Starting a business Flashcards
What are the challenges to set up a business?
Staff recruitment – it can be difficult for a new business to attract top employees. They may be unable to pay which is as high as established business and their jobs will not be as secure as more established ones
Competition – businesses may use price and strategies such as penetrating price of promotional techniques to promote sales as it can be hard to enter market with well-known brand
Production – the method of production will be influenced by the type of product being produced and type of work is required. The Business will choose between job bat and mass protection which will require a large capital investment.
Finance – it can be difficult for a new business to get access to finance so can’t struggle to get a fucking capital
What are the challenges when setting up a business?
Finance, production, competition, Staff recruitment
What factors should someone consider when changing production methods?
Finance – if a business were to move from job production to batch/mass it would require a huge capital investment for machinery
Staff working conditions – if work becomes more competitive workers will start to leave due to unwanted nature of work
Demand – there has to be an adequate demand to make a profit out of changing production method so enough market research needs to be carried out
Finance – additional long-term finance may be needed to be sourced. The business needs to consider whether or not they can source his fines.
Subcontracting is what
It means that a business employs another firm to manufacturer or produce part of a product. A business may do this if they do not have time or expertise to complete this part of the task.
What is a business plan?
It is a written document which includes information about the business
What are elements of a business plan?
Business details
Product details – their unique selling point and product feature
Market details – details of competitors their marketing mix results of market research
Production details – type of production used, machinery used
Financial detail details – forecasted revenue costs, cash flow forecast, purpose for finance, details of outstanding borrowing
Why would you need to prepare a business plan?
It is needed to obtain finance for financial institutions – investors such as banks will want to see a business plan before they provide funding. A business plan shows investors that the business and spend time planning and increases the likelihood of success.
Used to measure performance and set standards – they can use this tob measure performance. If the standards are not met them, Business can investigate why and put me in place to dissolve it.
Set out long-term and short-term strategies – the business can set out plans on how they will achieve their goals both short and long-term which can provide a sense of direction
What are stakeholders that are impacted by the business plan?
Employees, it shows the employees if they have job security. It will highlight whether there are a possible promotion opportunity in the future.
Investors, it allows investors to see if they can make a profit and a return on their investment. It can also persuade investors to provide capital.
Financial institutions, business must provide a plan when seeking finance so it can be used to decide financial approval. The financial institution can assess the expertise of the owners and reason why they want the finance.
What are the three types of production methods?
Job, batch, mass
What is job product production?
It is a method of production where goods are made to order. They are unique products and are not made for stock.
What is batch production?
It is a method of production where a limited number of identical products are made in a production run. A different type of model of the product will then be produced. Good they’re produced for stock.
What is mass production?
This is a method of production where the same products are made continuously. Goods are produced for stock in large quantities. CAM are used to automate the process max efficiency.
What production method would need highly skilled workers?
Job production as each product is made to order
What is low skilled workers used for in production methods?
They are used in batch production as their work seems to be more repetitive
What method of production needs unskilled workers?
Mass production as things run on an assembly line
In your production, what type of machinery is used?
Flexible machine machinery capable of producing a wide range of products
In math production, what type of machinery is used and what it costs?
It requires huge investment, which is a barrier to starting up
In batch production, what kind of machine is used?
Flexible machinery when one batch ends another one is used
Is drug production very expensive?
Yes, it is high-quality materials and wages for the employees are high as they are highly skilled
What type of production method does not benefit from economies of scale?
Job
What is economies of scale?
It occurs when you buy in bulk so you get discounts from buying so many
In batch production, what are costs like?
There is high capital expenditure initially for the machine machinery however cost can be lowered in the long run due to economies of scales and the lower wages of employees
What are the costs like for mass production?
Machinery is costly so there is high set up costs but it is saved in the long one as money is saved due to large levels of production and economies of scale
, what does mass production produce?
Pens, cars, batteries, pencils
