1.1.1 The dynamic nature of business Flashcards
Dynamic nature of business:
the idea that
business is ever-changing because external
factors, such as technology, are always changing.
Venture capital:
Risk capital provided by an
investor willing to take a risk in return for a
share in any later profi ts; the venture capital
provider will take a share stake in the business.
Advantage of Venture Capital
Available for more risky investment
Disadvantage of Venture Capital
Venture capitalists may want a share of the business, meaning some control may be lost
Demand:
The number of units that customers
want – and can afford – to buy.
Entrepreneurs:
Business people who see
opportunities and are willing to take risks in
making them happen.
Obsolete:
A product or service with sales that
have declined or come to an end as customers
fi nd something new.
Adapting existing products:
Finding new products based on the original one, such as Wall’s White
Chocolate Magnum.
Advantage of adapting existing products
Can lead to variety, which may attract customers and increase footfall, allowing the business to be able to charge a premium price, increasing Gross Profit Margin(Added Value)
Disadvantage of adapting existing products
Loyal customers may have liked the original product, and therefore the business may experience a decrease in sales.
Competitive advantage:
a feature of a business that helps it to succeed against rivals.
Original ideas:
Ideas that have not been done before.
Advantage of original ideas:
May attract customers and increase sales, leading to the business breaking even quicker and making a profit quicker than expected.
Disadvantge of Orignal ideas:
May be unpopular towards customers and lead to a decrease in sales and increase in the risk of insolvency.
