BUISNESS EDEXEL B PAPER 1

LITERATELY EVERYTHING YOU NEED TO KNOW

Why do new business ideas come about?

Changes in technology, changes in what consumers want, and products becoming obsolete.

What is an entrepreneur?

Someone who takes the risk to set up and run a business.

What does obsolete mean?

Out of date or no longer used.

What is e-commerce?

Buying or selling goods and services online.

What is m-commerce?

Using mobile devices to buy or sell goods and services.

What is a payment platform?

Online systems that allow businesses to take electronic payments.

What does “place” refer to in business?

Where and how a product is sold to customers.

Why might a business adapt an existing product?

To respond to changes in consumer needs or technology.

Why is understanding customer needs important?

It helps a business to attract and keep customers.

What are the main risks an entrepreneur faces?

Financial loss, business failure, and lack of security.

What are the rewards of starting a business?

Business success, profit, independence, and personal satisfaction.

What does “lack of security” mean?

When an entrepreneur has no guaranteed income or job stability.

How do you calculate profit?

Profit

How can a business reduce risk?

By carrying out market research and planning carefully.

What is enterprise?

The process of taking risks to set up and run a business.

What are goods and services?

Goods are physical items; services are non-physical activities provided to customers.

What is adding value?

The difference between the selling price and the cost of making the product.

How can businesses add value?

Through branding, quality, convenience, unique selling points, and good customer service.

What are the roles of an entrepreneur?

Organising resources, taking risks, and making business decisions.

What are customer needs?

Price, quality, convenience, and choice.

What are the benefits of meeting customer needs?

Increase sales, build loyalty, improve reputation, and gain repeat customers.

What is market research?

The process of gathering information about customers, competitors, and the market.

What is the difference between primary and secondary research?

Primary is first-hand data; secondary is data already collected by others.

What are methods of primary research?

Surveys, questionnaires, focus groups, and observations.

What are methods of secondary research?

Internet reports, government data, market reports, and sales data.

What is qualitative data?

Data based on opinions and feelings.

What is quantitative data?

Data based on numbers and statistics.

What is market segmentation?

Dividing a market into groups of buyers with similar characteristics.

What are common market segments?

Age, gender, income, lifestyle, and location.

What is a market map?

A diagram that shows how products are positioned in the market.

What is competition?

Rivalry between businesses that sell similar products.

Why is competition important for businesses to understand?

It helps them stay ahead and make strategic decisions.

What are business aims?

The long-term goals a business wants to achieve.

What are business objectives?

Specific targets to help achieve aims.

What are financial aims of a business?

Survival, profit, sales, market share, and financial security.

What are non-financial aims?

Personal satisfaction, independence, social objectives, challenge, and control.

What is revenue?

The total income a business earns from sales.

How do you calculate revenue?

Revenue

What is a fixed cost?

A cost that does not change with output, e.g. rent.

What is a variable cost?

A cost that changes with output, e.g. materials.

What is total cost?

Fixed costs + Variable costs.

How do you calculate break-even?

Fixed costs ÷ (Selling price – Variable cost per unit).

What is the margin of safety?

Actual output – Break-even output.

What is profit?

The amount left after all costs have been paid from revenue.

What is a cash-flow forecast?

A prediction of cash inflows and outflows over time.

Why is cash important to a business?

To pay suppliers, employees, and bills on time.

How do you calculate net cash flow?

Cash inflows – Cash outflows.

How do you calculate closing balance?

Opening balance + Net cash flow.

What are sources of short-term finance?

Overdrafts and trade credit.

What are sources of long-term finance?

Loans, share capital, retained profit, venture capital, personal savings, and crowdfunding.

What is an overdraft?

When a business spends more than is in its bank account.

What is trade credit?

Buying goods now and paying later.

What is share capital?

Money raised by selling shares in the business.

What is a loan?

Borrowed money that must be repaid with interest.

What is retained profit?

Profit kept in the business to reinvest.

What is venture capital?

Money invested by an individual or company in exchange for equity.

What is limited liability?

When owners are not personally responsible for business debts.

What is unlimited liability?

When owners are personally responsible for business debts.

What is a sole trader?

A business owned and controlled by one person.

What is a partnership?

A business owned by two or more people.

What is a private limited company (Ltd)?

A business owned by shareholders with limited liability.

What is a franchise?

A business model where one business sells the right to use its brand and idea to another.

Who is the franchisor?

The original business that allows others to trade under its name.

Who is the franchisee?

The person who buys the right to trade using the franchisor’s brand.

Where to locate is an important decision for all businesses – why?

Because location affects costs, sales, and accessibility to customers and suppliers.

What does proximity mean?

How close a business is to key factors like customers, labour, materials, and competitors.

What are the 4 main factors influencing location?

Proximity to market, proximity to materials, proximity to labour, and proximity to competitors.

What does labour mean?

The workforce or employees available for a business.

Why might a business want to be far away from competitors?

To attract customers without competition nearby.

What is a benefit of locating close to competitors?

To attract more customers and benefit from shared footfall.

Why might some businesses not need to be close to customers?

Because they operate online or deliver nationwide.

What are the 4 Ps of the marketing mix?

Product, Price, Place, Promotion.

What does marketing mean?

The process of identifying and satisfying customer needs profitably.

Why must the marketing mix be integrated?

So all elements work together to meet customer needs effectively.

Why might a business adapt its marketing mix?

To respond to changing technology or competition.

How does technology affect the 4 Ps?

It changes how products are made, priced, promoted, and sold (e.g. social media advertising).

How does competition affect the 4 Ps?

Forces businesses to improve quality, lower prices, and innovate.

What is a business plan?

A document outlining a business’s aims, objectives, and strategies.

Why is a business plan important?

It helps secure finance and guides business decisions.

What are 3 things included in a business plan?

Marketing strategy, financial forecasts, and objectives.

Why might a business plan be persuasive?

It gives confidence to investors and lenders.

What is a stakeholder?

Anyone with an interest in a business.

Who are the main stakeholders in a business?

Owners, employees, customers, suppliers, local community, government.

What’s the difference between internal and external stakeholders?

Internal are inside the business (owners, employees); external are outside (customers, suppliers).

How can stakeholders be affected by business decisions?

For example, higher wages benefit employees but increase costs for owners.

Why can stakeholders have conflicting aims?

Because different groups want different outcomes (e.g. profit vs. fair pay).

What is technology in business used for?

Communication, production, marketing, and sales.

What are digital communication methods?

Email, websites, video calls, social media, instant messaging.

How has technology influenced how businesses operate?

It’s made processes faster, reduced costs, and enabled remote working.

How does technology influence the marketing mix?

It allows personalised promotions and global reach online.

What does legislation mean?

Laws that businesses must follow.

What are examples of laws that affect businesses?

Employment law, consumer law, health and safety law, equality law.

How does legislation affect businesses?

It increases costs but ensures fair treatment and safety.

How does legislation affect consumers?

It protects them from unsafe or unfair products.

Why is legislation important?

It protects people and ensures ethical business behaviour.

What is the economy?

The system by which a country produces and uses goods and services.

How does a rise in unemployment affect businesses?

Less consumer spending and lower sales.

How does a fall in unemployment affect businesses?

Higher sales but harder to recruit staff.

How does a rise in consumer income affect businesses?

Increases demand for goods and services.

How does a fall in consumer income affect businesses?

Reduces demand and sales.