Exam (elaborations)
AQA A-Level business paper 1 revision Solutions (A+)2024
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Why businesses exist - ANS-Can make you money and you can be your own boss
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AQA A-Level business paper 1 revisionSolutions (A+)2024
Why businesses exist - ANS-Can make you money and you can be your own boss
Mission - ANS-a business aim expressed to make it seem especially purposeful and
motivating
Objectives - ANS-SMART Specific, Measurable, Achievable, Realistic, Time-bound
Why businesses set objectives - ANS-- it is motivating to have a goal to aim toward
- as a boss you can not make every decision
Profit - ANS-Revenue - total costs
What are the 5 types of business - ANS--sole traders
-private limited companies (LTD)
-Public limited companies (PLC)
-Private and public sector organisations
- non-profit organisations (charities)
Sole traders - ANS-a business that is owned and operated by one person
Private Limited Company (Ltd) - ANS-A small to medium sized company, owned by
shareholders who have limited liability. The company cannot sell its shares to the
general public.
Private Limited Company Advantages - ANS--Limited liability
-Additional capital can be raised by selling shares (not to the general public)
-Separate legal existence to the owner
-Higher business status to sole trader
Private limited company Disadvantages - ANS--You have to publish the account
information
-You need two share of £1 each
,Public limited company (plc) - ANS-A limited company with more that £50,000 of share
capital. Any member of the public can buy shares. Public companies must publish more
detailed accounts
Public limited company Advantages - ANS--Raising capital through public issue of
shares
-Offering shares to the public spreads risk
-Banks are more likely to lend money to PLC's
-More growth and expansion opportunities
-Having PLC at the end of your business name gives a better image
-Shares are more easily transferred so shareholders are happier
-Separate legal entity to the owner
public limited company Disadvantages - ANS--More regulations that could increase
costs
-Higher level of transparency needed
-Must start with £50,000 share capital
Private sector organisations - ANS-Organisations owned by individuals or companies
Public sector organisations - ANS-Businesses owned by the government.
Non-profit organisations - ANS-Businesses with a motive other than profit, may be to
provide a social benefit or service to society or to support a cause.
Share capital - ANS-The total value of capital raised from shareholders by the issue of
shares
Role of Shareholders - ANS-to raise important issues with the board directors and raise
funds
Why shareholders invest - ANS--Annual dividend payments
-A rise in the value of shares
Market capitalisation - ANS-Number of issued shares x current share price
Influences on the price of shares - ANS--The profit after tax of the company x the value
investors place on on those earnings
,Significance of share price changes - ANS-High = cheap and easy to obtain more share
capital
Low = unlikely to raise any extra share capital
What are the 6 external factors affecting businesses - ANS--Market conditions
-Competition
-Changes in household incomes
-Changes in interest rates
-Demographic factors
-Environmental issues
Market Conditions - ANS--The number of competitors in a particular market
-The intensity of competitiveness
-Total market available
-The rate at which the market is growing
Competition - ANS-The tighter the economic and market conditions, the greater the
competitive pressures tend to be
Factors that effect household incomes - ANS--Changes in the real income of the main
income earner
-The number of people in the household that work
-The impact of government decisions on taxation and benefits
Changes in interest rates - ANS-If interest rates go up, businesses and individuals
spend less. If interest rates go down, businesses and individuals spend more.
Demographic factors - ANS--Population size
-Age
-Gender
-Ethnicity
Environmental issues and fair-trade - ANS-Concern for green issues and ethical issues
involved with business.
What do managers do - ANS-Set objectives, organize, motivate and communicate,
measure, develop people
What are the leadership styles - ANS--Autocratic managers
-Democratic managers (laissez-faire)
, -Paternalistic
Autocratic managers - ANS-Managers who centralise power and tell employees what to
do. They tend to use one-way, top-down communication.
Democratic managers (laissez-faire) - ANS-Managers that take the view of their
subordinates into account when making decisions as well as delegating authority.
Communication tends to be two-way. 'Laissez-faire' means 'Let it be"
Paternalistic managers - ANS-They try to do what is best for their staff. There may be
consultations to find out the views but the boss always makes the final decision.
Blake and Mouton's Managerial Grid - ANS-looks at 'concern for people' and 'concern
for performance' then grades the people to see where they fall on the grid.
What are the 5 leadership types from the Blake Mouton grid - ANS--Team
management/Teamwork (9,9)
-Authority/Obedience (9,1)
-Middle-of-the-road management (5,5)
-Country Club management (1,9)
-Impoverished management (1,1)
(9,9) Team management - ANS-The boss shows interest and trust in staff, high belief of
teamwork, high determination to succeed.
(9,1) Authority/Obedience - ANS-High determination to succeed but on the leaders own
terms, staff are seen as 'human resources'.
(5,5) Middle-of-the-road - ANS-To willing to trade being nice for being successful, ok but
not great performance.
(1,9) Country Club - ANS-The boss is a really nice person, There is a lack of urgency
about getting things done, poor productivity.
(1,1) impoverished management - ANS-The boss has neither concern for for the staff or
the performance, absolutely no interest in the business or the people working in it.
The Tannenbaum Schmidt continuum - ANS-An analytical tool to assess management
style based on amount of authority delegated by managers. it suggests that
people-centred leadership skills could be learned and developed.
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