Intro to Business Exercise 1.0 1. Big corporations (e.g.

Taylors College, Coca Cola and Maybank) are the only true businesses. True or false? Why? False. This is because small corporations for example like food stalls are also counted as businesses. They are legally recognized organizations whose purpose is to make profit by selling goods and services to consumers.

2. All businesses share something in common. What do you call an organization

that does not have that purpose (assume such organization is not government related)? Provide 2 examples of such organizations. They are called non-profit organizations. Two examples of such organizations are Mercy Malaysia and Womens Aid Organization (WAO).

3. Haziq and C.J. have recently obtained a license to set up business. They are
free to set up any business of their choice. In the end, they have decided to target a large retiree community and open a music store selling Rap CDs. Comment on their decision. They made a bad decision. They did not carry out their research properly. They are targeting the wrong customers. The retiree community are not likely to feel attracted to the music store selling Rap CDs. This may cause their business to not survive long.

4. Businesses are good for the society. Discuss how they can contribute. Provide
specific examples for each type of contribution. Businesses can contribute in so many ways. For example, a University provides education and a platform where society are able to gain knowledge. Opening up a restaurant also provides contribution, as employment are available. This means the society can apply for jobs.

5. Define the term barrier to entry. Which type of business (goods-producing or

service) has bigger barriers to entry? Why? Barrier to entry means obstacles for new businesses to get started and enter a market. Goods-producing business has bigger barriers to entry. This is because they require a huge amount of assets, for example like land, factory and equipment to get started.

6. List 2 (other) types of barriers to entry and give one example for each type.
Two types of barriers to entry are economies of scale and control on majority of raw materials. For example Samsung, and marble respectively.

7. Why are service businesses becoming more dominant in many countries?

Research and discuss (any) 3 reasons. They are more dominant as they require low capital to get started. They also obtain more income to satisfy our needs. Besides that, they are generally more labor intensive thus creating more job opportunities.

8. In which economic condition should a business lower the price of its product
and services? Why? When the economy is in a recession condition, a business should lower the price of its product and services. This is because many people will be unemployed, therefore making it harder for them to buy the goods.

9. Explain what a free market or capitalistic economy means? And a planned

economy? Free market means businesses are free to decide on what good and services to sell, while the consumers have the freedom of choice on what to buy and at what price. Whereas a planned economy relies on the government to produce the goods and services for its citizens.

Intro to Business Exercise 2.0 1. What is a niche market? Can you give 2 examples (other than from the notes) of a niche market? Why would a business want to target a niche market? Niche market refers to very specific or unique segments of a market. Examples would be landscaping company and wedding store. Businesses target niche market to grow the size or scope of operation. 2. What are some of the reasons that motivate people to start their own business? If you were to start a business, what would be your main reason? Discuss. People are motivated to start their own business to achieve their personal goals. They want to be self-employed. And it could also be out of necessity. 3. What is limited liability? Is this an advantage or a disadvantage to the business owner? How (i.e. illustrate with an example)? Limited liabilities means an owner is not personally responsible for the debts of the company. It is an advantage to the business owner. This is because, if the company goes bankrupt, the owner only loses their invested capital. They do not need to pay off the companys debt. 4. What is a franchise? Why would the parent company of a franchise choose to sell licenses to franchisees instead of expanding their own chain of stores? Also, provide 2 examples of a franchise. A franchise is a business operating under licenses issued by the parent companies. They are entitled to a percentage of the annual revenue earned by the franchisee, and they are not responsible for the franchise store itself. Two examples of franchise stores would be Tutti Frutti and Baskin Robbins. 5. Your family has owned a business as a private company for the last 20 years. Recently your father, the CEO and chairman, is rushing to take the company

public, but you sensed that he has not thought through this decision properly. As his adviser, what reasons would you give to persuade to stay as a private company? As a private company, we get to control who the shares are being sold to. The shares will only be open to friends, family members and business associates. 6. How can internet help a recently-started small business? Internet helps to promote the business. You are also able to engage with the social media followers and hopefully turn them into customers. Internet also helps you keep tabs on your competitors, comparing with their marketing strategies. 7. If you are a banker and, Gabriel, a potential business owner wants to apply for a loan for starting a business, under which circumstances would you be more likely to lend a) he wants to buy an existing business or b) he wants to start a brand new business? Why? Buying an existing business. If the existing business is already successful, then it would be a less risk for investment to the bank. Since the business has established relationship with the customers and suppliers. 8. Discuss (any) 2 pros and 2 cons of a partnership. Pros Easier to get capital due to more owners and legal paperwork is simple and low cost. Cons Unlimited liabilities as all owners will be responsible of debts and arguments may arise if the owners do not share the same business ojectives. 9. What are shares? Where are shares traded in Malaysia? How is the price of a companys share determined in a share market? A share is a single unit of ownership in a corporation. KLSE (Kuala Lumpur Stock Exchange) or now known as BURSA MALAYSIA. A companys shares are determined by investors voting with their money.