Section A (Short Answer)

Answer all questions. 1 (a) Define the term ‘entrepreneur’. [2]

An individual who is willing to take the financial risk of starting and managing a new business venture

(b) Briefly explain two reasons why new businesses often fail. [3]

Lack of cash and working capital- Running shorts of capital run day-to-day business acitivites.

Without sufficient working capital the business may be unable to buy more supplies or pay suppliers offer credtit to important customer

Poor management skills

Changes in business enironment- new competitors legal changes and technolgical changes

Economic changes consumers have less money to spend

2 (a) Distinguish between random sampling and quota sampling. [2]

(b) Briefly explain two limitations of market research sampling. [3]

MS:

Limitations could include the following: Imperfect sample design Inadequate budget to determine the sample, as it could be very/too expensive Sample size may be too small Difficulty in getting representation in the sample Some sampling may be tedious and time-consuming

Untrained/inadequate interviewers

Biased, ambiguous questions

Could be very/too expensive.

3 Explain the costs and benefits to a business of a decision to hold low levels of inventory. [5]

Costs such as: Insufficient stock to meet demands – lost sales Lack of raw materials leads to idle production resources Unable to respond to exceptional/new orders quickly If not buying large quantity of inventory, miss out on bulk buying discounts (JIT).