1
Q
What is unlimited liability?
A
The owner is fully responsible for all debts of the business.
2
Q
What are the implications of unlimited liability?
A
The owner may have to use personal assets to pay debts.
3
Q
Give an example of unlimited liability.
A
A sole trader may need to sell their home to pay creditors.
4
Q
What is limited liability?
A
Owners can only lose the money they originally invested.
5
Q
Who has limited liability?
A
Shareholders of private and public limited companies.
6
Q
What are the implications of limited liability?
A
Owners are not personally responsible for business debts.
7
Q
Give an example of limited liability.
A
When Carillion collapsed in 2018, shareholders only lost their shares.
8
Q
What is a sole trader?
A
A business owned by one person, but they can still employ staff.
9
Q
What is an advantage of being a sole trader?
A
It is easy and inexpensive to set up.
10
Q
Another advantage of being a sole trader?
A
The owner has complete control over decisions.
11
Q
Another advantage of being a sole trader?
A
The owner keeps all profits.
12
Q
Another advantage of being a sole trader?
A
Simple tax arrangements.
13
Q
What is a disadvantage of being a sole trader?
A
Unlimited liability for debts.
14
Q
Another disadvantage of being a sole trader?
A
Limited access to finance and capital.
15
Q
Another disadvantage of being a sole trader?
A
Limited skill set of the owner.
16
Q
What is a partnership?
A
A business owned by two or more people.
17
Q
Give an example of a partnership business.
A
Lawyers or accountants.
18
Q
What is an advantage of partnerships?
A
They are easy and inexpensive to set up.
19
Q
Another advantage of partnerships?
A
Shared responsibilities and decisions.
20
Q
Another advantage of partnerships?
A
A wider range of skills and knowledge.
21
Q
Another advantage of partnerships?
A
Increased access to finance and capital.
22
Q
What is a disadvantage of partnerships?
A
Unlimited liability.
23
Q
Another disadvantage of partnerships?
A
Disputes can occur between partners.
24
Q
Another disadvantage of partnerships?
A
Profits are usually shared equally.
25
Another disadvantage of partnerships?
It is difficult to transfer ownership.
26
What is a private limited company (Ltd)?
A business owned through shares, usually sold to family, friends or investors.
27
Who usually makes decisions in a Ltd?
The appointed Managing Director or CEO.
28
What is an advantage of Ltds?
They have limited liability.
29
Another advantage of Ltds?
They have greater access to finance.
30
Another advantage of Ltds?
Ownership is easier to transfer.
31
Another advantage of Ltds?
They may have a more professional image.
32
What is a disadvantage of Ltds?
They are more expensive and time-consuming to set up.
33
Another disadvantage of Ltds?
They face complex legal requirements and regulations.
34
Another disadvantage of Ltds?
They must publish annual reports and accounts.
35
Another disadvantage of Ltds?
Shareholders may have little control over decisions.
36
What is franchising?
A model where an individual buys the rights to operate under a larger company.
37
Who is the franchisee?
The person who buys the rights to run the business.
38
Who is the franchisor?
The larger company that sells the franchise rights.
39
Give examples of franchises.
McDonald's, KFC, Domino's, Subway.
40
What is an advantage of owning a franchise?
You get a recognised brand name with central advertising.
41
Another advantage of franchises?
The franchisor provides training.
42
Another advantage of franchises?
The franchisor supplies equipment and products.
43
Another advantage of franchises?
The franchisee has an exclusive sales area.
44
Another advantage of franchises?
The franchisor provides ongoing support and advice.
45
Why is location important?
It affects costs, customer access, staff, competitiveness, and reputation.
46
What does proximity to market mean?
Being close to customers reduces transport costs and increases sales.
47
What does proximity to labour mean?
Locating near skilled workers helps efficiency.
48
What does proximity to materials mean?
Being close to raw materials reduces costs.
49
Why might businesses want to be close to competitors?
To share a customer base or to stand out from them.
50
How does the internet affect location?
Businesses can sell online, so physical location is less important.
51
What are the 4Ps of marketing?
Product, Price, Place, Promotion.
52
Why is promotion important?
It creates awareness, interest, and brand loyalty.
53
What are examples of promotion?
Advertising, direct selling, public relations.
54
What is the product design mix?
The balance of function, aesthetics, and cost.
55
Why is price important?
It positions the brand and affects competitiveness.
56
What does 'place' mean in marketing?
The business location or distribution channel.
57
How does competition affect price?
Businesses may lower prices or offer discounts.
58
How does competition affect products?
They may improve quality or add unique features.
59
How does competition affect promotion?
Firms may spend more on marketing and advertising.
60
How does competition affect place?
Firms may locate in high-traffic areas or use online channels.
61
How do changing consumer needs affect price?
Businesses may cut prices in a recession.
62
How do changing needs affect products?
Businesses may adapt products, e.g. plant-based foods.
63
How do changing needs affect promotion?
Businesses may use digital marketing and influencers.
64
How do changing needs affect place?
More businesses now sell online with home delivery.
65
How does technology affect pricing?
It allows real-time dynamic pricing and cost reduction.
66
How does technology affect products?
It helps create products based on customer feedback.
67
How does technology affect promotion?
Businesses can send targeted marketing messages online.
68
How does technology affect place?
E-commerce allows global selling without physical shops.
69
What is a business plan?
A document setting out a business idea, aims, forecasts and finances.
70
Why write a business plan?
It reduces risk and helps raise finance.
71
What does a business plan include?
Business idea, objectives, market, revenues, costs, finance, location, marketing mix.
72
How does a business plan help with finance?
It convinces lenders or investors the business is viable.
73
What is unlimited liability?
The owner is fully responsible for all business debts.
74
Explain one disadvantage of unlimited liability for a sole trader (3 marks).
The owner may have to use personal assets to repay business debts, which increases risk. For example, if the business fails, they may need to sell their house to cover creditors.
75
What is limited liability?
Shareholders only lose the money they invested in the business.
76
Explain one advantage of limited liability for shareholders (3 marks).
Shareholders’ personal assets are protected, so they only lose their shares if the company fails. For instance, when Carillion collapsed, investors only lost their investment, not their homes.
77
What is a sole trader?
A business owned by one person.
78
Explain one advantage of being a sole trader (3 marks).
They make all decisions quickly and keep all profits, giving full control. This motivates them to grow the business.
79
Explain one disadvantage of being a sole trader (3 marks).
They have unlimited liability, meaning they may need to sell personal assets to cover debts. This increases personal financial risk.
80
What is a partnership?
A business owned by two or more people.
81
Explain one advantage of being in a partnership (3 marks).
Partners bring different skills and share responsibilities, making the business stronger. For example, one partner might focus on finance while the other manages operations.
82
Explain one disadvantage of partnerships (3 marks).
Disagreements may occur, slowing down decision making. Profits must also be shared, reducing individual rewards.
83
What is a private limited company (Ltd)?
A company where ownership is divided into shares held privately.
84
Explain one advantage of forming a Ltd (3 marks).
Limited liability reduces risk for owners, protecting personal assets. This makes it easier to attract investors.
85
Explain one disadvantage of forming a Ltd (3 marks).
It is more expensive and time-consuming to set up, with more legal paperwork. This can slow down the start of the business.
86
What is franchising?
When someone buys the rights to operate under an existing brand.
87
Explain one advantage of buying a franchise (3 marks).
The franchisee benefits from a well-known brand and national advertising, attracting customers. This reduces the risk of failure compared to starting alone.
88
Explain one disadvantage of buying a franchise (3 marks).
The franchisee must pay royalties and follow strict rules, limiting independence. This reduces profit margins and flexibility.
89
Why is business location important?
It affects customer access, costs and competitiveness.
90
Analyse how choosing the wrong location could affect a new retail store (6 marks).
If the store is far from customers, footfall may be low, leading to reduced sales. At the same time, fixed costs like rent stay high, making the business unprofitable. Competitors in better locations may gain an advantage.
91
What are the 4Ps of marketing?
Product, Price, Place, Promotion.
92
Explain why promotion is important (3 marks).
Promotion builds awareness and attracts customers, helping the business compete. It can also increase brand loyalty and repeat sales.
93
Explain why product design mix matters (3 marks).
It balances function, aesthetics, and cost to meet customer needs. For example, Fentimans ginger beer is high quality, attractive and affordable.
94
Explain how competition might affect pricing decisions (3 marks).
If many substitutes exist, businesses may lower prices or use discounts to stay competitive. This can reduce profit margins but attract customers.
95
Explain how businesses might change products to meet changing consumer needs (3 marks).
They may introduce new products, e.g. plant-based foods, to meet growing demand. This helps them appeal to new customer segments.
96
Explain how technology has changed business promotion (3 marks).
Firms can now target customers directly through social media and online ads. This improves efficiency and reduces wasted spending.
97
What is a business plan?
A document showing aims, forecasts and strategies.
98
Explain how a business plan helps raise finance (3 marks).
It convinces lenders that the business is well-planned and low risk. This increases the chance of securing investment.
