Chapter 15 Flashcards
Three challenges a busines start up must address.
Choose the correct ownership structure
Choosing a method or production
Access to Finance
Two challenges of Job Production
Labour Intensive - labour intensive, higher salaries (skilled workers), increases runnning costs
Specialized Materials/Machinery- Raw materials can vary among orders to harder to buy in bulk
Definition Job production
Producing a single customized product (unique to the customers requirements) eg. custom wedding dress
Batch Production Definion
Producing a limited quality of identical products at the same time eg. different school textbooks/ shoes in diff sizes
Explain the term business plan
A written documents prepared by the entrepreneur about the business and its objectives and strategies in areas such as marketing (analysis and plan), ownership, production, finance and identifying of opportunities.
Main sections of a business plan
Ownership Structure: Details of owner’s backgrounds, ownership structure
Marketing Plan: The 4 P’s for the business (Product, Price, Place, Promotion)
Market Analysis: Size of market, demographics, segments, tastes, competitors
Production plan: Time, machinery, raw material, labour required to produce the goods
Financial plan: Debt vs Equity in the business, cashflow forecast
Evaluate the Importance of a business plan (2 points)
Seeking Finance/Investors- vital document when approaching any financial institution, grant agencies or other investors seeking funds (capital) for the enterprise.
No financial institutions will give funds to start up IT company without being convinced that the investment has a good chance of being recovered.
Sets Targets/Gives Focus
A business plan well set out it’s targets in figures e.g. sales/ revenue/ market share.
Figures are used as benchmarks for performance. If the set targets are not reached then the IT company should take corrective action.
