firm will need start-up capital to pay for equipment's needed as they set up the store. Working capital is also needed to pay for day-to-day operations and maintain liquidity.

Management:

The business will need a professional manager in order to make strategic decisions that are effective and efficient, motivate workers, and keep records.