Theme 1: Investigating a small business Flashcards

1
Q

Theme 1.1.1: Why do businesses come out?

A

Changes in technology, Changes in consumer taste, Products and services becoming obsolete.

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2
Q

Theme 1.1.1: What is the difference between a want and a need?

A

A want is something we wish to own and a need is an essential item.

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3
Q

Theme 1.1.1: How do businesses come out?

A

Original Ideas, Adapting existing products/ services/ ideas

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4
Q

Theme 1.1.2: Why do businesses fail?

A

Bad Pricing, Weak Marketing, Poor Location

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5
Q

Theme 1.1.2: Name 3 risks with starting a business.

A

Financial Loss, Lack of Security, Business Failure

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6
Q

Theme 1.1.2: Name 3 rewards of starting a business.

A

Business Success, Keep all profits, Independence

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7
Q

Theme 1.1.3: What are some characteristics of a successful entrepreneur?

A

Takes the initiative, Organises Resources, Makes an investment, Goes Ahead, Understands and calculates risk.

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8
Q

Theme 1.1.3: What is the purpose of business activity?

A

To produce goods and services, To meet customer needs successfully.

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9
Q

Theme 1.1.3: Name some ways to add value to a product/service.

A

Build a strong bond, Offer a unique selling point, Deliver excellent customer service, Provide a high quality product, Provide a well - designed product.

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10
Q

Theme 1.2.1: Name the 4 main customer needs.

A

Price, Quality, Choice, Convenience

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11
Q

Theme: 1.2.2: What is the purpose of market research?

A

To gather information to reduce the risk of failure.

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12
Q

Theme 1.2.2: What is the difference between Primary and Secondary research?

A

Primary Research is data collected first hand for a specific research purpose. Secondary Research is data that already exists that has been collected for a different purpose.

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13
Q

Theme 1.2.2: What are some examples of Primary and Secondary research?

A

Primary Research: Focus Group, Questionnaire, Survey
Secondary Research: Internet, Market Reports, Government
Reports

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14
Q

Theme 1.2.2: Name 1 benefit and 1 drawback to Primary Research.

A

Benefits: Directly focused to research objectives
Kept private so competition can’t access
More detailed insights particularly into customer views.

Drawbacks: Time consuming and expensive
Risk of survey bias
Supplying may not be representative of the whole
population.

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15
Q

Theme 1.2.2: Name 1 benefit and 1 drawback to Secondary Research.

A

Benefits: Often easy to obtain
Good source of market insights
Quick to access and use

Drawbacks: Can quickly become out of date
Not tailored to business needs
Specialist reports are often quite expensive.

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16
Q

Theme 1.2.2: What is the difference between Quantitative Data and Qualitative Data.

A

Quantitative Data: Data revolved around numbers and statistics.

Qualitative: Worded Data

17
Q

Theme 1.2.3: What is Market Segmentation?

A

Market Segmentation involves dividing a market into parts that reflect different customers needs and wants.

18
Q

Theme 1.2.3: What are the 3 market segments?

A

Demographics, Income, Location

19
Q

Theme 1.2.3: What are the advantages and disadvantages of Market Mapping.

A

Advantages: Spots gaps in the market, encourages use of market
research

Disadvantages: No guarantee of success, how reliable is the
market research, If there is a gap it doesn’t always
mean there is a demand.

20
Q

Theme 1.2.4: What is a competitive environment?

A

Where a business operates in a market where there are other businesses producing the same or similar goods and services.

21
Q

Theme 1.2.4: What are the some of the benefits of competition?

A

Take inspiration from competitors, Encourages a business to make the product better than competitors, Research will take place to improve their product and reduce costs.

22
Q

Theme 1.3.1: What is an aim?

A

Strategic goals of a business - this is what you want to achieve in the long run.

23
Q

Theme 1.3.1: What is an objective?

A

More specific steps in how you are going to achieve your aim.

24
Q

Theme 1.3.1: Name some financial aims and objectives.

A

Survival, Profit, Market Shares, Sales, Financial Security

25
Q

Theme 1.3.1: Name some non financial aims and objectives.

A

Social Objectives, Personal Satisfactions, Challenge, Independence and Control

26
Q

Theme 1.3.2: What is the revenue equation?

A

Revenue = Price x Quantity

27
Q

Theme 1.3.2: What is the difference between fixed costs and variable costs?

A

Fixed costs are costs which do not change.
Variable costs are costs which change in relation to output.

28
Q

Theme: 1.3.2: What is the total costs equation?

A

Total Costs = Fixed costs + Variable Costs

29
Q

Theme 1.3.2: What is the profit equation?

A

Profit = Total Sales - Total Cost

30
Q

Theme 1.3.2: What is the interest equation?

A

Interest = Total Repayment - borrowed money x 100
—————————————————————-
Borrowed Money

31
Q

Theme 1.3.3: What is cash flow?

A

Cash flow is the process of cash flowing in and out of a business i.e. cash inflows and outflows

32
Q

Theme 1.3.3: Why is a cash flow forecast important?

A

Identifies potential shortfalls in cash balances in advance.
Ensures the business can afford to pay suppliers and employees.
Helps to spot problems with customer payments.

33
Q

Theme 1.3.4: Name some short term sources of finance.

A

Bank Credit, Bank Overdraft

34
Q

Theme 1.3.4: Name some long term sources of finance.

A

Loan from friends and family, Venture Capital, Bank Loan, Retaining Profits, Crowd Funding, Share Capital

35
Q

Theme 1.4.1: What is a sole trader?

A

A sole trader has ONE owner who owns the business.

36
Q

Theme 1.4.1: What is a partnership?

A

Where 2-20 people take ownership of a business.

37
Q

Theme 1.4.1: What are some advantages and disadvantages of being a sole trader?

A

Advantages: Flexible Working
Be your own boss
Do what you want
Have all the profit

Disadvantages: A lot of responsibility
Unlimited Liability
No time off