AQA A-Level business paper 1 revision
Questions and Answers updated 2022
Why businesses exist - ANSWER Can make you money and you can be your own boss
Mission - ANSWER a business aim expressed to make it seem especially purposeful
and motivating
Objectives - ANSWER SMART Specific, Measurable, Achievable, Realistic, Time-bound
Why businesses set objectives - ANSWER - it is motivating to have a goal to aim toward
- as a boss you cannot make every decision
Profit - ANSWER Revenue - total costs
What are the 5 types of business - ANSWER -sole traders
-private limited companies (LTD)
-Public limited companies (PLC)
-Private and public sector organizations
- non-profit organizations (charities)
Sole traders - ANSWER a business that is owned and operated by one person
Private Limited Company (Ltd) - ANSWER 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 - ANSWER -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 - ANSWER -You have to publish the account
information
-You need two shares of £1 each
Public limited company (plc) - ANSWER 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 - ANSWER -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 - ANSWER -More regulations that could
increase costs
-Higher level of transparency needed
-Must start with £50,000 share capital
Private sector organizations - ANSWER Organizations owned by individuals or
companies
Public sector organizations - ANSWER Businesses owned by the government.
Non-profit organizations - ANSWER 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 - ANSWER The total value of capital raised from shareholders by the
issue of shares
Role of Shareholders - ANSWER to raise important issues with the board directors and
raise funds
Why shareholders invest - ANSWER -Annual dividend payments
-A rise in the value of shares
Market capitalization - ANSWER Number of issued shares x current share price
Influences on the price of shares - ANSWER -The profit after tax of the company x the
value investors place on on those earnings
Significance of share price changes - ANSWER 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 - ANSWER -Market conditions
-Competition
-Changes in household incomes
-Changes in interest rates
-Demographic factors
-Environmental issues
, Market Conditions - ANSWER -The number of competitors in a particular market
-The intensity of competitiveness
-Total market available
-The rate at which the market is growing
Competition - ANSWER The tighter the economic and market conditions, the greater
the competitive pressures tend to be
Factors that affect household incomes - ANSWER -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 - ANSWER If interest rates go up, businesses and individuals
spend less. If interest rates go down, businesses and individuals spend more.
Demographic factors - ANSWER -Population size
-Age
-Gender
-Ethnicity
Environmental issues and fair-trade - ANSWER Concern for green issues and ethical
issues involved with business.
What do managers do - ANSWER Set objectives, organize, motivate and communicate,
measure, develop people
What are the leadership styles - ANSWER -Autocratic managers
-Democratic managers (laissez-faire)
-Paternalistic
Autocratic managers - ANSWER Managers who centralize power and tell employees
what to do. They tend to use one-way, top-down communication.
Democratic managers (laissez-faire) - ANSWER 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 - ANSWER 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 - ANSWER looks at 'concern for people' and
'concern for performance' then grades the people to see where they fall on the grid.
Questions and Answers updated 2022
Why businesses exist - ANSWER Can make you money and you can be your own boss
Mission - ANSWER a business aim expressed to make it seem especially purposeful
and motivating
Objectives - ANSWER SMART Specific, Measurable, Achievable, Realistic, Time-bound
Why businesses set objectives - ANSWER - it is motivating to have a goal to aim toward
- as a boss you cannot make every decision
Profit - ANSWER Revenue - total costs
What are the 5 types of business - ANSWER -sole traders
-private limited companies (LTD)
-Public limited companies (PLC)
-Private and public sector organizations
- non-profit organizations (charities)
Sole traders - ANSWER a business that is owned and operated by one person
Private Limited Company (Ltd) - ANSWER 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 - ANSWER -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 - ANSWER -You have to publish the account
information
-You need two shares of £1 each
Public limited company (plc) - ANSWER 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 - ANSWER -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 - ANSWER -More regulations that could
increase costs
-Higher level of transparency needed
-Must start with £50,000 share capital
Private sector organizations - ANSWER Organizations owned by individuals or
companies
Public sector organizations - ANSWER Businesses owned by the government.
Non-profit organizations - ANSWER 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 - ANSWER The total value of capital raised from shareholders by the
issue of shares
Role of Shareholders - ANSWER to raise important issues with the board directors and
raise funds
Why shareholders invest - ANSWER -Annual dividend payments
-A rise in the value of shares
Market capitalization - ANSWER Number of issued shares x current share price
Influences on the price of shares - ANSWER -The profit after tax of the company x the
value investors place on on those earnings
Significance of share price changes - ANSWER 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 - ANSWER -Market conditions
-Competition
-Changes in household incomes
-Changes in interest rates
-Demographic factors
-Environmental issues
, Market Conditions - ANSWER -The number of competitors in a particular market
-The intensity of competitiveness
-Total market available
-The rate at which the market is growing
Competition - ANSWER The tighter the economic and market conditions, the greater
the competitive pressures tend to be
Factors that affect household incomes - ANSWER -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 - ANSWER If interest rates go up, businesses and individuals
spend less. If interest rates go down, businesses and individuals spend more.
Demographic factors - ANSWER -Population size
-Age
-Gender
-Ethnicity
Environmental issues and fair-trade - ANSWER Concern for green issues and ethical
issues involved with business.
What do managers do - ANSWER Set objectives, organize, motivate and communicate,
measure, develop people
What are the leadership styles - ANSWER -Autocratic managers
-Democratic managers (laissez-faire)
-Paternalistic
Autocratic managers - ANSWER Managers who centralize power and tell employees
what to do. They tend to use one-way, top-down communication.
Democratic managers (laissez-faire) - ANSWER 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 - ANSWER 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 - ANSWER looks at 'concern for people' and
'concern for performance' then grades the people to see where they fall on the grid.
