Understanding Business Flashcards
Name Business Stakeholders
Internal = Owners - want the business to maximise profits to receive a return on their investment - Get to make all the decisions. Shareholders - Want the business to make a profit so they continue to receive a dividend from their shares. - Vote at meetings to influence the decisions being made. Employees - Want a wage/salary and want good conditions of service from the business. - Can vary the quality of their work and can take industrial action (strike) if unhappy.
External = Banks - Want to make sure the business will pay them back. - Can refuse to grant loan. Customers - Want a good quality good/service and want to be treated well by the business. - Can decide to shop elsewhere. Suppliers - Want the business to continue to buy from them and want the business to pay them for goods. - Can change the price they sell the goods for and can change the time it takes for the goods to be delivered and can change the amount of credit they give the organisation. Local Community - Want the business to provide jobs in the community and want to know if the business will have a negative impact on the local area (e.g., pollution) - Can protest if unhappy and can complain to their member of parliament. Pressure Groups. - Want to know if the business will have a negative impact on the area/environment. - As Above. The Government - Want to know if the business will provide jobs in the area/country and want to know how much profit they earn to charge the correct amount of taxation. - Can change the rate of taxation the business has to pay and can introduce and change laws they have to abide by and can grant/refuse planning permission to build new premises.
Name/ Describe Sectors of Industry
PRIMARY = Carries out first stage of production - extracting things from nature.
SECONDARY = Carries out second stage of production - manufacturing, building and processing.
TERTIARY = Selling on finished products to the customer.
Name/ Describe Sectors of The Economy
PRIVATE SECTOR = made up of businesses which are privately owned.
PUBLIC SECTOR = made up of business/services which are owned by the government.
THIRD SECTOR (VOLUNTARY) = made up of businesses who exist to help others - not to make a profit.
Name/ Describe the Factors of Production
LAND = natural resources which businesses use.
LABOUR = the workforce of a business - human workers of all kinds.
CAPITAL = the tools, machinery, equipment that a business owns or controls (money, buildings, equipment etc.)
ENTERPRISE = the business idea that an entrepreneur has on how to use land, labour, capital in his/her business.
Sections of a Business Plan
Introduction Description of the Business/Staff The Product/Service The Market Competition Marketing Plan Operations Plan Financial Information
What Is an Entrepreneur?
Someone who has a business idea, or is prepared to take someone else’s idea and develop it in order to produce a good or provide a service.
What Makes a Good Entrepreneur?
SKILLS communicate well with people make good decisions selling negotiating problem solving marketing good at dealing with finances planning controlling
QUALITIES confidence determination enthusiasm leadership organised problem solver good at coming up with ideas self confident risk taker persuader
What Is a Private Limited Company?
A group of people who come together to set up a business. Each person has a share in the business and has invested money in it.
What Is a Sole Trader?
This is the most common form of business ownership and the easiest to set up. A Sole Trader is a business owned by one person - though it may employ a large mount of people.
What Is a Partnership?
A business association between 2-20 members.
Market Research
Methods of Field Research
PERSONAL INTERVIEW = This involves a face-to-face discussion between two or more people. The interviewer will ask a number of questions.
FOCUS GROUP = A discussion between selected people about a specific good or service. People taking part will be asked a number of questions about the good or service with the aim of generating a discussion on these days.
POSTAL SURVEY = When a list of questions is sent to people through the post. They will be asked to complete the survey and to send it back to the business.
TELEPHONE SURVEY = When people are contacted by telephone and asked to answer questions.
ONLINE SURVEY = When people answer a number of questions that are displayed on a website. It may involve them clicking on the appropriate answer and/or typing in comments.
HALL TEST = Involves a product being given to customers to try and then asking for their feedback on it.
OBSERVATION = Involves watching something and recording what happens. The observer might have to count how many times something happens, or someone does something, or someone’s reaction to a situation.
ELECTRONIC POINT OF SALE (EPOS) = Gather information when consumers are making a purchase at the checkout.
SOCIAL NETWORKING WEBSITE = Can be used to gain feedback from people on goods and services. Used to interact with customers and find out their reactions and opinions on different issues.
Market Research - Advantages and Disadvantages
PERSONAL INTERVIEW - (Advantages) - The interviewer can encourage the respondent to answer questions - The interviewer can ask the person being interviewed to clarify a point if they are unsure of something. (Disadvantages) - It is time consuming and expensive to carry out. - The interviewer will need training in interview skills.
FOCUS GROUP - (Advantages) - The feelings + views of people can be observed as can their body language - Points that are not understood can be claimed. (Disadvantages) - Info can be difficult to analyse - The sample of people used in the focus group might not represent the views of the whole population.
POSTAL SURVEY - (Advantages) - It is fairly cheap to send the survey to large numbers of people spread over a wide geographical area. (Disadvantages) - Can take time to get the information back. - The survey must be designed carefully so that it is not misinterpreted.
TELEPHONE SURVEY - (Advantages) - Points can be clarified. - Don not need to spend money on printing surveys. (Disadvantages) - People might not want to participate in a telephone survey; especially if called at unsuitable time. - Unsuitable for large surveys as people are often only willing to answer a short survey over the telephone because of time issues.
ONLINE SURVEY - (Advantages) -
Market Segments
Where the market for goods/services can be divided into groups of people who have common characteristics: Age Gender Lifestyle Occupation Religion Socio-economic group Income/Social Class Geographical Location Family Structure
Pricing Strategies
LONG TERM: Low Price Market Price High Price SHORT TERM: Skimming Pricing Penetration Pricing Destroyer Pricing Promotional Pricing Demand-Orientated Loss Leaders
Production Methods
JOB PRODUCTION:
Involves making a product one at a time, from start to finish, before another is begun. The products made are usually hand crafted by skilled workers using very little machinery.
BATCH PRODUCTION:
Involves making a specific number of identical products in a batch, from start to finish, before a batch of a different product is then made. The products are made using a mixture of machines and people.
FLOW PRODUCTION:
Involves passing an identical product down line of production. At each stage on the line a different operation is carried out until the product reaches the end and it is completed. Products made using line production are mass produced by machines operated by a very few people or computers (e.g. car manufacture, soft drink manufacture).
