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Business theme 1 > theme 1 > Flashcards

theme 1 Flashcards

1
Q

Why do new business ideas come about?

A
  • Changes in technology
  • Changes in trends
  • Products and services becoming obselete
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2
Q

How do new business ideas come about?

A
  • Adapting existing products / services / ideas
  • Original ideas
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3
Q

Impact of risk on a business

A
  • lack of security
  • business failure
  • financial loss
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4
Q

Impact of reward on a business

A
  • business success
  • profit
  • independance
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5
Q

The role of business enterprise

A
  • to produce goods or services
  • to meet customer needs
  • to add value: convenience, branding, quality, design, USP
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6
Q

The role of an entrepreneur

A
  • organsis resources
  • takes risks
  • makes business decisions
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7
Q

What are customer needs?

A
  • price
  • quality
  • convenience
  • choice
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8
Q

Why are customer needs important?

A
  • generating sales
  • business survival
  • brand image
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9
Q

What is the purpose of market research?

A
  • identify and understand cutomer needs
  • identify a gap in the market
  • reduce risk
  • inform business decisions
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10
Q

What are the methods of market research

A
  • primary - getting it yourself
  • secondary - someone elses
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11
Q

Examples of primary research

A
  • survey
  • questionaire
  • focus group
  • observation
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12
Q

Example of secondary research

A
  • internet
  • market reports
  • government reports
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13
Q

Pros and cons of primary research

A
  • Pro: up to date, questions can be tailed to answer specific question for that business, allows business to have direct contact with existing or potential customers
  • Con: time consumer, some surveys get low responce rates, expensive, can be bias in small or incorrect sample groups
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14
Q

Pros and cons of secondary research

A
  • Pro: is cheap, easily accessible
  • Con: may be out of date, may not be relevent for the business
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15
Q

What is qualitive and quantative data?

A
  • qualitive - subjective, personal opinions e.g. focus group
  • quantative - to do with numbers and statistics e.g. poll
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16
Q

What are market segments?

A
  • location
  • age
  • demographic
  • income
  • lifestyle
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17
Q

Why do we use market mapping?

A
  • identify a gap in the market
  • identify competitors
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18
Q

Understanding the competitive environment

A
  • strengths and weaknesses of competitors based on: price, quality, location, product range and customer needs
  • impact of competitors on business making decisions e.g. lower prices to remain competitive
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19
Q

Effects of the use of social media

A

· Fast to access a wide range of people.
· Relatively cheap compared to other forms of market research.
· Can be used for primary or secondary research.
· A number of social media sites with different audiences.
· Analytical tools are required.
· Takes time and money to establish, build and monitor a presence.

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20
Q

What are business aims and objectives

A
  • aims - is the overall target / goal of the business
  • objective - smaller targets / goals in order to reach the main aim
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21
Q

Why are business aims and objectives useful?

A
  • helps strategise and visualize how to complete problems / ambitions
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22
Q

What types if aims and objectives are there?

A
  • Financial - goals relating to money
  • Non-financial - often personal goals or solving a social issue within society e.g. being more sustainable
23
Q

Why do aims and objectives differ between businesses?

A

Every business is different and because of this, their aims and objectives differ vastly. Business have different desires and things they want to accomplish. Some may focus more on the financial aims of the business and others may focus on the non-financial aims. It depends on the business and what they stand for

24
Q

revenue

A

sales price x units sold

25
Q

fixed costs

A

total costs - variable costs

26
Q

variable costs

A

total costs - fixed costs (or) cost per unit

27
Q

total costs

A

variable costs + fixed costs

28
Q

profit / loss

A

total revenue - total costs

29
Q

interest

A

interest (on loans) in % - ([total repayment - amount borrowed] / amount borrowed) x 100

30
Q

break even level of ouput

A

fixed costs / (sales price x variable costs)

31
Q

break even point in costs

A

break even point in units x sales price

32
Q

Margin of safety

A

actual sales - break even sales

33
Q

gross profit

A

total revenue - variable costs

34
Q

gross profit margin

A

gross profit / sales revenue x 100

35
Q

net profit

A

total revenue - total costs (or) gross profit - fixed costs

36
Q

net profit margin

A

net profit / sales revenue x 100

37
Q

contribition per unit

A

sales price - variable costs

38
Q

Net cash flow

A

cash inflow - cash outflow

39
Q

Opening balance

A

closing balance of previous month

40
Q

closing balance

A

opening balance + net cash flow

41
Q

Average rate of return

A

average annual profit [total profit / number of years] / cost of investment x 100

42
Q

break even diagram

A

cba to find it

43
Q

Why is cash important

A
  • to pay suppliers
  • to prevent insolvency / business failure
44
Q

trade credit - short term

A
  • supliers give a period of credit before payment
  • Pro - buy now pay later (free), potential discounts for early payments
  • Con - may be charges for late payments, not available wth all suppliers
45
Q

Overdraft- short term

A
  • agreement with bank to go over
46
Q

what is unlimited liabilty?

A
  • responsible and liable for ALL debts that the business incurs
  • It is simpler to set up these types of business
  • Sole traders and partners may be less inclined to take risks as all their personal wealth is at risk
  • Sole trader and partnerships
  • same entity
47
Q

What is limited liability?

A
  • Private limited companies Ltd / Public limited company PLC
  • seperate entities
  • Risk is reduced as personal assests cannot be lost
    *Only money invested by shareholders in the business can be lost

The business s more likely to have the confidence to take risks

As losses are limited to the amount invested, this makes it more attractive for investors

48
Q

sole traders

A
  • It is simply an extension of the legal personality of the owner
    • It may have one or more employees
    • The most common form of ownership in the UK
    • Unincorporated
    • Unlimited liability
    • Examples include street vendors, buildings, electricians, equestrian instructors
49
Q

factors effcting business location

A

market, labour, raw materials, competitors

50
Q

difference between Ltd and PLC

A
  • Ltd sell shares to family and friends to raise capital
  • PlC sell shares on a stock exchange to members of the public and other institutions - run by directors
51
Q

What is the marketing mix?

A

Price, place, product and promotion

52
Q

Why make a business plan

A
  • reduce risk
  • obtain finance
53
Q

What is in a business plan?

A
  • business idea
  • aims and objective
  • target market (market research)
  • forecast revenue / costs / profit
  • cash flow forecast
  • sources of fincance
  • location
  • marketing mix
54
Q

effect of stake holders

A
  • employees - if unhappy with work evironment, could strike
  • suppliers - late deliveries and poor quality / wanting payment on time
  • customers - will want best value for money, could go to competitors
  • community - want a business to behave ethically
  • owners - how much money they take out / reinvest / decisions
  • Government - changing legislation

Business theme 1 (1 decks)

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