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GCSE Business Edexcel > Theme 1 > Flashcards

Theme 1 Flashcards

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1
Q

why do new business ideas come about?

A
  • *changes in technology (making expensive technology affordable, reducing manufacturing costs, more affordable),(e commerce platforms, larger target audience)
  • *changes in consumer wants and needs (demand)
  • *products and services becoming obsolete(change in demand/trend)
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2
Q

How do new business ideas come about?

A
  • adapting existing ideas (less risky,new markets,quicker, cheaper development costs)
  • original ideas (more risky, longer, more development costs, but USP and new market with no competitors)
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3
Q

What is the impact of risk on business activity?

A
  • business failure- negative cash flow, drop in revenue/ demand
  • financial failure
  • lack of security
  • health:stress, bad business decisions
    plan ahead
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4
Q

What is the impact of reward on business activity:

A
  • independence (flexible working hours-being your won boss)
    *profit (motivation)
  • business success (satisfaction, being an employer)
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5
Q

What is the role of business enterprise and the purpose of business activity?

A
  • produce goods/services
  • meet customer needs(happy customers,repeated purchases, sales of the business)
  • add value(branding, convenience, quality and design, USP)
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6
Q

The impact of adding value

A
  • branding- emotional connnection, brand loyalty , more likley to buy/stand out
  • convenirnce- saves them time, more happier custoomers, compettive advantage
  • USP/competive advanatge
  • design and quality- more satisfied/likley to buy, reputation
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7
Q

What is the role of entrepreneurship

A
  • take risks
  • make business decisions
  • organise resouces(manage/lead people effectivley)
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8
Q

What are customer needs?

A
  • price (for product, competive advantage, accesibility )
  • quality(product+customer service)
  • convenience
  • choice(product portfolio, customer loyalty, repeated purchases)
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9
Q

what happens when you meet customer needs?

A

more happy, encorages reapeated purchases, generating customer loyalty , increased sales. Also will recoomend the product to thers

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10
Q

What is the purpose of market research ?

A
  • to identify and understand customer needs
  • to identify gaps in the market
    *to reduce risk
    *to make informed business decisions
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11
Q

What are ins methods of primary market research ?

A
  • survey
  • questionnaire
  • focus group
  • observation
    ✅accurate and easy to implement
    ❌time consuming , expensive
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12
Q

What are some methods of secondary research?

A
  • internt
  • market reports
  • government reports
    ✅cheaper
    ❌not that relevant
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13
Q

Qualitative market research

A

✅provides depth and detail
✅helps business listen to customers rather than jumping to conclusions
❌small sample = bias
❌responses are subjunctive
❌can be biased/lead by bad interviewer

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14
Q

The role of social media in collecting market research

A

✅cheaper
✅identify popular maker trends
✅saves time collecting market research
✅improve products /marketing

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15
Q

Why do you need reliable market research?

A

Business decisions

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16
Q

What are the different market segments?

A
  • Location(more demand )
  • Demographics (sex/family)
  • Lifestyle (promotional /marketing strategies)
  • Income (quality and price of the product)
  • Age (promotional strategies)
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17
Q

Market mapping

A

Helps identify gaps in market and competitors, can adapt products/services
❌subjunctive and doesn’t consider demand

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18
Q

What are the strengths and weaknesses of competitors?

A

Price
Quality
Location
Product range
Customer service

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19
Q

Impact of competition on business decions

A

Having Lower costs , innovation for new product ideas

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20
Q

what are some financial aims and objectives of a business?

A
  • survival
  • profit
  • sales
  • market share
  • financial security
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21
Q

what are some non-financial aims and objectives of a business?

A
  • personal satisfaction
  • social concerns
  • challenge
  • independance and control
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22
Q

why do businesses have different aims and objectives?

A
  • differnt industries
  • different ways of operating
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23
Q

what is revenue ?

A

=price X quanity
income that the business revieves through sales

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24
Q

what is the difference between fixed and variable costs?

A

fixed costs do not chnage egardless the number of sales of the business

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25
Q

what is the formula for total costs?

A

= fixed costs + variable costs

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26
Q

what is the formula for gross profit?

A

=sales revenue- costs of sales
the amount of profit that a busines makes on a product before the cost of producind and selling the product

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27
Q

what is net profit?

A

=gross profit- other operating expenses and intrest

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28
Q

what is the formula for intrest (%)?

A

(total repayment-borrowed amount)/borrowed amount
*100

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29
Q

how do you calculate the break even formula in units?

A

fixed costs/
(sales price-variable)

30
Q

what is the break even point in revenue/price?

A

=break even point in units * sales price

31
Q

formula for the margin of saftey?

A

=actual sales-break even sales

32
Q

what is the importance of cash to a business?

A
  • paying supliers/employees/overheads(realtionships, being taken to court, services withdraw)
  • preventing business failure (unable to pay bills, becoming insolvent): reduce customers with credit
  • the difference between cash and profit- profit is cash before deduction of costs
33
Q

why do businesses interpret cash flow calculations?

A

indicate the future
* taking on more staff
* opening a new branch
* identifying a risk (running out of money)
* taking money out of business to invest in a new business or to reward the owner

34
Q

what are some sort term sources of finance?

A
  • overdraft (high intrest rates, quick and convenient)
  • trade credit (do not need to have cash available to purchase goods)
35
Q

what are some long term sources of finance?

A
  • bank loans (assets, intrest)
  • crowdfunding (time consuming, may have to give discount ect)
  • venture capitalist (source of finance if no one else gives, want a return and control)
  • share capital (no ore quick decions, dividends)
  • personal savings (no intrests, nut lose any itrest on additional savings in account)
  • retained profit (
36
Q

what is the difference between limited and unlimited liability?

A
  • limited liability(personal assets can be used to pay off debts, incorperated )
  • unlimited liability (unincorperated)
37
Q

what are the different types of business start ups?

A
  • soletrader
  • parternship
  • private limted company
38
Q

pros and cons of having a sole trader ownership

A

✓makes all the decions by themselves, less room for disagreement, fast implemenation
✓sole trader keeps all of the profits
✓financial information is private
✗unlimted liability, unincorperated ,diffiult to raise finance delayed growth
✗pressure on one person, may not be able to take time off or holidays, making stress, health problems

39
Q

pros and cons of having a partnership

A

✓wider expertise, sharing ideas, better business decisons
✓finanicla information kept private
✓easier to raise sources of finace (limited liability)
✗profits shared
✗disagreements between partners

40
Q

pros and cons of being a private limited company

A

✓limited liabiity
✓easier to raise finance and grow the business
✓business can trade even if the shareholders change
✗more complex to set up
✗disagreements between shareholders
✗finanical information is published, and have to report to HMRC

41
Q

what are the advantages and disadvantages of franchising ?

A

✓lower risk as business model is sucessful
✓support and training provided by the franchisor
✓franchisees benefit from national marketing campaigns
✗francisees have to pay an initila fee as well as a percentage of their profits
✗franchisees cannot make independant decisions
✗brand reputation of frnachisor may be damaged if franchisees do not maintain standards

42
Q

How does proximity to market affect business location?

A
  • market (close to footfall/demographics, convenience)
  • labour(dpending on skill/ high unemployment rate)
  • materials (less transport costs)
  • competitors( if convenience good then not good but if shopping good then is good)
43
Q

How does the nature of the business affcet the location ?

A
  • footfall
  • importing/exporting goods, so near an airport or port
    *
44
Q

How does the internet impact business decions?

A
  • do not need a retailing premise or staff more cost effective)
  • ability to reach a wider audience
  • able to respond to conumer buying habits
45
Q

what is the marketing mix?

A
  • price (determined by comptettion or consumers’ thoughts on the product)
  • product
  • promotion
  • place
    all to consumer appeal
46
Q

How do elements of the marketing mix work together?

A
  • balancing on basis of competitive enviroment (cheaper, product with USP /better design, place more conveninet , increased prmotion)
  • chaning consumer needs on business (launching new products in response to trends, hanging prices and recession,)
  • technology, ecommerce and digital communication ( cheaper manafacturing prices, place may change, more affective promotion with targeted ads )
47
Q

What is the role of a business plan?

A

identifies:
* business idea
* aims and objectives
* target market
* forecast revenue (cash and profit)
* sources of finance
* location
* marketing mix

48
Q

what is the purpose of planning business activity?

A
  • minimising risk (a clear sense of direction for business decisons, allows to adress and come up with potential problems that may arise, can set budgets and monitor spending)
  • obtaining finance (from bank loans/investor)
49
Q

who are business stakeholders and what are their seperate intrests?

A
  • goverment (more jobs means more taxes and less benefits to pay)
  • pressure groups(implementing change and business acting ethically)
  • employees/managers (job secuirty, progression, salary)
  • customers(price, quality, range)
  • local community (potential jobs)
  • suppliers (increased orders =profit)
  • shareholders(profits/ divindends)
50
Q

how do the stakeholders affect the business?

A
  • goverment (taxes laws, promoting business activity
  • local community (support by buying can object)
  • employees/manager (good service/reputation of business)
  • shareholders (provide funding )
  • suppliers (provide material, depending on reliability determine quality and business reputation)
  • pressure groups(changing products, customers opionion)
  • customers (purchase, make recommendations)
51
Q

What are the different types of technology used by the business?

A

E-Commerce
Social media
Digital communication
Payment system

52
Q

what are the pros and cons of E- commerce?

A

✓can trade 24/7 all around the world
✓can give real time updates to customers
✓more convenient for customers
✓avoid the overhead costs for a physical premises
✗expensive to keep up with technology
✗harder to build relationships with customers, customers make purchases becuase of price and not loyalty
✗customer may have security concerns regarding fraud
✗business may not be easily fndable due to high levls of competition

53
Q

what are the pros and cons of social media?

A

✓can communicate with customers
✓respond to online feedback

54
Q

what are the pros and cons of payment systems?

A

✓easy and more convenient for customer
✓open 24/7
✓allow people to order immediatly, good for customer service
✓trends in sales can be identified
✓can work in many currenccies
✓customers may expect it and may be put off from business if not availaible
✗vunerable to fraud
✗may have to pay an additional fee

55
Q

what are the pros and cons of digital communication?

A

✓emplyess can communicate any time of the day, quivker and cheaper than travelling long distances, employess time is used efficently
✓customers can recieve real time updates
✓may not need an office-saving in overhead costs for rent
✓quick cheap communication within branches

56
Q

How does technology influence a business in terms of sales and costs?

A
  • cost (communication means that costs are low , technology and manufacturing mean thatstart up costs can be low)
  • sales (can be made any time , so more sales, helps a business manage sales, tabs on stock and making customer aware if product is unavailiable or not, customer satisfaction)
57
Q

How does technology influence a business in terms of the marketing mix?

A
  • price (increases competition online means my have to reduce prices, because can reduce costs, business can lower their selling price)
  • product (technology can help offer new products and services,latest methods and robots to produce goods, customers can customise products)
  • promotion (cheap digital promotion materialstarget ads through cookies)
  • place (reliable easy to use E commerce, however may put off customers )
58
Q

what is the purpose of legislation?

A
  • consumer law
  • employment law
59
Q

What are the principles of consumer law?

A
  • quality (reasonable and fit for intended purpose)
  • consumer rights(can rejet goods, safe delivery)
60
Q

what are the principles of employment law?

A
  • recruitment (fair)
  • pay (minimum wage)
  • discrimination
  • health and saftey (safe workspace)
61
Q

What is the impact of legislation on the business?

A
  • cost (training equipment, pay, liscense/services)
  • consequences of not obliging (bad repuation, tempriory closure, taken to court and given fines
62
Q

what are the positive consequences of meeting legal obligations?

A
  • positive reputation, more attracted customers and emplyloyees , more sales and better candidates for the job
  • customers and emplyess feel like they are being treated clearly
63
Q

what is the impact of the economic climate on the business?

6 points

A
  • unemployment
  • changing levels of consumer income
  • inflation
  • changes in exchange rates
  • goverment taxation
  • changes in intrest rates
64
Q

How does unemployment affect a business?

A

low unemployment:
* fewer people to hire, may have to increase wages to attract
* employees are more hapy because jobs are secure
* consumer higher income, higher disposable income, more sales

65
Q

How do changing levels of consumers income affect a business?

A

low levels:
* less disposable income,lower prices products
* less sales
* consumer confidence is low and so less likley to buy shopping goods
high levels (opposite)

66
Q

how does inflation affect a business?

A

low inflation: will not have to pay suppliers as much, employees are less likley to ask for a raise
high inflation: consumers may not buy but would rather wait for prices to further go down

67
Q

how do changes in intrest rates affect a business?

A
  • high: savers will have more to pay, borrowers have less to spend- generally consumer income levels are lower. Businesses may not be confident to take bank loans and invest
  • if countries have a high intrest rate then investors may be more likley to invest in UK, increasing the value of the pound
68
Q

How does goverment taxation impact a business?

A
  • busniess make less net profit
  • conusme income levels are low
69
Q

how do changes in exhange rates impact a business
?

A
  • if a business exports or imports goods may be cheaper than local
  • SPICED
  • more/less profits, having to change selling price, increase/decrease in sales
    *
70
Q

what are some responses of a business to chnages in the economic changes?

A
  • technology (do not want to be obslete and face a decline in repuation
  • legislation (fines/ brand reputation)
  • the economic climate (dependant on consumer income, stopping plans of growth , if intrest rates are high- not taking a loan, if taxation falls business can hire more people , making it more effective , ahead of competitiors who have not responded to the economic climate)

GCSE Business Edexcel (9 decks)

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