BUSINESS MANAGEMENT

Question 1

what is a business?

Answer 1

a business is an organisation that provides goods or services to customers in exchange for profit

Question 2

what is business management?

Answer 2

the process of planning, organising, and controlling resources to achieve the goals of a business

Question 3

what are goods?

Answer 3

goods are tangible, physical products that can be touched, seen, and stored. They are usually produced and then sold to consumers

Question 4

what are services?

Answer 4

services are intangible and represent activities, performances, or tasks that are provided to customers. They are usually performed by people or systems to meet specific needs or to offer assistance

Question 5

what is entrepreneurship?

Answer 5

the process of starting and managing a new business venture, taking on financial risks in the hope of making a profit

Question 6

what is innovation?

Answer 6

is when a business develops and applies new ideas that are an improvement to the good or service that is currently offered in the market

Question 7

what are some main business objectives?

Answer 7

• making a profit (profit = revenue - costs) therefore maximising profit means maximising revenue and minimising production costs
• increase market share - market share is the proportion of sales belonging to a business out of the total sales in the industry, often measured as a percentage figure
• fulfil a market need - this is where a ‘gap’ in the market is filled

Question 8

what is competitive advantage?

Answer 8

a point of difference or superiority over one’s competitors (rival businesses in the same industry of goods or services)

Question 9

what is business concept?

Answer 9

an idea for a business including the actual product, the target market plus the proposed competitive advantage

Question 10

what is market research?

Answer 10

a systematic approach that assists a business to make decisions about consumers and the marketplace

Question 11

what is feasibility study?

Answer 11

initial research that is required to determine whether the business concept is viable (can exist successfully)

Question 12

how does a business create competitive advantage?

Answer 12

through:
- lower cost (reducing production or delivery expenses)
- differentiation (of product or service features)

Question 13

how does a business become lower cost?

Answer 13

• input prices: reducing the price of its inputs. change suppliers to do this or find a cheaper option
• bulk production: buying resources in bulk quantities
• standardised products: basic products with limited variation in design features or service delivery
• efficient use of labour resources: only having staff available to meet customer needs at the appropriate times

Question 14

why does lower cost achieve competitive advantage?

Answer 14

• increases a business’s profit by reducing its operating expenses whilst charging the same retail prices as competitors
• increases a business’s profit by passing its cost savings to customers in the form of lower retail prices. this will encourage existing and new customers to increase their total number of sales resulting in the business achieving its objective of increasing its profit
• increases a business’s percentage of market share by attracting price-sensitive customers from industry competitors to increase the total number of products sales for the business

Question 15

how does business use differentiation?

Answer 15

• marketing: promote specific products or service features that customers will find appealing. may also include loyalty programs
• quality: uses high-standard input materials that are durable and without the risk of breaking to increase customer satisfaction
• technology: using scientific applications to research and develop innovative features
• product branding: specific logos, symbols or colours to demonstrate quality to its targeting customers
• customer service: high levels of customer service during or after the sales process

Question 16

why does differentiation achieve competitive advantage?

Answer 16

• increases a business’s profit because target customers are not price sensitive. they are willing to pay a premium for unique features that are valued due to meeting customer needs or wants
• increases a business’s market share. increases the total number of sales compared to industry competitors
• enough resources and duds to develop innovative production processes. makes it difficult for other businesses to easily copy unique attributes or provide substitute items. This strength is best suited to large businesses that have these plentiful resources

Question 17

what does market research aim to do?

Answer 17

• identify new products or services
• help to understand existing customers and identify potential customers
• discover future market trends to assist with goal-setting
• keep the company ahead of competitors

Question 18

what does a feasibility study aim to do?

Answer 18

• describe products being sold and staff required to operate the business
• profile staff skills, personal qualities and qualifications needed for business success
• description of the market - who and where the customers are, the size of the market and expected sales based on costs of production
• identification of the strengths and weaknesses of competitors and how competitive advantage can be obtained

Question 19

what is marketing?

Answer 19

the strategic process of promoting and selling products or services by understanding customer needs, creating value, and effectively communicating with the target audience.

Question 20

what is the target market?

Answer 20

a specific group of potential customers that the business aims to reach and serve with its products or services

Question 21

what are the market segments of a business?

Answer 21

• demographic - characteristics such as age, gender, income level, education, marital status and occupation
• psychographic - what motivates the customers? these factors include attitude, values, interests, lifestyles, personality traits
• behavioural - includes the purchasing behaviours, brand loyalty, usage rate, and buying frequency of customers
• geographical - these factors involve the physical locations and regions where the target market resides

Question 22

what are the four Ps?

Answer 22

Product, price, place, promotion

Question 23

What is product?

Answer 23

this refers to the physical product or service being offered to customers.

product considerations
- branding - involves creating a name, design or logo that are recognisable and memorable. the aim is to stand out from a business’ competitors with a distinctive brand name and logo
- design - creating and developing a product that has the features needed to fulfil its purpose. the aim is to include features that are able to fulfil the needs of customers
- quality - degree to which the product fulfils its purpose without defects. the aim is to achieve the customer’s desired quality and to be reliable
- packaging - designing what the product will be presented in, how customers will see it. the aim is to improve customer perception and stand out from competitors

Question 24

what is price?

Answer 24

price represents the amount of money customers are expected to pay for the product or service.

price adjustment strategies
- promotional pricing - offering special deals or limited-time offers to create urgency and attract customers
- psychological pricing - using pricing tactics that leverage consumer psychology, like setting prices just below a round number
- price matching - matching competitors’ price to prevent customers from shopping elsewhere

Question 25

what is place?

Answer 25

place refers to the distribution channels and locations through which customers can access the product or service

place considerations
do I want a direct or indirect distribution? - direct distribution involves selling products directly to customers without intermediaries. indirect distribution involves using intermediaries like retailers or distributors to reach customers, eg. Kmart
do I want an online store or a brick-and-mortar store? or both?

Question 26

what is promotion?

Answer 26

promotion encompasses the various activities used to communicate and promote the product to the target audience

types of promotion
- advertising
- personal selling
- direct marketing
- social media marketing
- influencer marketing

Question 27

what are the psychological strategies used in advertising?

Answer 27

• creating a sense of urgency - can trigger the fear of missing out
• emotional appeal - advertisements can evoke strong emotions that tend to be more memorable and can lead to a deeper connection with the brand
• humour - create positive associations
• nostalgia - can trigger positive emotions and help consumers connect with the past, resulting in a more favourable view of the brand