Small Business Decision Making - Chp 2 Flashcards
Service
A product that is intangible, meaning it cannot be held, or touched and is usually performed at the point of sale. For example you receive a haircut and pay for it at the time you receive it.
Good
A product that is tangible meaning that you can see, touch, and hold the item. An example is a car because you can see, touch and hold it.
What does a businesses success and failure depend on?
The owners abilities, resources, enthusiasm, initiative, level of expertise, decision making skills and motivation.
What are the three main reasons for people to start a business?
- Desire for independence
- To make a profit
- To fulfil a market need.
What is a business concept?
Describes the core activities of the business and the key specific features and values of the product it provides.
‘Gap in the market’
A demand not currently being satisfied in the particular market.
What are inspirations that business ideas can be generated from?
- listening to people
- reading books, magazines & the Internet
- visiting displays and exhibitions
- accessing government statistics
- identifying a gap in the market
- determining improvements on current products
Demand
The quantity of a product that consumers are prepared to purchase
Market research
A process is systematic collecting, recoding, and analysing information concerning a specific market.
Market conditions
The features of a market into which a new product or service is to be introduced, and include factors such as the number of potential customers, level of completion and potential growth.
What are the steps involving market research?
- Identifying what information to gather
- Gathering the relevant information from appropriate sources
- Analysing and interpreting the results to extract clear information which will assist in decision making.
Innovation
The press of creating a new or significantly improved product, service, or process.
Invention
The development of something that is totally new.
What doe innovation and invention have in common?
The both Reith in something totally unique being created, whether is be a product or process.
Research and Development (R&D)
A set of activities undertaken to: improve existing products, create new products and improve production.
Entrepreneurship
The ability and willingness to start, operate and assume the risk of a business venture in the hope of making a profit.
Business entity
Any organisation engaged in the production of goods and services
What are the 5 main types of legal structure?
- sole trader
- partnership
- company
- cooperative
- trust
What are the uncorporated business entities?
Sole traders and Partnerhips
Incorporation
The process that companies go through to become a separate entity from the owner(s)
What is an incorporated business?
A business that has its own legal existence. So regardless of what happens to individual owners of the commonly, the business can still continue to operate.
What is an unincorporated business?
A business that has no seepage legal existence from its owner(s)
Why is choosing the business structure the most fundamental decision?
As each different business legal structure has to cover different government regulations that will influence the operations of the business.
Sole trader
A business that is owners and operated by one person.
Unlimited liability
Refers to the business owner being personally responsible for all the debts of his or her business.
Partnership
An unincorporated legal business structure with a minimum of two and a maximum of 20 owners.
Silent partner / sleeping partner
A partner that contributes financially to the business but takes no part in the running of the business.
How can a partnership be made?
It can be made verbally, in writing or by implication.
Shareholders
The owners of a company