Theme 1 Flashcards
1
Q
why do new business ideas come about?
A
- *changes in technology (making expensive technology affordable, reducing manufacturing costs, more affordable),(e commerce platforms, larger target audience)
- *changes in consumer wants and needs (demand)
- *products and services becoming obsolete(change in demand/trend)
2
Q
How do new business ideas come about?
A
- adapting existing ideas (less risky,new markets,quicker, cheaper development costs)
- original ideas (more risky, longer, more development costs, but USP and new market with no competitors)
3
Q
What is the impact of risk on business activity?
A
- business failure- negative cash flow, drop in revenue/ demand
- financial failure
- lack of security
- health:stress, bad business decisions
plan ahead
4
Q
What is the impact of reward on business activity:
A
- independence (flexible working hours-being your won boss)
*profit (motivation) - business success (satisfaction, being an employer)
5
Q
What is the role of business enterprise and the purpose of business activity?
A
- produce goods/services
- meet customer needs(happy customers,repeated purchases, sales of the business)
- add value(branding, convenience, quality and design, USP)
6
Q
The impact of adding value
A
- branding- emotional connnection, brand loyalty , more likley to buy/stand out
- convenirnce- saves them time, more happier custoomers, compettive advantage
- USP/competive advanatge
- design and quality- more satisfied/likley to buy, reputation
7
Q
What is the role of entrepreneurship
A
- take risks
- make business decisions
- organise resouces(manage/lead people effectivley)
8
Q
What are customer needs?
A
- price (for product, competive advantage, accesibility )
- quality(product+customer service)
- convenience
- choice(product portfolio, customer loyalty, repeated purchases)
9
Q
what happens when you meet customer needs?
A
more happy, encorages reapeated purchases, generating customer loyalty , increased sales. Also will recoomend the product to thers
10
Q
What is the purpose of market research ?
A
- to identify and understand customer needs
- to identify gaps in the market
*to reduce risk
*to make informed business decisions
11
Q
What are ins methods of primary market research ?
A
- survey
- questionnaire
- focus group
- observation
✅accurate and easy to implement
❌time consuming , expensive
12
Q
What are some methods of secondary research?
A
- internt
- market reports
- government reports
✅cheaper
❌not that relevant
13
Q
Qualitative market research
A
✅provides depth and detail
✅helps business listen to customers rather than jumping to conclusions
❌small sample = bias
❌responses are subjunctive
❌can be biased/lead by bad interviewer
14
Q
The role of social media in collecting market research
A
✅cheaper
✅identify popular maker trends
✅saves time collecting market research
✅improve products /marketing
15
Q
Why do you need reliable market research?
A
Business decisions
16
Q
What are the different market segments?
A
- Location(more demand )
- Demographics (sex/family)
- Lifestyle (promotional /marketing strategies)
- Income (quality and price of the product)
- Age (promotional strategies)
17
Q
Market mapping
A
Helps identify gaps in market and competitors, can adapt products/services
❌subjunctive and doesn’t consider demand
18
Q
What are the strengths and weaknesses of competitors?
A
Price
Quality
Location
Product range
Customer service
19
Q
Impact of competition on business decions
A
Having Lower costs , innovation for new product ideas
20
Q
what are some financial aims and objectives of a business?
A
- survival
- profit
- sales
- market share
- financial security
21
Q
what are some non-financial aims and objectives of a business?
A
- personal satisfaction
- social concerns
- challenge
- independance and control
22
Q
why do businesses have different aims and objectives?
A
- differnt industries
- different ways of operating
23
Q
what is revenue ?
A
=price X quanity
income that the business revieves through sales
24
Q
what is the difference between fixed and variable costs?
A
fixed costs do not chnage egardless the number of sales of the business
25
what is the formula for total costs?
= fixed costs + variable costs
26
what is the formula for gross profit?
=sales revenue- costs of sales
the amount of profit that a busines makes on a product before the cost of producind and selling the product
27
what is net profit?
=gross profit- other operating expenses and intrest
28
what is the formula for intrest (%)?
(total repayment-borrowed amount)/borrowed amount
*100
29
how do you calculate the break even formula in units?
fixed costs/
(sales price-variable)
30
what is the break even point in revenue/price?
=break even point in units * sales price
31
formula for the margin of saftey?
=actual sales-break even sales
32
what is the importance of cash to a business?
* paying supliers/employees/overheads(realtionships, being taken to court, services withdraw)
* preventing business failure (unable to pay bills, becoming insolvent): reduce customers with credit
* the difference between cash and profit- profit is cash before deduction of costs
33
why do businesses interpret cash flow calculations?
indicate the future
* taking on more staff
* opening a new branch
* identifying a risk (running out of money)
* taking money out of business to invest in a new business or to reward the owner
34
what are some sort term sources of finance?
* overdraft (high intrest rates, quick and convenient)
* trade credit (do not need to have cash available to purchase goods)
35
what are some long term sources of finance?
* bank loans (assets, intrest)
* crowdfunding (time consuming, may have to give discount ect)
* venture capitalist (source of finance if no one else gives, want a return and control)
* share capital (no ore quick decions, dividends)
* personal savings (no intrests, nut lose any itrest on additional savings in account)
* retained profit (
36
what is the difference between limited and unlimited liability?
* limited liability(personal assets can be used to pay off debts, incorperated )
* unlimited liability (unincorperated)
37
what are the different types of business start ups?
* soletrader
* parternship
* private limted company
38
pros and cons of having a sole trader ownership
✓makes all the decions by themselves, less room for disagreement, fast implemenation
✓sole trader keeps all of the profits
✓financial information is private
✗unlimted liability, unincorperated ,diffiult to raise finance delayed growth
✗pressure on one person, may not be able to take time off or holidays, making stress, health problems
39
pros and cons of having a partnership
✓wider expertise, sharing ideas, better business decisons
✓finanicla information kept private
✓easier to raise sources of finace (limited liability)
✗profits shared
✗disagreements between partners
40
pros and cons of being a private limited company
✓limited liabiity
✓easier to raise finance and grow the business
✓business can trade even if the shareholders change
✗more complex to set up
✗disagreements between shareholders
✗finanical information is published, and have to report to HMRC
41
what are the advantages and disadvantages of franchising ?
✓lower risk as business model is sucessful
✓support and training provided by the franchisor
✓franchisees benefit from national marketing campaigns
✗francisees have to pay an initila fee as well as a percentage of their profits
✗franchisees cannot make independant decisions
✗brand reputation of frnachisor may be damaged if franchisees do not maintain standards
42
How does proximity to market affect business location?
* market (close to footfall/demographics, convenience)
* labour(dpending on skill/ high unemployment rate)
* materials (less transport costs)
* competitors( if convenience good then not good but if shopping good then is good)
43
How does the nature of the business affcet the location ?
* footfall
* importing/exporting goods, so near an airport or port
*
44
How does the internet impact business decions?
* do not need a retailing premise or staff more cost effective)
* ability to reach a wider audience
* able to respond to conumer buying habits
45
what is the marketing mix?
* price (determined by comptettion or consumers' thoughts on the product)
* product
* promotion
* place
all to consumer appeal
46
How do elements of the marketing mix work together?
* balancing on basis of competitive enviroment (cheaper, product with USP /better design, place more conveninet , increased prmotion)
* chaning consumer needs on business (launching new products in response to trends, hanging prices and recession,)
* technology, ecommerce and digital communication ( cheaper manafacturing prices, place may change, more affective promotion with targeted ads )
47
What is the role of a business plan?
identifies:
* business idea
* aims and objectives
* target market
* forecast revenue (cash and profit)
* sources of finance
* location
* marketing mix
48
what is the purpose of planning business activity?
* minimising risk (a clear sense of direction for business decisons, allows to adress and come up with potential problems that may arise, can set budgets and monitor spending)
* obtaining finance (from bank loans/investor)
49
who are business stakeholders and what are their seperate intrests?
* goverment (more jobs means more taxes and less benefits to pay)
* pressure groups(implementing change and business acting ethically)
* employees/managers (job secuirty, progression, salary)
* customers(price, quality, range)
* local community (potential jobs)
* suppliers (increased orders =profit)
* shareholders(profits/ divindends)
50
how do the stakeholders affect the business?
* goverment (taxes laws, promoting business activity
* local community (support by buying can object)
* employees/manager (good service/reputation of business)
* shareholders (provide funding )
* suppliers (provide material, depending on reliability determine quality and business reputation)
* pressure groups(changing products, customers opionion)
* customers (purchase, make recommendations)
51
What are the different types of technology used by the business?
E-Commerce
Social media
Digital communication
Payment system
52
what are the pros and cons of E- commerce?
✓can trade 24/7 all around the world
✓can give real time updates to customers
✓more convenient for customers
✓avoid the overhead costs for a physical premises
✗expensive to keep up with technology
✗harder to build relationships with customers, customers make purchases becuase of price and not loyalty
✗customer may have security concerns regarding fraud
✗business may not be easily fndable due to high levls of competition
53
what are the pros and cons of social media?
✓can communicate with customers
✓respond to online feedback
54
what are the pros and cons of payment systems?
✓easy and more convenient for customer
✓open 24/7
✓allow people to order immediatly, good for customer service
✓trends in sales can be identified
✓can work in many currenccies
✓customers may expect it and may be put off from business if not availaible
✗vunerable to fraud
✗may have to pay an additional fee
55
what are the pros and cons of digital communication?
✓emplyess can communicate any time of the day, quivker and cheaper than travelling long distances, employess time is used efficently
✓customers can recieve real time updates
✓may not need an office-saving in overhead costs for rent
✓quick cheap communication within branches
56
How does technology influence a business in terms of sales and costs?
* cost (communication means that costs are low , technology and manufacturing mean thatstart up costs can be low)
* sales (can be made any time , so more sales, helps a business manage sales, tabs on stock and making customer aware if product is unavailiable or not, customer satisfaction)
57
How does technology influence a business in terms of the marketing mix?
* price (increases competition online means my have to reduce prices, because can reduce costs, business can lower their selling price)
* product (technology can help offer new products and services,latest methods and robots to produce goods, customers can customise products)
* promotion (cheap digital promotion materialstarget ads through cookies)
* place (reliable easy to use E commerce, however may put off customers )
58
what is the purpose of legislation?
* consumer law
* employment law
59
What are the principles of consumer law?
* quality (reasonable and fit for intended purpose)
* consumer rights(can rejet goods, safe delivery)
60
what are the principles of employment law?
* recruitment (fair)
* pay (minimum wage)
* discrimination
* health and saftey (safe workspace)
61
What is the impact of legislation on the business?
* cost (training equipment, pay, liscense/services)
* consequences of not obliging (bad repuation, tempriory closure, taken to court and given fines
62
what are the positive consequences of meeting legal obligations?
* positive reputation, more attracted customers and emplyloyees , more sales and better candidates for the job
* customers and emplyess feel like they are being treated clearly
63
what is the impact of the economic climate on the business?
| 6 points
* unemployment
* changing levels of consumer income
* inflation
* changes in exchange rates
* goverment taxation
* changes in intrest rates
64
How does unemployment affect a business?
low unemployment:
* fewer people to hire, may have to increase wages to attract
* employees are more hapy because jobs are secure
* consumer higher income, higher disposable income, more sales
65
How do changing levels of consumers income affect a business?
low levels:
* less disposable income,lower prices products
* less sales
* consumer confidence is low and so less likley to buy shopping goods
high levels (opposite)
66
how does inflation affect a business?
low inflation: will not have to pay suppliers as much, employees are less likley to ask for a raise
high inflation: consumers may not buy but would rather wait for prices to further go down
67
how do changes in intrest rates affect a business?
* high: savers will have more to pay, borrowers have less to spend- generally consumer income levels are lower. Businesses may not be confident to take bank loans and invest
* if countries have a high intrest rate then investors may be more likley to invest in UK, increasing the value of the pound
68
How does goverment taxation impact a business?
* busniess make less net profit
* conusme income levels are low
69
how do changes in exhange rates impact a business
?
* if a business exports or imports goods may be cheaper than local
* SPICED
* more/less profits, having to change selling price, increase/decrease in sales
*
70
what are some responses of a business to chnages in the economic changes?
* technology (do not want to be obslete and face a decline in repuation
* legislation (fines/ brand reputation)
* the economic climate (dependant on consumer income, stopping plans of growth , if intrest rates are high- not taking a loan, if taxation falls business can hire more people , making it more effective , ahead of competitiors who have not responded to the economic climate)
