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Business (LC) > Chapter 19 - Identifying Business Ideas > Flashcards

Chapter 19 - Identifying Business Ideas Flashcards

1
Q

What are internal sources of business ideas for an entrepreneur?

A

Interests + hobbies
Unexpected events (eureka moment)
Frustration
Skills and knowledge

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2
Q

What are internal sources of business ideas for existing firms?

A

Brainstorming
Intrapreneurship
Research and development

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3
Q

What are external sources of business ideas for entrepreneurs?

A

Family + friends

Networking

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4
Q

What are external sources of business ideas for entrepreneurs and existing firms?

A

Media
Market trends
State agencies
Import substitution

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5
Q

How can state agencies help with idea generation?

A

They provide information on worldwide statistics and growth statistics e.g. enterprise Ireland

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6
Q

How can import substitution help with idea generation?

A

When an Irish business or entrepreneur makes a product that is currently imported

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7
Q

What are external sources of business ideas for existing firms?

A

Competitions

Customer feedback

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8
Q

What is market research?

A

The process of collecting and analyzing information about the target market. Used to identify trends and marketing decisions

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9
Q

What are reasons for conducting market research?

A

To find out the size of the market
To identify competitors
To find out consumer needs and wants
To identify trends

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10
Q

What are the 3 stages of market research?

A

Gather
Analyse
Report

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11
Q

What is primary research?

A

Involves gathering first hand information from the marketplace

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12
Q

What are 4 examples of primary research?

A

Observation
Consumer panels
Surveys
Mystery shoppers

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13
Q

What is a mystery shoppers?

A

An anonymous shopper to evaluate customer service and store operations

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14
Q

What are the advantages and disadvantages of observation?

A

Consumers are unaware that they are being observed so the retailer can gain accurate information
It shows how people behave but it does not show why they behave as they do

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15
Q

What are the advantages and disadvantages of consumer panels?

A

The business can gain detailed insight into the consumers attitudes and opinions
It can be time consuming

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16
Q

What are the advantages and disadvantages of surveys?

A

The firm can obtain detailed information

High non response rate

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17
Q

What are the advantages and disadvantages of mystery shoppers?

A

It encourages employees to provide high quality customer service at all time
Information gathered is subject to the mystery shoppers personal opinion

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18
Q

What are the advantages of primary research?

A

Specific information (information is relevant to the business)
Better analysis (doesn’t rely on other people’s interpretation)
Timing (more recent information)
Confidentiality

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19
Q

What are disadvantages of primary research?

A

Time consuming
Cost
In accurate feedback ( biased or untrue)
Business resources (can take resources away from other important areas e.g. finance)

20
Q

What is secondary research?

A

Involves gathering information that has already been collected by others

21
Q

What are 5 examples of secondary research?

A 
Business reports 
Government publications (central statistics office)
Internet 
Media
Commercial research agencies
22
Q

What are the advantages and disadvantages of business reports?

A

Many of these reports are available for free

It can be time consuming to read through it

23
Q

What are the advantages and disadvantages of government publications?

A

They provide accurate information

It can be difficult to find the reports

24
Q

What are the advantages and disadvantages of the internet?

A

Most of the information is available for free

There is an enormous amount of information

25
Q

What are the advantages and disadvantages of commercial research agencies?

A

They provide detailed information

Agencies charge a fee

26
Q

What are the advantages and disadvantages of the media?

A

A wide range of information

Information may not be available at the time it is needed

27
Q

What are the advantages of secondary research?

A

Cheaper than primary research
Faster than primary research
Large volume of information
Accurate

28
Q

What are disadvantages of secondary research?

A

Non specific ( may not be exactly what the business needs)
Outdated
Copyright (reproducing data without permission can cause conflict)
Information overload

29
Q

What are 5 benefits of market research?

A

Identify the target market
Reduce costs (avoid making products consumers don’t want)
Evaluate an advertising campaign (did the advertising campaign interest the consumers)
Forecast future trends
Identify problems

30
Q

What are the 7 steps in the development process of a new product?

A
  1. Idea generation
  2. Product screening
  3. Concept development
  4. Feasibility study
  5. Prototype development
  6. Test marketing
  7. Product launch
31
Q

What is product screening?

A

Separating possible good ideas from ideas that are not practical

32
Q

What is concept development?

A

When the idea is turned into an actual product

33
Q

What is USP?

A

Unique selling point = sets the product apart from others on the market

34
Q

What is a feasibility study?

A

Study carried out to see if the product is commercially viable

35
Q

What are the 3 feasibility studies that should be carried out?

A

Production feasibility - can it be made? Is it safe?
Financial feasibility - how much does it cost to make?
Marketability - is there a demand for it?

36
Q

What is the purpose of prototype development?

A

It identifies possible faults, see if it meets standards, identifies if adjustments need to be made

37
Q

What is test marketing?

A

Launching the product into a small market before releasing it into the entire market

38
Q

Which step in the development process of a product is the break even analysis included?

A

Feasibility study

39
Q

How do you calculate break even point?

A

Fixed costs
__________
Contribution per product

40
Q

How do you calculate contribution per product?

A

Selling price per unit - variable cost per unit

41
Q

How do you calculate total revenue?

A

Forecast output x selling price

42
Q

How do you calculate total costs?

A

Fixed costs + variable costs

43
Q

How do you calculate margin of safety?

A

Forecast output - break even point

44
Q

How do you calculate variable costs?

A

Forecast output x variable costs per unit

45
Q

How do you calculate profit?

A

Total revenue - total costs

46
Q

What 6 things must be included in a break even analysis?

A 
Total costs
Total revenue 
Fixed costs 
Margin of safety
Break even point
Profit
47
Q

What are the limitations to a break even analysis?

A

It assumes all products made will be sold
It assumes selling price remains the same
It does not account for faulty products
It assumes businesses know all costs and can categories them

Business (LC) (23 decks)

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