Business Studies Test Answers #
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Answer: Business objectives are the goals that a business wants to reach. They are like targets that help the business know what it is trying to do.
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Answer: Five common business objectives are:
- Make profit
- Grow bigger
- Survive (stay in business)
- Add value to products
- Provide good service
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Answer: Profit is the money left over after a business pays all its costs. It is when the money coming in (revenue) is more than the money going out (costs).
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Answer: Adding value helps a business because it can:
- Charge higher prices for better products
- Attract more customers
- Be different from competitors
- Make customers happy to pay more
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Answer: Value added is how much extra worth a business creates. It is the selling price minus the cost of materials.
Example: A bakery buys flour for $2 and sells bread for $5. The value added is $3.
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Answer: Business growth is important because it:
- Makes more profit
- Creates more jobs
- Helps the business become stronger
- Makes the cost of each item they make, cheaper to produce (because of economies of scale)
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Answer: A business can grow by:
- Selling more items to their existing customers
- Finding new customers
- Opening new branches in new places
- Making new products
- Buying other existing businesses
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Answer: Economies of scale means when a business gets bigger, it can make things cheaper per item. This happens for two reasons:
- Fixed costs spread out: Costs like rent and machines stay the same whether you make 100 or 1000 items
- Bulk buying discounts: Raw materials become cheaper when you buy large amounts
Example: A bakery paying $1000 rent makes the rent cost $10 per cake if making 100 cakes, but only $1 per cake if making 1000 cakes. Plus, buying flour in bulk costs less per kg than buying small amounts.
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Answer: Survival is very important for new businesses because:
- Many new businesses fail in the first few years so its important to survive these first few years
- They need survive long enough to increase the number of customers that they have
- Survival come first. Making profit can come later
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Answer: If a business fails, owners can:
- Lose all the money they put into the business
- Have to pay back money that the business owes (debts)
- Lose their job and income
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Answer: Government businesses focus on service over profit because their main job is to help people, not make money. Examples include hospitals, schools, and police. The government wants to provide these services to everyone, even if they don’t make profit.
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Answer: Stakeholders are people or groups who are affected by what a business does. They have an interest in how well the business performs because it impacts them in some way.
Key stakeholders include:
- Owners: Want profit and growth
- Employees: Want wages and job security
- Customers: Want good products and service
- Suppliers: Want to be paid on time
- Banks: Want loans repaid with interest
- Government: Wants taxes and legal behavior
- Local community: Wants jobs and clean environment
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Answer: Financial stakeholders want money from the business (like profit or wages). Non-financial stakeholders want other things like good products, jobs, or a clean environment.
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Answer: Three financial stakeholders are:
- Owners: Want profit and business growth
- Employees: Want wages and job security
- Banks: Want the money that they loaned the business back, with interest
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Answer: Business owners want:
- Good return on their money (profit)
- Their business to grow in size and value
- To have control over business decisions
- To have success and recognition
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Answer: Besides wages, employees also want:
- Job security (knowing they won’t lose their job)
- Job satisfaction (enjoying their work)
- Good working conditions
- Chances for promotion to a higher job
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Answer: Managers like power and status because it:
- Gives them authority to make decisions
- Makes them feel important
- Helps them control their work environment
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Answer: Three non-financial stakeholders are:
- Customers: Want good products and service
- Government: Wants taxes and legal behavior
- Local community: Wants jobs and clean environment
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Answer: Customers expect:
- Good quality products
- Fair prices (value for money)
- Good customer service
- Help after buying (if problems occur)
- Safe and reliable products
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Answer: A business can help its local community by:
- Creating jobs for local people
- Paying taxes to improve local services
- Supporting local events and charities
- Not polluting the environment
- Buying from other local businesses
