Discuss Flashcards
1
Q
Discuss how business may react to changes in consumer legislation making it more difficult to sell product
A
- Stop selling, have money to research and develop new, improve business, and raise research but maybe in debt
- Enter new markets where less legislation, retrain staff and move location of production which would be costly but allows them to sell product
2
Q
Discuss the impact on a small business from the introduction of new employment laws.
A
- Health and safety laws, good as it reduces injuries of employees, greater productivity.
- Bad as it costs money to provide training, greater costs, lower profit margin
- National living wage, higher, higher costs
- If higher, greater employee motivation so greater retention
3
Q
Discuss drawback of franchise
A
- Can’t choose supplies, no independence, so can’t look for cheaper supplier, unable to reduce costs, so can’t change price of product which could give competitive advantage, may not have enough sales for breakeven
- Intial start up fees are a lt and royalty fees every month so less profit
4
Q
Discuss the importance of cash to the survival of a small business.
A
- Needed to pay employees, if don’t then they will leave, more labour turnover, less employees come
- Pay supply’s, good relationship with suppliers so can negotiate
- Good net cash flow, prevent insolvency, as pay wages and rent
5
Q
Discuss how the decision making of a small business may be affected by increased competition.
A
- Will have to differentiate, so lower prices, so lower profit margins, more sales needed to breakeven can have negative impact
- High quality so competitive advantage, costs more, higher variable costs, breakeven level of output increases
- Location, can’t be in place with lots of competition
6
Q
Discuss what a small business owner should consider when deciding upon the location for their business
A
- Level of competition, may have to reduce prices etc if in competitive environment, which leads to less profit
- Proximity ti customers, if lots of footfall, more likelihood of passing trade and so more customers
