Edexcel GCSE (9-1) Business (1BS0) · Spec 1.4.1, 1.4.2, 1.4.3 and 1.4.4
Making the business effective
Read the notes, then try the questions. Each one is marked the moment you press Check, and shows the right answer and why.
Key ideas
- A sole trader has unlimited liability: the owner is personally responsible for the business debts. A limited company has limited liability. A private limited company (Ltd) cannot sell shares to the public; a public limited company (plc) can.
- Location depends on the business. Shops need passing trade. Manufacturers may need to be near suppliers or workers. Some firms can sell online without expensive premises, but not every business can.
- The marketing mix has four parts: product, price, promotion, place. Profit is not one of them.
- A business plan helps an owner to get finance and cut the risk of failure. It includes the target market, a cash-flow forecast, sources of finance and aims and objectives.
Key terms
- Unlimited liability
- The owner is personally responsible for all the debts of the business.
- Limited liability
- Owners can lose only the money they put in, not their personal belongings.
- Marketing mix
- The four parts of marketing: product, price, promotion and place.
- Business plan
- A document setting out a business idea, its market, its finances and its aims.
- Plc
- A public limited company, which can sell its shares to the general public.
Common mistakes
- Mixing up Ltd and plc. Only a plc can offer its shares to the public.
- Believing a business plan guarantees success. It helps; it does not guarantee.
- Saying the internet means nobody needs premises. Some firms still need a fixed location.
Exam tip
Application questions ask you to use the business in the question. For location, name the factor that matters to that business, such as customers walking past, then say why it matters.
Free practice questions
8 questions, 18 marks. Answer, then press Check. The marking guide explains how the marks are worked out. Nothing is saved.
- Question 1 · Multiple choice[1 mark]
Which type of business ownership means the owner has unlimited liability for business debts?
- Question 2 · Multiple choice[1 mark]
Which of the following types of business ownership has shareholders but cannot advertise its shares to the general public?
- Question 3 · True or false[4 marks]
State whether each statement about location is True or False.
1. Being near suppliers can matter to a manufacturer.
2. A shop selling to passers-by needs a location where many people walk past.
3. The internet means no business needs fixed premises.
4. Being near competitors is never an advantage.
- Question 4 · Choose more than one[2 marks]
Which TWO of the following influence where a business locates?
Choose 2.
- Question 5 · Matching[4 marks]
Match each example to the element of the marketing mix.
- Question 6 · Multiple choice[1 mark]
Which one of the following is a purpose of a business plan?
- Question 7 · Matching[4 marks]
Match each part of a business plan to what it shows.
- Question 8 · Multiple choice[1 mark]
Which one of the following is NOT an element of the marketing mix?