Facts

Question 1

Identify the stages in product lifestyle

Answer 1

Development
Introduction
Growth
Maturity
Decline

Question 2

The product lifestyle

What is development

Answer 2

The business is researching and developing the product. product testing and trials take place
. the product is not yet available for sale.

Question 3

The product life-cycle

What is introduction

Answer 3

The business launch is the new product on the open market and makes it available for sale. During this stage, The business advertises the product and uses promotions to encourage sales

Question 4

Product life-cycle

What is growth

Answer 4

Customers are now familiar with the product and sales are increasing. At this stage of the life-cycle, sales are increasing at the fastest rate.

Question 5

Product life-cycle

What is maturity

Answer 5

During the stage, sales of the product have reach their highest. It is likely that the number of new customers is reducing and sales growth is limited. Other businesses organisations may have entered at the market to compete with a number of similar products available may mean the market is saturated

Question 6

The product life-cycle

What is decline

Answer 6

In the decline phase sales of the product will begin to fall. The business will not actively advertise the product and will eventually remove from the sale.

Question 7

What is an extension strategy

Answer 7

Action is a business can take to extend the life of a product and increase sales

Question 8

Examples of extension strategies

Answer 8

Advertising
Price reduction
Add value
Explore new markets
New packaging

Question 9

Cost of production formula

Answer 9

Product costs+ profit= selling price

Question 10

Examples of pressed strategies

Answer 10

Competitive prices
Price skimming
Psychological pricing
Price penetration

Question 11

What is competitive pricing

Answer 11

Selling a product with a price which is similar to other local competitors however it will be lower so customers will buy yours

Question 12

What is price skimming

Answer 12

Introducing the product at a high price and then it gradually lower as it overtime

Question 13

What is psychological pricing

Answer 13

Set an approach that appears attractive to a customer for example 999 rather than 1000
99p

Question 14

What is price penetration

Answer 14

Introduce the product at a lower price than usual to attract customers gradually increase the price all the time

Question 15

advertising

Answer 15

Leaflets
Social media
Websites
Newspapers
Magazines
Radio

Question 16

What is a sole trader

Answer 16

A business owned and controlled by one individual

Question 17

Give an example of a sole trader

Answer 17

Plumber
Electrician
Mobile

Question 18

Examples of a sole trader

Answer 18

Easy to set up
Low set up costs
The owner makes all the business decisions
You can choose your working hours

Question 19

Disadvantages of a sole trader

Answer 19

Difficult for the business to grow
Banks are less keen to lend
No one to share a responsibility with
May have to long work long hours
Unlimited liability

Question 20

What is partnership

Answer 20

Business that is owned and controlled by two or more individuals

Question 21

Examples of a partnership business

Answer 21

Estate agents
Accountant
Solicitors

Question 22

Advantages of partnership

Answer 22

Partner is bringing different skills
Responsibility and risk a shared
Partners can discuss queries before finalising decisions

Question 23

Disadvantages of partnership

Answer 23

Decision-making can be consuming
There is a potential disagreement and conflict
All partners are jointly responsible for business debt

Question 24

What is a franchise

Answer 24

A business organisation where the franchisor grants a license to another business so they can sell brand or business ideas the franchisor owns the business ideas

Question 25

Examples of a franchise

Answer 25

McDonald’s
Pizza Hut
Starbucks

Question 26

Advantages of a franchise

Answer 26

Limited business and its industry experience
The franchise still owns the business but not the idea
Is easier to gain customers

Question 27

Disadvantages of franchise

Answer 27

The initial and ongoing costs of operating a franchise are not cheap
The franchise will need to stick to the marketing activities agreed by the franchisor

Question 28

What is the functional area

Answer 28

A department that plays a pacific role within an organisation and his employees carry out a particular aspect of the work of the organisation

Question 29

What are the four main functional areas

Answer 29

Human Resources
Marketing
Operations
Finance

Question 30

What is the formula for total cost

Answer 30

Fixed cost + variable costs = total cost

Question 31

What is revenue

Answer 31

The money a business earns from selling goods or providing services

Question 32

What is total revenue

Answer 32

The total amount of money earned at a particular output level

Question 33

What is the formula for total revenue

Answer 33

Total revenue= selling price per unit X number of sales

Question 34

How to calculate profit

Answer 34

Sales revenue - total cost = profit/loss

Question 35

What is Break even

Answer 35

The point at which a business makes no profit and no loss

Question 36

The formula for calculating breakeven points in units

Answer 36

BEP=FC divided by (SP-VCPU)
Fixed costs
Variable cost per unit

Question 37

What are the name of the three lines which could be shown on a break even graph

Answer 37

Fixed cost
Total cost
Total revenue

Question 38

How to calculate cash flow

Answer 38

Net cash flow = cash inflow - cash outflow