Paper 1

Question 1

What is limted liability?

Answer 1

when the levels of risk is limited to the amont of money that has been invested in the nusiness or promised as an investment

Question 2

what is unlimted liability?

Answer 2

where the level of risk goes beyond the amount invested in a business, so the personel assets of the business owner can be used to pay off the business’s debts

Question 3

What are the positive implications of limited liablity?

Answer 3

with limited liability , investors only risk losing the money they have invested. Therefore they are more likley to invest in a company knwoing they will not lose their personal assests. This may help the business in raising finance through share capital in the future.

Question 4

What are the negetive implications of limited liabilty?

Answer 4

• they take longer to set up
• they cost more

Question 5

What are the negative implications of unlimited liability

Answer 5

with unlimited liability , investors risk losing more than the money they have invested. Therefore they less likely to invest in a company knwoing they will lose their personal assests. This means it may be harder for the business to raising finance through share capital in the future.

Or lack of confidence in business decisions

Question 6

What is a sole trader?

Answer 6

A type of unincorporated business that is owned by one person who has unlimited liability

Question 7

What is a partnership?

Answer 7

A business that is owned by a group of two or more people who share the financial risk, the decision-making and the profits.

Question 8

What are the disadvantages and advantages of a sole trader?

Answer 8

❌unlimited liability (difficult to raise finance /expand business slower and harder)
✅financial information kept private, this means that no longer disadvantaged by competitors having access to their private information, allowing theme to keep a competitive edge
✅control/ independance over the business
✅all rewards / profits retained
✅quick to set up, more convenient for busy lifestyle
❌a lot of pressure on one person, business decisions
❌difficult for holidays / being ill

Question 9

What is a franchisee?

Answer 9

An entrepreneur who pays a grew to trade using the name and products of an established business

Question 10

What is a franchise?

Answer 10

When a business gives another business permission to trade using it’s names and products in return for a feee and a share of it’s products

Question 11

What is a franchisor?

Answer 11

An established business that gives permission to an entrepreneur to trade using its name and products

Question 12

Pros and cons of franchising (for franchisee)

Answer 12

✅lower risk , business model already successful
✅support and training provided by franchisor
✅business benefits from marketing campaigns
❌have to pay initially fee , as well as a percentage of the profits
❌cannot make independent decisions (products already selling )

Question 13

What is meant by the dynamic nature of a business?

Answer 13

This means the business is in a dynamic market, dynamic means that it’s rapidly changing. This means they have to constantly adapt to respond to consumer’s wants and needs

Question 14

How do changes in technology allow new businesses to come about?
3 points

Answer 14

🟣make expensive technology affordable, reducing manufacturing costs
🟣e- commerce , bring ideas straight to market place, do not have to rent a physical premises, decreasing the risk that entrepreneurs have to take
🟣social media, inexpensive promotional method, can interact with current and potential customers, encouraging them to make more sales

Question 15

How can business identity changes in consumer demands?

Answer 15

data, analyse this data to to make their customers’s shopping experinece ebtter, rethink the way that they design produce and market their products.

Question 16

Why should a business keep up to date with consumer wants?

Answer 16

As customer tastes change regularly, a business may require to adapt existing products to prevent them from coming obsolete. These adaptations can also allow businesses to keep up with trends, retaining current customers and attracting new ones

Question 17

Why might a business fail

Answer 17

🟣drop in revenue , eg: increase in competition reducing the amount of sales , negative cash flow

Question 18

What are the types of risks that can lead to financial loss?

Answer 18

🟣competitive risks: in fear of competition, may spend more on marketing, increasing costs
🟣financial risk: not enough investment to attract customers attention

Question 19

How is lack of security a risk in starting up a business?

Answer 19

Lack of regular wage, job security, this may negatively impact the entrepreneur’s health , causing a lot of stress. This may result in bad decisions for the business

Question 20

What is a reward of starting up a business?

Answer 20

Profit, reinvested into the business
Independence : making their own decisions, flexibility, satisfaction
Business success :

Question 21

What is the purpose of business activity?

Answer 21

🟢provide a good/ service
🟢adding value
🟢meeting customer needs

Question 22

What is the difference between a goods and service ?

Answer 22

A good is a tangible item that can be used /stored.
Services are intangible actions , that cannot be stored . Use set only have access to them for a small period of time

Question 23

Why do businesses need to meet customer needs?

Answer 23

Meeting customer needs , develops a positive relationship with them. They are more likely to be satisfied, and loyal . Buying the product again

Question 24

How could a business add value to it’s products?

Answer 24

Branding
Convenience
Quality and design
USP

Question 25

What is the importance of branding?

Answer 25

🟢Can create an emotional connection with brand that they share same views & beliefs , more likely to buy those products 🟢increases customer loyalty protect businesses from competitors. 🟢helping the business increase it’s market share

Question 26

What are the pros/cons of primary market research?

Answer 26

✅tailored to business needs specifically, analyse their current market, improvements to products/ promotional strategies, future products ✅up to date info ❌expensive ❌ time consuming

Question 27

What are the pros/ cons of secondary market research ?

Answer 27

❌could be inaccurate, biased ❌not tailored to business specifically ❌outdated ✅quick and easy ✅cheap

Question 28

What is the purpose of market research ?

Answer 28

Identity and understand customer needs & identifies gaps in the market, allowing one to make informed businesss decisions ,reduces risk of business failure/ product more likley to suceed

Question 29

Quantities and qualities data :

Answer 29

Quantity: quick , easy to analysis Quality: more depth and detail

Question 30

What are the pros and cons of social media market research?

Question 31

Importance of reliable market research ?

Answer 31

✅well informed decisions ✅reduces risk ✅higher chance of businesses successful ❌unwise decision ❌cost the business money ❌products that do not sell ❌failure

Question 32

What is market segmentation? And types

Answer 32

Easier to develop products aimed at certain people to help them target their marketing 🟣income segmentation (disposable) 🟣lifestyle segmentation (hobbies ) 🟣behaviour segmentation (time of year they buy)🟣demographic segmentation (age, gender, race)

Question 33

How does market mapping help a business?

Answer 33

identifying a gap in the market, analysing competitors , adapt their product or promotional stategy to give them a competitive edge.

Question 34

Describe one way in which a business could adapt existing products | ( 3 marker)

Answer 34

They could adapt the promotional strategy for of a particular service or brand. This could make the product more suitable to different customers or markets. As a result , the small business would perhaps make more sales , leading to larger profit.

Question 35

Describe business failure (risk of a business)

Answer 35

🟢cash flow, customers slow in paying bills, (negative cash flow) , cannot buy supplies or pay employees , business having to borrow money 🟢drop in sales revenue, recession , lack of disposable income , less sales of non - essential items🟢

Question 36

Describe financial loss

Question 37

Describe the risk of the lack of security

Answer 37

No regular wage , financial insecurity, stress, affect business decisions negatively

Question 38

Describe the reward of independence

Answer 38

Working for themselves, more likely to take risks and think of something new rather than conventional ideas, this may lead to future exciting products

Question 39

Describe the reward of business success

Answer 39

Provides jobs for employees Industry entrepreneur awards

Question 40

What is the purpose of business activity (meeting peoples’s needs)

Answer 40

Eg: fast delivery Things such as response to feedback ,Allows them to develop a positive relationship , satisfied customers are more likely to repeat their purchases and recommend to others , increasing sales

Question 41

What is the point on feedback from consumers?

Answer 41

Gaining understanding of the consumer’d needs , Allows business to learn from consumer , use this information to improve existing products or develop new

Question 42

How can branding add value ?

Answer 42

The branding of a product defines the aims and values of a business, when consumers shares these values and beliefs they are more likely to connect emotionally, more likely to buy the brand’s products. 2. Could also induce customer loyalty , as the consumer’s emotional connection between the brand could protect a business from other competitors, This could potentially lead to an increase in market share

Question 43

Convenience adding value

Answer 43

Eg: allowing them an easier method to pay or great customer experience Great customer experience, encourages customers to be brand loyal , protects the business from competitors, allowing them to maintain their market share

Question 44

Design adding value

Answer 44

More aesthetically pleasing, attracts more customers, more sales

Question 45

Good entrepreneur

Answer 45

Minimises risk, knowledge ,data (market research) Makes good business decisions , long term viability, short term stage Organising resources (finance ), managing people effectively

Question 46

What are consumer needs ?

Answer 46

🟢price 🟢convenience 🟢choice (a range of products) 🟢quality

Question 47

How does choice (a range of products ) supply consumer needs

Question 48

How does convenience supply consumer needs?

Question 49

How does price supply consumer needs?

Question 50

How does quality supply consumer needs ?

Question 51

what is the importance of identifying and meeting customer needs?

Answer 51

if a product/service doesn't meet customer neeeds it will not have much demand. This means that it is likley to generate sales. As a result of this, the product/service ay be withdrawn and the business may fail completley.

Question 52

1,2.1

Answer 52

(not done)

Question 53

What is the purpose of market research?

Answer 53

markrt research gathers accurate information regarding influences on a possible business idea (competitors/ potential consumers) As a result of this the entreprenur is able to determine whether a business idea is viable , before investing money and time. This therefore reduces the likleyhood of business failure, as the business can make informed business decisions.

Question 54

What is the purpose of market research?

Answer 54

markrt research gathers accurate information regarding influences on a possible business idea (competitors/ potential consumers) As a result of this the entreprenur is able to determine whether a business idea is viable , before investing money and time. This therefore reduces the likleyhood of business failure.

Question 55

The purpose of market research regarding customer needs

Answer 55

Market research allows a business to identify and understand consumer needs. This means that the business is able to adapt a product or evaluate as to whether it is viable for the entrepreneur. As a result of this , the business can make informed business decisions. As a result the risk of business failure reduce.

Question 56

What are are pros and cons of qualitative data ?

Answer 56

Question 57

Describe a use of quantitative data:

Question 58

What are some uses of quantitative data ?

Answer 58

Can be used to find out about and compare different groups of a business’s customers. This data can then be used to help the business to direct their marketing at each group. As a result of this , the business will be able to target and advertise to their target market more effectively.

Question 59

What are some advantages of using social media in market research?

Answer 59

🟣deepen their understanding of their market 🟣improve popular trends 🟣improve their products and marketing 🟣save time conducting market research (more samples, easy to scenes , promoting more honest and reliable feedback

Question 60

Describe an advantage of using social media to gather market research (3 marks)

Answer 60

Social media can be used to improve marketing. This is because social media platforms allow a business to observe how customers talk and understand it’s products . As a result of this the business can then use this language to make it’s marketing more effective.

Question 61

What are the different types of market segmentation?

Answer 61

🟢geographic segmentation 🟢demographic segmentation (gender ) 🟢income segmentation 🟢behavioural segmentation 🟢

Question 62

What is the importance of market segmentation to a small business?

Answer 62

Market segmentation groups together consumers with similar needs/interests. Once have identified it’s target market. Can adapt / change products to increase the attraction/supply the demand

Question 63

How does market mapping help a business?

Answer 63

Can help spot gaps in the market. This is because small businesses can analyse all the products within their chosen market. As a result of this a small business can change / adapt their product to differentiate themselves from the competition.

Question 64

What factors determine the competitive environment?

Answer 64

More saturated markets : lower start up costs This leads to more businesses with

Question 65

What is a SWOT analysis ?

Answer 65

analysing competitors strengths , weaknesses, opportunities and threats. Allows them to compete properly. TIBs they can adapt /change products / promotional strategies to give a competitive advantage (offer something to consumers that others don’t have), Larger market share

Question 66

What is the importance of competition on business making?

Answer 66

🟢price 🟢 new product ideas , competitive advantage ….

Question 67

What are some financial aims and objectives?

Answer 67

🟣survival 🟣profit (sales) 🟣financial security 🟣 market share

Question 68

What are some non - financial aims ?

Answer 68

🟣social concerns (environmentally friendly) 🟣personal satisfaction 🟣independence 🟣control 🟣challenge

Question 69

What is the difference between aims and objectives?

Answer 69

Objectives are set to achieve the ultimate aim

Question 70

Explain one social objective of a business

Answer 70

A business may aspire to be environmentally friendly. This means that business would run sustainably, leading to the business owner having less guilt when selling their product . As a result of this the business owner may feel more confident and passionate.

Question 71

Explain one financial aim to a business

Answer 71

Breaking even. This is because, at this point the business would be making enough revenue to cover costs. As a result of this , the business are less likely to have negative cash flow. This increases the likelihood of the business’s successfulness

Question 72

Difference between fixed and variable costs

Answer 72

FC: do not change , no matter how many sales a made. Can be pre determined eg: insurance, rent, tax, salaries VC: opposite eg: electricity, raw materials

Question 73

Why are businesses in early stages more likely to have more costs than revenue?

Answer 73

Start up costs expenses (cost of premises , equipment, raw material) Which all must be pre paid before the customers start placing their orders

Question 74

What is cash ?

Answer 74

The amount of money in a bank’s business account * comes in from customers *goes out to suppliers

Question 75

Why is cash important

Answer 75

🟢to pay bills 🟢relationships with suppliers / employees (may withdraw their services or take to court) Leading to business failure (insolvency )

Question 76

Why might a good cash flow be hard ?

Answer 76

Credit arrangements (Klarna ) *Customers not paying the second that they have purchased the product

Question 77

How do make sure cash flow is good ?

Answer 77

🟣suitable credit agreements with suppliers (maybe to pay them after customer has) 🟣limit the number of customers to whom it gives credit , (instant pay)

Question 78

What are some short term sources of finance ?

Answer 78

🟣**trade credit** (paying suppliers latter ) 🟣**overdraft** -high intrest rates 🟣

Question 79

what conditions are in a credit agreement ?

Answer 79

* credit limit * credit period * frequency of payment * method of payment * retosecpective discount (bulk buying discount)

Question 80

what is long term and short term finance ?

Answer 80

long term- used for large one off costs (purchasing new equipment, ) Short term - designed to help maintain a positive cash flow

Question 81

What are some souces of long term finance ?

Answer 81

* loans * share capiral * personal savings (no intrest) * venture capital * crowdfunding * retained profit

Question 82

what is venture capitalism? pros +cons

Answer 82

sucessful entreprenurs lending (investors ) ✓ may offer an investment when bank doesn't as they are willing to take the risk 🗴 want a return on investment (pressure), can withdraw at any time 🗴 ✓ have input regarding business decisions , not 100% freedom, some experience and help

Question 83

What is share capitaism ? pros + cons

Answer 83

share capital , is raised by shareholders , by selling shares 🗴have a vote in business decisons , slows down the decision making process

Question 84

loans pros and cons

Answer 84

🗴credit checks- liklehood /chnaces may be harder 🗴security : in the form of assets or guarantor 🗴intrest rates

Question 85

retained profit

Answer 85

great if you have , but may be difficut as if ther are shareholders then they many need to be payed dividends

Question 86

Pros and cons of private limited company “ltd”

Answer 86

✅limited liability ✅easier to raise finance , establish the business ✅having “ltd” makes the business sound more established ❌more harder to set up ❌disagreements between shareholders ❌publicises info , competitors

Question 87

Pros and cons of franchising (for franchisor)

Answer 87

❌brand reputation may be damaged

Question 88

What factors influence business location ?

Answer 88

🟣proximity to labour 🟣proximity to market 🟣proximity to competition 🟣proximity to materials

Question 89

How does proximity to market affect a business?

Answer 89

(Footfall , demographic of people to match it’s target market ) Providing convenience to customer

Question 90

Proximity regarding business location

Answer 90

Question 91

Benefits of e- commerce

Answer 91

🔵lower operating costs 🔵reaching a wider audience 🔵trading 24/7 🔵response t changing consumer buying habits , by moving to m commerce

Question 92

How do changing consumer needs impact the marketing mix ?

Answer 92

Eg : launching new products in response to consumer trends such as veganism Reducing pricing in response to recession Opening more local cafes to make products more convenient

Question 93

What is the impact of technology on marketing mix ?

Answer 93

🟣introducing E/ M Commerce to meet customer needs 🟣using more digital communication such as social media to promote products and keep customers interested in the brand 🟣changing the product design by incorporating new technologies in the product 🟣lowering prices due to savings made by efficient technologies in the production process 🟣changing prices due to competition

Question 94

What is the importance of a business plan?

Answer 94

🟢Minimises risk 🟢Obtaining finance

Question 95

Why should a business have satisfied employees?

Question 96

What are the main aims of employees?

Answer 96

💙get the best possible pay and rewards 💙keep jobs secure

Question 97

What are the impact of technology on a business ?

Answer 97

🟣dynamic nature of business , things become obsolete and outdated more quicker 🟣🟣

Question 98

What are the advantages and disadvantages of E - Commerce ?

Answer 98

Question 99

Importance of social media

Answer 99

✅allows a business to communicate with customers ✅read customer comments (feedback) regarding business ✅business can collaborate with one another ❌❌❌

Question 100

Advantages of digital communication

Answer 100

Digitally communicate with consumers in real time 24/7 updates and possible communication to customers or employees Virtual communication (Skype & teams): Quicker and cheaper than travelling long distancing *more cost effective and quick , employees time used as efficiently as possible Reduced overhead costs for physical premise: rent , lighting , electrical bills. Larger audience: globally

Question 101

What are the advantages and disadvantages of payment systems ?

Answer 101

Question 102

What influences do technology have on sales ?

Answer 102

Can increase sales , as sales can be made 24/7 and are not just restricted to a certain period. Makes customer aware of stock , so that they won’t be disappointed later on down the line, and informed when a product is no longer available.

Question 103

What influence does technology have on cost

Answer 103

Technology can keep the costs low through 🟣reducing travel costs (online meetings) 🟣not needing physical premises 🟣no need to print documents out 🟣email rather than sending letters 🟣cost for production may decrease, with less Manual /human inputs and more machinery

Question 104

What influence does technology have the marketing mix

Answer 104

Question 105

Why does legislation exist for consumers ?

Answer 105

Consumer rights A business must provide a products/ service reasonable of quality. 30 day right to return , replace or refund Retailer responsible for safe delivery of goods Service conducted with “reasonable care”

Question 106

Why does legislation exists for employees?

Answer 106

No discrimination Decent pay (minimum wage) Health and safety of them

Question 107

What are the impacts of legislation on a business?

Answer 107

Costs for training the employees, hotel costs , travelling costs all included Cost for equipment that may have to be regularly updated Cost for pay

Question 108

Pros and cons on a business tie meeting legislation

Answer 108

Question 109

What sort of factors occur due to the changing economic climate on businesses .

Answer 109

🔵unemployment 🔵changing levels of consumer disposable income 🔵inflation 🔵changes in interest rate 🔵government taxation 🔵changes in exchange rates

Question 110

How do low unemployment rates effect a business?

Answer 110

* however due to globalisation the employ rate of a specific country may nit affect then at all

Question 111

How does consumer level of disposable income affect a business ?

Answer 111

Question 112

How does low inflation affect a business ?

Answer 112

* low inflation is when the wages rate and the cost of everyday items are roughly the same ✅less to pay to suppliers , as the costs of everyday items and raw materials would have not risen ✅employees won’t ask for large pay rises ✅

Question 113

How do changes in interest rates affect savers and borrowers ?

Answer 113

Question 114

How do changing interest rates affect consumers and the business ?

Answer 114

*low interest rates Consumer disposable income higher , as more money left over (for consumers who borrow money ) Businessare bale to borrow money for growth and future investments, as will get a cheaper rate

Question 115

How does government taxation affect a business ?

Answer 115

Low tax = consumers with high disposable income

Question 116

What are the different types of taxes ?

Answer 116

Question 117

How do changes in exchange rates impact a business?

Answer 117

SPICED string pound imports cheap , export dearer ❌May have to reduced prices. Consumers may not be as attracted to the products ✅

Question 118

How do interest rates impact exchange interest rates ?

Answer 118

If interest rates high , investors from overseas may wish to put their money into the UK , to get paid a high interest rate on their money. If the demand to put money into UK increased then the value of th expound increases and becomes more stronger

Question 119

What is the result of a business not responding to increasing interest rates?

Answer 119

If a business has further expansion in mind and they continue with this and borrow money , the cost of borrowing may have a negative consequence on the business’s finance.

Question 120

What is the result of a business not responding to consumer income levels decreasing

Answer 120

A result of lower consumer incomes, will be that they are looking for cheaper prices and more budget friendly products. In response to this the business should move to an overseas market or lower prices . If it does not do this then it may fail to make enough sales , leading to cash flow problems within the business and potential business failure

Question 121

What should a business do in the fall of taxation ?

Answer 121

A business could respond by hiring more staff , as they can now afford this. This would make the business more effective , perhaps increasing sales . This move would put them ahead of any competitors who have not responded to the change in economic climate.