1.1 The purpose and nature of businesses

• What is the primary purpose of a business in terms of profit?

  Make money to grow
• What does the profit motive of a business allow it to do?

  Grow and reinvest
• A sole proprietorship is owned and managed by one person
• What is a key disadvantage of a sole proprietorship?

  Unlimited liability
• Internal stakeholders include employees, managers, and owners
• Production is the process of converting raw materials into finished goods or services.


  True
• What is the primary reason for the existence of a business called?

  Purpose
• Match the business purpose with its key benefit:

  Profit Motive ↔️ Sustained growth and reinvestment

  Value Creation ↔️ Increased customer satisfaction

  Social Responsibility ↔️ Enhanced reputation and trust
• A Public Limited Company (PLC) sells its shares publicly.


  True
• The nature of business activity involves creating goods and services to satisfy customer needs.


  True
• What is the primary goal of a commercial enterprise?

  Maximize profit
• Social responsibility can enhance a business's ethical brand image
• What are the four primary types of business organizations?

  Sole proprietorship, partnership, private limited company, public limited company
• Shares in a private limited company can be sold publicly.

  False
• What are stakeholders in a business?

  Individuals or groups with interest
• What are the two key activities in the nature of business activity?

  Production and exchange
• What is the role of social responsibility in a business?

  Ensure operations benefit society
• Value creation involves providing products or services that meet customer needs.

  True
• What type of business organization has unlimited liability?

  Sole Proprietorship
• Match the stakeholder type with their examples:

  Internal Stakeholders ↔️ Employees, managers, owners

  External Stakeholders ↔️ Customers, suppliers, government
• The marketing function focuses on understanding customer needs
• Value creation involves providing products or services that customers need.


  True
• Businesses aim to satisfy customer needs to generate sales and revenue.


  True
• Match the type of business organization with its key feature:

  Sole Proprietorship ↔️ Easy to start, full control

  Partnership ↔️ More capital, shared management

  Private Limited Company ↔️ Limited liability, easier to raise capital

  Public Limited Company ↔️ Large capital base, better reputation
• Order the types of business organizations from least to most complex in terms of setup:

  1️⃣ Sole Proprietorship

  2️⃣ Partnership

  3️⃣ Private Limited Company

  4️⃣ Public Limited Company
• Match the stakeholder type with their key interest:

  Employees ↔️ Job security and wages

  Customers ↔️ Product quality and value

  Government ↔️ Tax revenue and compliance
• The profit motive allows a business to sustain growth
• The profit motive of a business aims to generate income
• Order the types of business organizations from simplest to most complex:

  1️⃣ Sole Proprietorship

  2️⃣ Partnership

  3️⃣ Private Limited Company (Ltd)

  4️⃣ Public Limited Company (PLC)
• Stakeholders are individuals or groups with an interest in a business's activities
• What are the two essential elements of business activity?

  Production and exchange
• Match the type of enterprise with its feature:

  Commercial Enterprise ↔️ Maximizes profit

  Social Enterprise ↔️ Achieves social mission