Business Planning

Question 1

Quantitative factors of SME’s

Answer 1

 Annual revenue of less than $50 million
 Less than 100 employees
 Assets of less than $25 million

Question 2

Qualitative factors of SME’s

Answer 2

 Most decisions made by owner
 Capital from owner
 Little power within market
 Rely heavily on external support services

Question 3

3 reasons SME’s fail

Answer 3

1. Lack of management expertise
2. Lack of sufficient money (undercapitalisation + inadequate cash flow)
3. Trading losses + declining sales revenue

Question 4

3 ways SME’s can succeed

Answer 4

• Be flexible and adapt to change
• Develop a competitive advantage
• Focus on niche market

Question 5

3 personal qualities for running a business

Answer 5

entrepreneurial spirit, qualifications/skills, motivation

Question 6

Why is a cultural background good to have?

Answer 6

Migrants have insights into overseas markets and can negotiate and establish supply networks of unique products from their home country.

Question 7

Why are females more successful entrepreneurs

Answer 7

• More organised and motivated
• Better people skills
• Borrow less money and seek advice

Question 8

Intermediate Market

Answer 8

Customer is buying the products to use as an input in their production process or they are intending to resell it. i.e. retailers, wholesalers and manufacturing businesses.

*customers focus on price, quality and service

Question 9

Final Market

Answer 9

person who buys the product is the end user of that product.

*customers focus on packaging, price and product benefits

Question 10

Mass Market

Answer 10

all consumers are viewed as being homogenous (i.e. the same) so they are all offered the SAME UNDIFFERENTIATED product.

*low prices + higher volume of customers

Question 11

Niche Market

Answer 11

small specialised segment of a larger market where the business provides products specifically tailored to meet their needs.

*higher prices and lower volume of customers

Question 12

4 factors determining niche

Answer 12

Geographically - based on the location of customers

Demographically – based on features of people e.g. gender, income, religion, age

Psychographically - based on lifestyle, beliefs and preferences

Behaviourally – based on how and why they buy the product

Question 13

Types of competition

Answer 13

Monopoly = one seller in market

Oligopoly = few large sellers supply a sizeable portion of products in market

Monopolistic competition = many sellers offer differentiated products

Perfect competition = many sellers of nearly identical products

Question 14

What is a SWOT analysis?

Answer 14

strengths, weaknesses, opportunities and threats.

Question 15

What is a SWOT analysis used for?

Answer 15

• Analysis of the business’s strengths and weaknesses is an internal analysis
• Analysis of the business’s opportunities and threats is an external analysis

Question 16

What is a competitor analysis?

Answer 16

assesses the level of competition in the market in which a business operates/intends to operate.

Question 17

What is a vision statement?

Answer 17

broadly states what the business aspires to become; its purpose and its function.

Question 18

What is a goal?

Answer 18

more specific statement of what is intended to be achieved

Question 19

What is an objective?

Answer 19

very specific statement of how a goal is achieved

Question 20

4 benefits of an organisational structure

Answer 20

1. It establishes a chain of command.
2. It creates a coordinated work environment by outlining who does what and who is responsible for various activities
3. It provides a sense of common purpose
4. It organises resources in the most efficient manner