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- Out of date as someone else took before, bad decisions, product bad etc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
Explain one disadvantage to a small business of an increase in interest rates.
- Increase in bank loans, more costs, less profit
- People spend less, less income, more unwilling to pay for luxury items
Explain one disadvantage to a small business of manufacturing a high-quality product.
- High costs, low profit margins, higher breakeven level of output
Explain one disadvantage of a sole trader.
- Not protected by limited liability, if can’t pay debt have to sell assets as no legal distinction between owner and business
Explain one advantage of sole trader.
- Independent, makes all decisions, no one to disagree meet customer needs
Explain one advantage of operating as a partnership
- Business owners may have wider expertise and can share ideas and decision-making
- Can lead to more innovative solutions to problems in shorter time
- This in turn increases the efficiency of the business, driving it forward and giving it a competitive advantage
Explain one disadvantage of operating as partnership.
- May be disagreement between partners
- Difficult to make decisions
- Lead to the business not being able to meet the needs of its customer
- Deed of partnership may have to be produced
- Increases admin/legal requirements
- Increase start-up costs of the business
Explain benefit of overdraft
- Only pay interest on overdraft used, so repayment is less than other forms if small amount uses, costs low, good for sudden cashflow problems
Explain one drawback of advancements in technology
- Must invest a lot, expensive, also need training, increase costs beyond initial investment
Explain benefit of high unemployment
- Easier to hire, large amount of people looking for job, large pool to select from, increasing chance of best person
