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BUSINESS STUDIES (COMPONENT 1) > BUSINESS OPPORTUNITIES (Manning) > Flashcards

BUSINESS OPPORTUNITIES (Manning) Flashcards

1
Q

What is revenue?

A

The amount of money a business makes from selling their goods and services

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2
Q

What are costs?

A

Amount of money a business spends in running operations

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3
Q

What are profits?

A

Excess of revenue once all costs have been deducted

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4
Q

What are fixed costs?

A

Costs that do not vary with output

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5
Q

What are variable costs?

A

Costs that do vary with output

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6
Q

What are semi-variable costs?

A

Costs that do vary with output, but not in direct proportion

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7
Q

What are indirect costs?

A

Costs that are do not relate directly to the product/ proportion process

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8
Q

What are direct costs?

A

Costs that do relate directly to the product/ proportion process

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9
Q

What are total costs?

A

All costs involved in running a business

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10
Q

Total revenue formula

A

Selling price x Quantity sold

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11
Q

Total costs formula

A

Fixed + Variable costs

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12
Q

Profit formula

A

Total revenue - Total costs

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13
Q

Average costs formula

A

Total costs/ Output

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14
Q

What is the importance of profit?

A
  • expansion
  • attract share holders
  • reward staff (motivate)
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15
Q

How to draw a breakeven chart?

A
  1. Draw and label axis
  2. Draw and label fixed costs (horizontal)
  3. Variable costs (starts at 0)
  4. Total costs (starts at FC, parallel to VC)
  5. Revenue (starts at 0, should cross TC)
  6. Draw and label breakeven
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16
Q

Contribution per unit formula

A

Selling price - Variable costs

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17
Q

Total contribution formula

A

(selling price-variable costs) x output

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18
Q

Breakeven output formula

A

Fixed costs/ contribution per unit

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19
Q

Margin of safety formula

A

Current of output - breakeven output

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20
Q

What are benefits of breakeven?

A
  • calculate profit figures
  • generate sales targets
  • generate ‘what if’ scenarios
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21
Q

What are the drawbacks of breakeven?

A
  • assume all units will be sold and at the same price
  • figures can date quickly
  • diagram assumes everything will be sold
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22
Q

What is a local market?

A

Products/ services exchanged within a limited geographical location

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23
Q

What is a global market?

A

P/S traded internationally

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24
Q

What is mass market?

A

Products that sell to the whole market

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25
Q

What is a niche market?

A

Products that sell to a very small market, usually specialised goods

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26
Q

What is trade?

A

Business to business trading

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27
Q

What is a product?

A

Traded goods that have a physical presence and can be touched

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28
Q

What is a service?

A

An action carried put in return for a payment

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29
Q

What is seasonal markets?

A

P/S bought at certain times in the year

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30
Q

What is a market?

A

A place where buyers and sellers meet to bring about an exchange

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31
Q

What are examples of methods of exchange?

A
  • retail
  • internet
  • telephone
  • mail
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32
Q

What is the definition of competition?

A

Process by which businesses strive against each other to capture a larger market and increase their market share

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33
Q

What is the definition of market research?

A

Process of collecting information and data about a businesses customers, the market place and the activities of competitors within the market place

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34
Q

Define primary research

A

First hand information directly relevant to the needs of a business

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35
Q

Define secondary research

A

Second hand research adapted to fit the needs pf a business

36
Q

What is quantitative data?

A

Statistical, numerical data that can be compared objectively

37
Q

What is qualitative data?

A

Involves attitudes and opinions and is compared subjectively

38
Q

What methods gather quantitative data

A

Surveys/ questionnaires

Government reports

39
Q

How can you gather qualitative data for a business

A

Interviews

Consumer panels

40
Q

Market share formula

A

Sales of business/ total sales of market x100

41
Q

Market growth formula

A

Sales in year 2- year 1/sales in year 1 x100

42
Q

What can marketing data be affected by?

A
  • state of economy
  • competition
  • consumer trends
43
Q

What is random sampling?

A

Each member of a group has an equal chance of being chosen

44
Q

What is quota sampling?

A

Representative individuals are chosen out of a specific sub-group that share similar characteristics

45
Q

Why is sampling beneficial?

A
  1. Save finances- selected group researched

2. Saves time- more time devoted to ensuring the research is useful from sampling group

46
Q

What are drawbacks of sampling?

A
  1. Sample may be too small

2. May be biased- in random, may happen to be elected from only high income people

47
Q

Define market segmentation

A

Process of breaking the market into sections where consumers share similar characteristics and needs and developing products or services for each of them

48
Q

Define barriers of entry

A

Factors that can prevent new firms entering the market

Eg: customer loyalty

49
Q

What are homogenous products?

A

Products that are exactly the same and unchangeable

Eg: travel money

50
Q

What are differentiated products?

A

Products that have unique features that set them apart from other products in the market

51
Q

What are methods of differentiation?

A
  • celebrity endorsements
  • brand name
  • packaging
52
Q

What is a monopoly?

A

One firm has total control over the market

25% of market share

53
Q

What are features of oligopolies?

A

A few main firms dominate the market

54
Q

What is monopolistic competition?

A

Large numbers of relatively small businesses in competition with each other, there aren’t any dominant firms

55
Q

What are methods of monopolistic competition?

A
  • product differentiation
  • price makers
  • low barriers of entry
56
Q

What is perfect competition?

A

Large numbers of small businesses in competition with each other, producing a homogenous product

57
Q

How does population affect demand?

A

Increase in population=increase in demand

Will shift to the right on graph

58
Q

How does advertising affect demand?

A

Good advertising=^demand

59
Q

How do substitutes affect demand?

A

Increase it

60
Q

How do interest rates affect demand?

A

When they are high, people don’t want to borrow because they have less disposable income
So with higher rates, demands decrease

61
Q

How do fashion and trends affect demand?

A

Increases demands when they increase

62
Q

How does income affect demand?

A

As is increases, so does demand (more able to as they have more money)- tend to buy higher end products
When income is low, demand is low for high end but high for low end products

63
Q

How do complementaries affect demand?

A

Things that come together (strawberries and cream)

If one increases, people may be less likely to buy the other therefore complimentary demand will decrease

64
Q

Define demand

A

The quantity of a good or service that consumers are willing and able to buy at a given range of prices over a given period of time

65
Q

What are rules of how to draw a demand curve?

A
  1. Label y-axis price, x-axis quantity

2. Draw demand curve downward, from left to right (label D)

66
Q

How does an increase in productivity of workers affect supply?

A

Increases supply

67
Q

How does an increase in cost production affect supply?

A

Decreases

68
Q

How does the increase in use of technology affect supply?

A

Increases

69
Q

How does bad weather affect supply?

A

Decreases

70
Q

How does good weather affect supply?

A

Increases

71
Q

How does an increase in indirect taxes affect supply?

A

Decreases

72
Q

How does an increase in the number of firms affect supply?

A

Increases

73
Q

How does an increase in subsidies affect supply?

A

Increases

74
Q

When might consumer protection be needed?

A

In markets where firms have power over the consumer that may lead to exploitation
Eg: in monopolies and oligopolies

75
Q

What do consumers need protection to ensure?

A
  • prices are not too high, affordable to most customers
  • customer service meeting needs a consumer
  • quality of product is fit for purpose
76
Q

How may consumer protection be achieved?

A

-government legislation (eg: price fixing is illegal between firms)- more likely in oligopolies

77
Q

How do monopolies impact businesses?

A

Charge higher prices to increase profit

Use profit to invest in new/improved products to retain high barriers of entry

78
Q

How do oligopolies impact businesses?

A

Engage in non-price competition to increase market share (eg: promotion, branding, loyalty rewards)
Avoid price competition as price wars are expensive

79
Q

How does monopolistic competition impact businesses?

A

Price competition to attract customers

May merge/takeover with competition to reduce competition

80
Q

How does perfect competition impact businesses?

A

Invest in methods to differentiate their product so they can attract more customers

81
Q

Define laws of demand

A

States that the higher the price the lower the quantity demanded- the slope is downwards on graph

82
Q

What are factors that affect demand?

A 
Changes in population
Change in taste and fashion 
Increase or decrease of income
Advertising 
Interest rates
Complementary
83
Q

What are factors that affect supply?

A 
Change in cost of production
Technology
Weather
Productivity of workers
Number of firms
84
Q

What does high elasticity mean?

A

That a change in price will cause a more than proportional change in the quantity demanded
-price increase= demand decrease

85
Q

What is price inelastic/ insensitive?

A

If a good has inelastic price elasticity of demand than a change in price causes a less proportional change in the quantity demanded
-price increase= demand decreases (just a little)

86
Q

How can businesses make demands for their goods more price inelastic?

A
  • encourage customer loyalty
  • reduce/ restrict competition in market
  • increase brand value
87
Q

What are rules on how to draw a demand curve?

A
  1. Label Y (price) and X (quantity)

2. Draw demand curve downward, from left to right (label; D)

BUSINESS STUDIES (COMPONENT 1) (7 decks)

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