Explain Flashcards
Explain one disadvantage to a business of operating in a competitive environment.
- Have differentiate, so decrease prices, so decreased profit margins, so more sales to breakeven
Explain one benefit of adding value
- Premium price, higher profit margins, increase profits
- Differentiate, customers pay more, more profit
Explain one possible conflict that can exist between stakeholders of a business.
- Business wants maximum profit, pressure groups what ethical products, conflict over that
- Stakeholders want more dividends, but employees want more wages so conflict over spending if profit
Explain one reason why an entrepreneur would produce a business plan.
- Plan out aims and objectives so can inform decisions and reduce risk of failure
- banks look for financial forecast to see if the business is viable, easier to obtain bank loan, easier to start up business, less risk
Explain one method a business could use to add value to its product.
- Improve quality, premium price, larger profit margins so increased revenue
- Strong brand so customer pay more so increase revenue
- Lower price, competitive advantage, more sales
- Usp, premium price, profit
Explain one benefit to a small business from having a unique selling point.
- Meets need and wants that was an area that wasn’t met by competitors, Competitive advantage, premium price/ more sales
Impact of unreliable data
- Make product that isn’t wanted because sample too small maybe, unsatisfied customers, money wasted, loss
Explain one advantage to a small business of using trade credit as a source of finance.
- Buy now pay later, meaning you can pay for supplies after getting money form customers, better Cashflow, reinvest into business
Explain one disadvantage of starting a small business as a partnership
- Argue, bad decisions, don’t meet needs, less sales
- Unlimited liability, sue, lose assets, sad people
Explain one way the marketing mix of a small business may change due to changing consumer needs.
income decrease, less disposable income, so decrease price to meet demand
- Changing trends/ needs, so adapt existing product to meet, so more sales
- Lifestyle of customer needs extra features, so change product, design
Explain one reason why new business ideas come about.
- Gap in market, not met, no competition
- Changing needs and wants
- Tech advance, keep up so products not obsolete,
Explain a disadvantage of secondary data
- Out of date as someone else took before, bad decisions, product bad etc
Explain benefit of quantitative data
- Can collect large amount as numerical so easy to analyse, better decisions, meet needs
Explain one advantage to a small business of using market mapping.
- Can see gap, not met, competitive advantage
- Analyse competition, so can differentiate, reduce risk of failure
Explain one benefit to an entrepreneur of buying a franchise to start a business.
- Knowledge, so less risk more informed decisions, sales
- Benefit from national advertising campaigns as access to pool of money form franchise, so more customers attracted
- Already established brand image, so don’t have to work on brand, so less money on promotion, more sale
Explain one way a small business could use market segmentation to target customers.
- Income, if high want nice quality product, so make and pay
Explain one possible non-financial aim an entrepreneur may have when starting a small business
- Independence, no boss, decisions own
Explain one disadvantage to a small business of using qualitative data for market research.
- Hard to analyse, so might make bad decisions, product not wanted,
Explain one benefit to a small business of understanding customer needs
- Adapt to needs, increase sales, increase revenue
- Satisfied customer, repeat buyers, sales
Explain one reason why it is important to include financial information in a business plan.
- Bank loan, forecast, nice
- Stock right amount etc
Explain one drawback to a business of having low levels of cash
- Less money employees, leave, labour turnover increase, public image bad so less employees
- Supply, bad relationship so might not be able to negotiate
Explain one way an entrepreneur can reduce the risk of failure when starting a new business.
- Business plan, aim, informed decisions
- Market research, understand needs, develop product that is wanted
- Cash flow forecast, expect shortage of cash, reduce risk of insolvency
Explain one reason why an entrepreneur may adapt an existing product to come up with a new business idea.
- Already market, so demand, can meet
- Already understand market, have research already, understand needs better
- Reduce development costs, reduce need to obtain finance, so less time to launch
Explain one disadvantage to a small business of using a focus group to collect market research data.
- Small, poor decisions, product not wanted, bad satisfaction
