Risk, uncertainty & liability

Two brothers are currently unemployed. They decide to set up their own window cleaning business, trading as a partnership.

What is an entrepreneurial risk for the brothers?

A Cold weather

B Paying taxes

C Poor health

D Slippery ladders

Text 1 J Sainsbury plc (Sainsbury’s)

Sainsbury’s is one of the UK’s largest supermarket chains. Sainsbury’s targets middle to high income customers nationally. Sainsbury’s is owned by shareholders who have limited liability.

The supermarket industry is very competitive, and marketing promotions are important. An example is Sainsbury’s price match against similar products sold by Aldi, one of its competitors. Sainsbury’s also spends a large proportion of its marketing budget on television advertising.

Developing new products is important to remain competitive, as customers are always looking for something new. Sainsbury’s uses market segmentation to support successful product development.

Sainsbury’s managers believe that good food should be accessible to everyone. They use primary market research to ensure the business develops products that meet the needs of its customers.

Explain one way that limited liability affects the owners of a company.

Explain three advantages for Sainsbury’s of using television to advertise its products.

Analyse one likely reason why Sainsbury’s uses market segmentation when developing new products.

Identify two primary market research methods.

Evaluate whether Sainsbury’s should use primary or secondary market research methods in the future.

Limited liability protects:

A business owners

B customers

C suppliers

D the local community

The impact of risk taken by a business:

A affects all business functions

B affects all business stakeholders equally

C only affects the finance function

D only affects the owners of the business

Which of the following is a financial reward for enterprise?

A Authority

B Profit

C Success

D Wages