Topic 1.4 Making The Business Effective Flashcards
Liability
Responsibility from pay any debts that a business may have
Capital
Money and goods used to produce other goods e.g. machinery, computers, equipment
Unlimited vs limited liability
Limited liability - can only lose money invested into the business
Unlimited liability - can lose personal possessions to pay off debts of business
Sole trader
Someone who sets up a business on their own
1 owner
Unlimited liability
Capital provided by owner
Owner gets profits
High risk
No legal requirements
Partnership
2 or more people join together in a business enterprise to pursue profit
2 or more owners
Unlimited liability
Capital provided by owners
Owners get profit
High risk
Need to make a Deed of Partnership
Private Limited Company (LTD)
A business that is owned by shareholders - the shares are not available to the general public
Up to 50 owners
Limited liability
Capital provided by the shareholders
Shareholders get profits
Low risk
Need to register company
Public limited company
A business that sells its shares to the general public which are listed on the stock exchange
Unlimited owners, limited liability, capital provided by shareholders, shareholders get profits, low risk, need to register the company
Factors influencing business location
Proximity to:market, labour, materials and competitors
Nature of the business activity
The impact of the internet: e-commerce and/or fixed premises
What are the 4 elements of the marketing mix
Product
Price
Place
Promotion
Product
Features
Quality
Branding
Packaging
Services
Warranties
Price
Price strategy
Pricing
Allowances
Discounts
Payment terms
Place
Chanels
Market coverage
Assortment
Location
Inventory
Transport
Promotion
Sales promotion
Advertising
Public relations
Direct marketing
What can businesses do to the marketing mix when in a competitive environment
Offer a product or service that fills a gap in the market
Offer better sales promotions: BOGOF, online discount codes or cash back
Create a unique selling point (USP)
Develop relationships with existing customer to make them more likely to buy again
What are some ways business adapt to changing customer needs
Introducing new products
Changing the selling price oif products
Opening new retail outlets
Introducing m-commerce and e-commerce
How do businesses adapt to advances and trends in technology
Increasing use of e-commerce and m-commerce
Use of digital media to promote products and maintain a consumer interest
Changes to a products design to incorporate new technologies
Reduction of prices because of more efficient production methods
Introduction of more competitive pricing because of easy access to orpice comparisons across retailers
Business plan
A document setting out the business idea and showing how it is to be financed, marketed, and put into practice.
Why are business plans important
Likely to be a crucial part of an attempt too raise finance from outside sources such as the bank
Minimise risk
What should a business plan include
The business idea
Business aims and objectives
Target market
Marketing plan
Forecast revenue, costs and profit
Cash flow forecast
Sources of finance
Location
Marketing mix
