Definitions Flashcards
Business activity def
what the business does to provide its customer with a product or service
Enterprise def
spotting an opportunity to provide a product or service taht the customer is willing to buy
State
no explanation needed 2 things
Explain
develop point with linked statements using “this is better because “
Business objectives
make new products increase sales and boost advertising
Business Plan
sets out how the owners/managers of a business intends its objectives without a plan the business will drift
potential business risks include financial and strained relationships and ____
Health
purpose of business plan
FOCUS on the idea
ORGANISED
USP
unique selling point
rewards of risk taking
profit
self satisfaction
independence
Business plan advantages
review ideas
reduces risk
review progress
secure finance
reduce failure
Business plan problems
poor quality or lack of experience
time and effort
constant updates
Sole traders
owned and controlled by one person
does not stop from employing more people
Advantages of sole traders
owner keeps all profit
control - in complete control
finance - can be set up with very little
set up - easy and cheap
financial info - is private
disadvantages of sole traders
illnes
Unlimited liability
the owner of the business risks losing his personal possessions to pay of debts
Partnerships
business which is owned and controlled by a min of 2 people
e.g vets. dentist
Advantages of partnerships
different skills to offer
more capital - grow in size
Disadvantages of businesses partnerships
profit has to be shared
disagreements
unlimited liability
Sleeping partner
invest money into the business but do not take part in day to day running of the business
LLP
limited liability partnerships
llp disadvantages
registered with companies house which costs money
Deed of partnerships
legal document signed by 2 or more people to agree on deal in advance legally cannot back out once signed
capital
the amount of money the business has
rival business
competitors
a person who takes the risk of starting and running a business
entrepreneur
Private limited companies advantages
easier to raise finance as can sell shares
original owner are likely to retain control
Private limited companies disadvantage
finance limited to friends and family
public limited company advantage
limited liability protects their personal wealth of the shareholders
public limited company disadvantages
greater cost to set up as a ltd
risk of being taken over
Maxamise profit
make as much profit as possible
What is market share
the % of total ales that a business has in a specified market
what is a stakeholder
any person who has an interest of the business
internal stakeholders
inside , employees
external stakeholders
outside , competitors
organic/ internal growth
when the business grows naturally by selling more
Merger
two or more firms join to create a new business
Takeover (acquisition)
this is when one business buys another business. in case of a limited company, this means buying more than 50%
Horizontal
a business joines with another business at the same stage of production ( kelloggs - nestle )
Backwards vertical
a business joins with its suppliers / the previous stage of production
(kellogs - to farm )
forward vertical
a business joins with its the next stage of production e.g kellogg to sainsburys
diversification
a buiseness joins in a different market e.g lidl - boots
Marketing
Is concerned with finding the needs for the consumers and then meeting those needs promotion product price place
Market Research
Is all about collecting information on whether or not their products or services will be brought
What is the purpose of carrying out market research
To provide you with answers of what your customers want
Why should negative comments be ignored (market research)
Learn from mistakes and adapt pricing
Should market research be carried out as a one off or an ongoing basis?
Ongoing as everything always changes
Primary market research
Is any type of research that is new bring collected for the first time (e.g questionnaire interview focus groups trail)
Questionnaire advantage
Can easily target particular customers (supermarket entrance e.g)
Can distribute to many respondents to get varied opinions
Cheaper than other primary market research methods
Questionnaires disadvantage
Not at all customers will fill in all of the gaps leaving gaps in results data
Customers may not understand all of their questions
Focus groups
A group of consumers who are selected to represent the target market brought together to discuss their feelings on a product/market
Focus group’s advantage
Because focus groups are chosen to represent the target market for a business, the data from them is usually very accurate
The ability to ask further questions (compared to questionnaires) means that more in depth response are gained
Focus group disadvantage
Are squally small in size, which limits the quantity of responses
The deletion of people to take part is time consuming and so expensive
Trails
A product or service sold for a short amount of time to test to see whether or not the consumers like the product
Trails advantage
A business can establish wether the idea would have a positive on overall sales which reduces the risk of failure
A business May save in the long term if they identify that customers are not demanding the business is offering for sale
Trails disadvantage
Trails are costly to set up in the short term
They are chosen Kay not fully reflect the target market which may lead to unreliable conclusions
Websites
Most companies put information about them selves and their prdocts on the internet all of which can be used by other competitors business as secondary data
Website advantage
It’s a quicker way to obtain data compared to primary market research methods
It is cheaper way to obtain data compared to primary research methods
Website disadvantage
The data Nat not be up to date and some data me be incorrect
The research might not be exactly what the business is looking for
Census data
Is data collected by the government every 10 years, questioning the entire population on the income, occupation lost was April 2021
Internal data
This refers to psst figures, profits and comments from customers this can be used for future decision making and is usually stirred in computer systems
Newspaper and magazines
Information cab be identified form reading news paper and magazines for example ideas to develop new products and the products services that competitors are offering
Quantitive data
(Numbers) can be used to create % and graphs this makes it easier to analyse
Typically, quantitative data can be incorporate responses from a larger number of people
Qualitative
Can offer more in depth information
The data/opinion may be more useful in satisfying the market research brief
Market segmentation
Is playing the market for a product into the market for a product parts or segments
Age gender income occupation location lifestyle
How does segmentating the market help to save money?
Businesses need tu deliver their marketing message to a relevent customer audience. By seamenting markets, the turget customer cun be reucheu more often and at a lower cast. For Instance, turgeting customers of womens’ per Fume in the magazines that women are most likely to reco.
By segmenting the market, businesses can learn about different groups of customers ano then develop ufferent produces to meet the needs and wants of these customers, forexamoe a watch brand can develop a portFolio of produce meeting the needs of the customers of vifferent ages, incomes, y enciers und lifestyles.
What are the 4 ps
Product, Place, Price and Promotion
Promotion
Is concerned with how a business inform its customer about a product or service and then persuades them to buy
(Radio tv billboard social media posters)
Social media
Social media accounts are cheaperto operate (Not free. as there will be some costs involved i.e. staff).
2. Customers are more likely to take notice of advertisements as they have demonstrated an intered in the business by choosing to follow it.
3. Larger numbers of people use social media.
4. Social media pages are quicker. to update that other methods.
Social media disadvantages
It can be time consuming tomanage
• negative feedback from customers may be viewed by other customers
Radio advantage
Radio advertising is cheaper than TV advertising.
• Radio is portable and so can reach customers anywhere (i.e. work). This also includes in the car and listeners may be able to visit the business before reaching their destination.
Radio disadvantage
One problem is that the product cannot be seen.
• A further problem is that listeners may skip adverts.
Websites advantage
Most businesses will have their own website.
• Websites can be used to send a particular message to buyers in an attempt to persuade customers to buy from that business i.e.
Krochet Kids.
• Videos can be used to show the product in more detail i.e. ASOS.
Website disadvantages
Setting up and maintaining a well designed/complex website can be expensive which can be an issue for smaller businesses with limited funds.
• Therefore, smaller businesses may use simpler websites to provide basic information such as price lists.
Loss leaders
is a product priced below cost-price in order to attract consumers intoa shop or an unline fore the purpose of making a croduce a loss leader is to incorage custemers to make further purchaser of profitable goods unire they are in the snop.
Distribution channel
All of the organisations through which a product must pass between its point ofproduction and purchases by the consumer
Wholesaler
A large storage centre ableto take in deliveries directfrom procucers The role of a wholesaler is to ‘bulk buy” This means buying in large quantities from a producer and then selling smaller amounts to a retailer
Distribution channel
All distribution channels begin with a p..ocucer (The business making the product).
• All distribution channels end with the c.ustomelThe person buying and using the product).
• Distribution channels can include intermediaries. These are
‘third parties’ between producers and consumers, and can include retails and wholeswers
• Examples of reetsvis. include Marks and Spences. and Jack
• Wholesalers store and break bulk…. to supply retailers with smaller quantites
Digital distribution
-distripition of goods digitag by downicading from a website or app ie a song purchesedfrom Apple music.
Free samples
Customers can try the sample to see if they like it leading to the potentially buying full size product
Loss leader
More people go in and see the products May want to impulse buy
Place
Refers to where and where products and services are sold any his the business gets products and services to the customer . How products and services get to consumers known as distribution channels
Distribution channel
All of teh organisations through which a product must pass between its point of provision and lurches by the customer
Wholesaler
A large storage centre abeto taken deliveries direction procucers The role of a wholesaler is to ‘bulk buy’. This means buying in large quantiries from a producer and then selling smaller amounts to a retailer
Market segmentation
Market segmentation refers to splitting up the market based on the different characteristics that customers possess. For example, by age or gender.
Wholesaling
Def - a business buys large quantities of products from manufacturers
Benefits - high sale values reduce distribution costs
Drawbacks - less profits due to sharing
Distribution
• All distribution channels begin with a p.coccer (The business making the product).
• All distribution channels end with the customer The person buying and using the product).
• Distribution channels can include intermediaries. These are
‘third parties’ between producers and consumers, and can include retails and wholeswers
• Examples of retsis.. include Marks and Soence. and Jack
• Wholesalers store and break b.I… to supply retailers with smaller quantites
Regional distribution centre
Are owned byne reatailer and are used to store prooucts they win latersen unstures.
Digital distribution
distripition of goods digitaly by downicadingfrom a website or app ie a song purcheredfrom Apple music.
Advantage - Not suitable for all products as some products (such as food) cannot be downloaded.
• Not all customers have access to an internet connection and/or the connection may be too slow to download large files.
• Digital distribution has also made it easier to illegally download content for free.
Advantages - less staff needed
More potential customers because it can be sent across the world
Cost plus pricing
-This is apricing method that adds % to the cost of making a product to give a sewing point.
Competitor pricing
is when a price is set based on prices changed by cumpetitor businessfor a similar or iventral product.
Promotional pricing
this is a reduction in price to attract customers to an existing product Or to sell off olu produces. promotions include
Buy one getonefree, 3for 2
Advantages: • Atruces more customers into sture
Breakes logarties wich rivals
• encourages customers ouy more
Disaovantages: • Customers mayyet user tothe promotion ano not ouy full price
• can leau to stock not being available for customers who usually pay full price.
Price skimming
: this is where a product is more avanced thun that of the competitors, and therefore price is set at a mIaH becausecustomers are willing to buy higher prices to own a product.
After a perioo of time, the price will be reduceu.
Advantages - • Help to builo a reputution for high quality produces • Potential for hign sales revenue
Disauvantages - In the long term, competitors willenter the market and apply pricing pressure (Lowerprice)
May leao to lower sales quantities
Penetration pricing
When a business isnew to a business is new to uneset, a or se Is set lower than competitor businesses this ras short term stratorgy to help break customer loyaltiesfrom Erusteo branos.
Aduantages: Can be protoction tour when a burines product first launches. Can be helpful to breuk loyalty with other brands
Disadvantages - likely to resutin recantation from established competitors. creates expection from customers
.
Invention - This is the introduction of a totally new idea. think
Innovation - This is the improvement of an original idea. tnis inciwes changing and pouting it
Design - This is an important element in a number of different products. It can be related to style (i.e. clothing) or technology (i.e. smart phone screens becoming bigger).
Product life cycle
Product life cycle - An important concept in marketing. It describes the stages a product goes through from when it was first thought of until it finally is removed from the market.
Product life cycle steps
main stages of the product life cycle are:
• Introduction - Researching, developing and then launching the product
• Growth - When sales are increasing at their fastest rate
• Maturity - Sales are near their highest, but the rate of growth is slowing down e.g. because of new competitors in the market
• Decline - Final stage of the cycle, when sales begin to
Market data
Market data- is information that will help a business make marketing decisions
Human reciources
Human Recources. Are the people uno ou the work for the business.
The purpose a Human Resources- this refers to the work that must be done by human recources. Itis hormally broken down into a number a different Jobs.
Human recurses plan
detuiling the workers a business nees. nowmany, wheter they should befuror purt time, the skills they shouldncue anowhen they snould work.
Human recourses change
The human resource need/plan may change because:
• Workers leave/retire/are promoted
• The business either grows or shrinks
• The business may introduce more technology
• The business may relocate
• The budget of the business may change
Organisational structure
Is how people ano departments are organised within a business
Organisational charts
diagrams thet show internal structure of the business
Benefits: • can see uno is responsible for unich functions. tasks anó people
• can see who each person is assosiated to
• can viewlines of communication
•can view links berween departments
Organisational chart benefits
A benefit of ccs having a organisutiona chart is thur they can have acieur line of communicatien
Layers
this referr to the number or levels in a business organisation
Many layers
Many layers = tau structure
Few layers = flat structure
Spam of control
-number of subordinates
Who the manager manages
Chain of command
order of authority of which information passed down.
Iner ten unitem a busones
hierarchy. Tup are abre to send down.
Different ways of working
Largebosiness -tal structures sothere are
clear lines of communicutron more control
Flat structures - suit creutive businessus
they encourage communication
between people at lifferent levels
Zero hour contracts
mean +nat an
employee has no setur guarenteed nours
ut work, sofarexample one week may work
Working from home
Advantages - Workers can work longer as they will not be travelling.
Workers may be more productive as they are motivated by the freedom
Disadvantages-Worker may produce less as they are not being a directed
Flexi time
Adavantages - employee can plan work around lifestyle , less abstances as staff are less likely to call in sick
Disadvantages - communication May lack as they are not together as much
Flexi time
this is where the worker can work their weekly hours in as fewer as many days as they wish
Self employed person
Advantages- choose when you work , keep alll the profit
Disadvantages- may not have work all the time
Internal recruitment
Is wnen a vacancy if fined with someone who already works in the organisation
Internal recrui
Is wnen a vacancy if fined with someone who already works in the organisation
External recruitment
when an organisacion fills a spot withsomeone outside the organisation
