Studied by 14 people
outline
make two main points, link them together
explain
state a fact, give two points, expand on these and give reasons
analyse
talk about the main features, explain how they collectively affect the business
discuss
long answer, describe and explain
justify
use the info given to recommend one of the two options given
evaluate
discuss and analyse both sides of the issue conclude and make a final judgement
enterprise
the process of identifying new business opportunities and taking advantage of them
add value
improve a product so people are willing to pay more
how to add value
convenience, branding, design, quality, USP
why new business ideas come about
changes in tech, customer wants/needs, other products becoming obsolete
new business ideas can be
original or an adaptation of an existing product
what does an entrepreneur do
take risks, organise resources, makes business decisions
risks
financial loss, lack of security, business failure
rewards
success, profit, independence
marketing mix
place, product, promotion, price
strengths and weaknesses
price, customer service, quality, product range, location
what does market research help with
making informed decisions, spotting gaps in the market, reducing risk
primary research examples
questionaires, surveys, focus groups, observation
advantages of primary research
up to date, relevant, specific
disadvantages of primary research
expensive, time consuming
examples of secondary research
market research reports, government reports, newspapers, magazines, internet
secondary research advantages
cheap, easily found, instantly available
secondary research disadvantages
not always relevant, not specific, out of date
business aims
survival, maximise profit, increase market share, maximise sales, achieve financial security
market share
the percentage of a markets total sales a company or product has made.
non financial aims for starting a business
personal challenge, satisfaction, independence and control, doing whats right for society
factors that affect the aims and objectives
the size and age of business, who owns it, the level of competition
the margin of safety
the gap between the current level of output and the break even output
credit terms
tell you how long after agreeing to buy a product the customer has to pay. This can affect the timings of a businesses cash flow
why do firms need finance
start up, cash flow, additional finance, delay payment, day-to-day running costs, expansion
short term sources of finance
trade credit, overdrafts
long term sources of finance
loans, personal savings, share capital, venture capital, retained profit, crowd funding
advantages of a sole trader
easy to set up, get to be your own boss, get to decide what happens to profits
disadvantages of a sole trader
work long hours, unincorporated, unlimited liability, hard to raise money
advantages of partnerships
more owners -more ideas, more skills + expertise, people share the work, more capital so business grows faster
disadvantages of partnerships
partners are legally responsible for each others actions, most have unlimited liability, disagreements are common, profits are shared
what limited companies owned by
shareholders
what are the two types of limited companies
private and public
private limited companies
shares can only be sold if all shareholders agree, often family members, have ‘Ltd’ after their name
Ltd. advantages
limited liability, easier to get a loan or mortgage
Ltd. disadvantages
more expensive, legally obliged to publish accounts every year
franchising advantages
recognition, trust, less risk of failing, easier to get a loan, provided with training, management and accounting
franchising disadvantages
limited freedom, franchisee has to pay a lot to startup, then make regular payments
what influences location
location of raw materials, labour supply, competition, using the internet, location of the market
factors that affect the marketing mix
technology, customer needs, competition
who are business plans made for
the owner and financial backers
what is a business plan
an outline of what a business will do and how it aims to do it
what does a business plan help with
makes owner think carefully about what the business will do, the organisation and resources required, convince financial backers, reduce risk, prioritising objectives
what should a business plan contain
how the business will be run, the idea, USP, aims and objectives, target market, marketing mix, location, finance
who are stakeholders
owners, employees, suppliers, local communities, customers, government, pressure groups
what is e-commerce
buying and selling online
who has to be paid the National Minimum Wage
22 and under
who has to be paid the National Living Wage
23+
which act states that recruitment procedures can’t discriminate against people
Equality act 2010
What do businesses have to do to be safe
risks are properly controlled, risk assessments, staff have training
pros and cons of health and safety legislation
fewer accidents, more productive, less time off work, expensive, have to pay compensation is anyone is injured
what does the Consumers Rights Act cover
how goods and services can be sold
what are the three criteria of the Consumers Rights Act
the product should be fit for its purpose, it should match its description, it should be of satisfactory quality. If these are not followed, the customer can ask for money back, repair or replacement.
how do consumer laws affect businesses
if they break it, they are faced with costs and inconvenience, they could end up in court, harm their reputation, have to train staff properly.
what does unemployment mean for the economy
the economy produces less output than if everyone was employed, everyone suffers
how does unemployment help businesses
lower wages, fill jobs easily, gov could give grants to firms who open and provide jobs
how does unemployment cause issues for businesses
less disposable income, lack of demand
what do tax rates determine
the percentage of a businesses profits have to be paid to the government
how does income tax affect spending
if it falls, they have more disposable income, consumer spending increases
what is inflation
the increase in price of goods and services
how does inflation impact businesses
consumer spending, cost of labour, global competition
methods of internal growth
targeting new markets (selling to new people) and developing new products
external growth is…
faster but more risky
methods of external growth
merger or a takeover
4 ways to merge/take over other firms
join with a supplier, join with a competitor, join with a customer, join with and unrelated firm
downsides of mergers and takeovers
less than half are successful, lack of motivation, clashing management, cost-cutting, tension
what is an economy of scale
when a business expands and the average costs or a product are cheaper
why do economies of scale happen
larger firms need more supplies so buy them in bulk, they can afford to buy and operate more advanced machinery
diseconomies of scale
areas where the growth can lead to increase in average unit costs
larger business funds
retained profit, fixed assets, loan capital, share capital
why do business objectives change
new legislation, changes in market conditions, changes in tech, performance, internal changes
what is globalisation
the process by which businesses and countries around the world become more connected
how globalisation impacts businesses
imports, exports, business location, multinationals
barriers to international trade
tariffs, trade blocs
trade blocs
groups of countries with few or no trade barriers
Note 
Flashcard (93)