Business Theme 1 - 3 mark questions Pt.1

Explain one benefit to a small business from having a unique selling point (3 marks)

it can help the business stand out from the competition, as they fulfil the needs of customers that other businesses cannot, therefore they can make more revenue

Explain one disadvantage to a small business of manufacturing a high quality product (3 marks)

High quality products may be more expensive to produce, because the cost of raw materials may be high, therefore the business may have to charge a premium price that some customers cannot afford

Explain one reason why new business ideas come about (3 marks)

New business ideas may come from a gap in the market, as new customer wants/needs may come about therefore leading to entrepreneurs coming up with new business ideas

Explain one risk for an entrepreneur when starting a new business (3 marks)

One risk is financial loss, as their business may not be able to compete with other already established businesses. So, the bigger business will keep all of their customers, therefore leading to failure for the small business.

Explain one way a small business could add value to a product (3 marks)

One way a small business could add value to a product is by increasing quality, so it is more appealing to customers, therefore customers are willing to spend more

Explain one way an entrepreneur can reduce the risk of failure when starting a new business (3 marks)

One way is by market research, so they can find out what customers want, therefore they can make their business more appealing to other customers and reduce risk.

Explain why an entrepreneur may adapt an existing product to come up with a new business idea

To satisfy a demand for a new or previously unknown customer trend

Identify a reward from business activity

Profit

Identify two examples of a service

Train ride, lawyer

Outline one risk taken by an entrepreneur when starting a new business

FInancial risk

Explain disadvantages to a small business of using a focus group to collect market research data (3 marks)

One disadvantage is that some of the participants may be hesitant to express their thoughts and honest opinions, so they will not be truthful, therefore leading to inaccurate data

Explain one advantage to a small business of using market mapping (3 marks)

One advantage is that you can scout the competition in the area, so it reduces risk, therefore leading to a greater chance of success.

Explain one benefit to a small business of understanding customer needs

One advantage is that it enables the business to provide a product or service that directly meets customers' requirements.

Explain one disadvantage to a small business of using qualitative data for market research

It can be time consuming and costly to gather and analyse

Explain one way a small business could use market segmentation to target customers

They could use market segmentation to focus on a younger demographic and then use social media to advertise their products.

Analyse the impact on a business of using market mapping to target customers

It can help marketers gain deeper insights into consumer behaviour in terms of attitudes and perceptions, making it easier to target customers

Discuss how the decision making of a small business may be affected by increased competition

if two businesses offer the same product and one of the businesses offers a discount for a limited time, the other business may need to do the same.

Identify something that could be used to identify a market segment

Age, gender, lifestyle, interests

Identify an example of secondary market research

government records

Identify what could be used to identify customer needs

Surveys or focus groups

Explain a disadvantage of using an overdraft as a source of business finance

You have to pay an annual interest rate on the amount by which you’re overdrawn

Explain one advantage to a small business of using trade credit as a source of finance

puts less pressure on cashflow that immediate payment would make

Explain one drawback to a business of having low levels of cash

Inability to pay suppliers

Explain one possible non-financial aim an entrepreneur may have when starting a small business

personal satisfaction

Explain one way a small business could reduce its variable cost

find a cheaper supplier