GCSE Business Edexcel Paper 1

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What is the role of an entrepreneur?

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108 Terms

1

What is the role of an entrepreneur?

-organise resources -take risks -make business decisions

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2

Why do new business ideas come about?

-changes in consumer wants -changes in technology -products and services becoming obsolete

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3

How do new businesses come about?

-adapting existing products/services/ideas -original ideas

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4

What is the risk of business activity?

-business failure -lack of security -financial loss

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5

What is the reward of busniess activity?

-profit -independence -business success

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6

What is the role of business enterprise and the purpose of business activity?

-to meet customer needs -to produce goods or services -to add value: convenience, branding, quality, design, usp

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7

What are the strengths and weaknesses of a competitor based on?

-price -quality -location -product range -customer service

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8

How do businesses use market segmentation to target customers?

-demographics -location -lifestyle -income -age

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9

What are the methods of secondary research?

-internet -market reports -government reports

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10

What are the methods of primary research?

-surveys -questionnaires -focus groups -observations

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11

What is the purpose of market research?

-to identify and understand customer needs -to reduce risk -to inform business decisions -to identify gaps in the market

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12

What are some examples of customer needs?

-price -quality -choice -convenience

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13

Why is it important to identify and understand customers?

-to generate sales -for business survival

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14

What is a lease?

money commonly used to finance land, equipment, vehicles etc for a specific period of time -asset is returned to the lessor

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15

What is a hire purchase?

- money commonly used to finance land, equipment, vehicles etc for a specific period of time, the asset is retained by the business

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16

breakeven chart instructions

-output (units) on the x-axis -costs and revenue on the y-axis

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17

what is the formula for the margin of safety?

actual sales - break even sales

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18

examples of long-term source of finance

-loans -mortgage -hire -grant -share capital

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19

what does breakeven analysis assume?

that the external environment is stable

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20

how can loses be reduced or turned into profit?

-cutting costs -increasing revenue

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21

what is profit the reward of?

risk-taking

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22

what can profit be used for?

-to reward owners -to invest in growth -to save for the future

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23

what is a mortgage?

a long-term loan for buying buildings

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24

what are total costs?

the money spent by the firm on producing a given level of output

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25

example of short-term sources of finance

-overdraft -trade credit

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26

three reasons why a business needs finance

-to start up -to run the business -to expand the business

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27

what are overheads?

another term for costs

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28

what is revenue?

the income earned by a business over a period of time

  • depends on the number of items sold and their selling price

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29

what is the formula for revenue?

price per unit x quantity

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30

what are costs?

expenses paid out to run the business

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31

what are fixed costs?

costs that don't change with output

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32

examples of fixed costs

-rent -salaries -utilities -insurance

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33

what are variable costs?

costs that change with output

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34

examples of variable costs

-wages -raw materials -machinery costs (ongoing)

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35

what is the formula for fixed costs?

total costs - variable costs

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36

when does the breakeven point fall?

when costs go down

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37

what makes a business solvent?

when it has enough working capital

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38

what is the formula for total costs?

fixed costs + variable costs

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39

what is a bank loan?

an amount of money provided by a back to be paid back with interest, over a set period of time

-banks often have to approve business plans for startups

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40

what is net cash flow?

the difference between cash inflow and cash outflow over a period of time

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41

what is cash flow?

the physical movement of cash in and out of a business

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42

what is a grant?

money provided by the government or a charity

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43

when is the breakeven point reached?

when the total revenue exactly matches the total costs and the business is not making a profit or a loss

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44

what is the formula for profit?

total revenue - total costs

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45

what is trade credit?

when suppliers deliver goods now and are willing to wait for a set period of time before they receive the money

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46

what is an overdraft?

where a bank allows a firm to take out more money than it has in it's bank account

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47

what is the formula for calculating breakeven?

fixed costs/selling price - variable costs

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48

what is the formula fro contribution?

selling price - variable costs

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49

why is it important that market research data is reliable?

-for consistency -incorrect market research could lead to a lack of demand -decrease in sales

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50

what is the purpose of planning business activity?

-minimises risks -helps obtain finance

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51

what is the role of a business plan?

-to identify business ideas -to identify aims and objectives -to identify their target market -to forecast revenue -to forecast profits -to forecast losses -to forecast costs -to forecast cash-flow -to identify sources of finance -to identify location -explain the use of the marketing mix

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52

what are advantages of using social media to collect market data?

-low cost -quick -easy to set up

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53

what are disadvantages of using social media to collect market data?

-potential small sample size of customers

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54

what is the impact of technology on the marketing mix?

-introducing opportunities such as social media, machinery -introduces threat -allows competitors to be better

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55

what is the impact of changing consumer needs?

-by introducing e-commerce, it is more convenient for consumers -by changing prices due to economic conditions (disposable incomes)

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56

how can businesses balance the marketing mix?

-change prices to undercut competitors -increase the number of places that a product is sold

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57

what is the purpose of promotion in the marketing mix?

to raise awareness of a product through advertising -offering discounts -on television or billboards -on social media -through sponserships

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58

The Marketing Mix - PLACE

-where a product is being sold and how it is delivered

  • online, retailer , from the manufacturer

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59

The Marketing Mix - PRODUCT

the good or service that the business is selling

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60

The Marketing Mix - PRICE

-the amount that a consumer has to pay for a good or service -the amount of competition for other businesses -customers opinions about the products value -cost to produce

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61

How are products different?

-name -design -ingredients -packaging -price -target market -quality

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62

What is the product range?

a set of variations of a specific products made to appeal to different market segments

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63

Advantages of e-commerce

-lower operating costs -wider audience -trade 24/7 -respond to changing consumer buying habits

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64

What is the impact on the business on location decisions?

-consider e-commerce or m-commerce -cost effective -convenient for customers

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65

What is the nature of business activity?

-imports and exports (close to airport) -tourists -type of raw material -inertia - keeping things how they have always been

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66

How does proximity to competitors affect a business?

-may choose to be the only supplier in a local area -may choose to be close to competition to offer choice

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67

How does proximity to materials affect a business?

-business may want to consider the transportation of materials -impact on carbon footprint

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68

How does proximity to labour affect a business?

The business should consider where potential employees may work or how they could get to work eg) public transport

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69

How does proximity to market affect a business?

-business should consider the location of the potential customers before they consider the business location -research footfall of the area

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70

What are the disadvantages of franchising?

-royalties can be very high -brand reputation may be damaged if they do not maintain reputation

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71

What are the advantages of franchising?

-lower risk than setting up independently -benefits from the major marketing campaigns support and training is provided by the franchisee

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72

What are royalties?

Percentage of sales revenue to be paid to the franchisor to the franchisee

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73

What is a Franchisor?

An established business that gives permission to an entrepreneur to trade using it's branding and products

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74

What is a franchisee?

An entrepreneur who pays a fee to trade using the branding and products of an established business

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75

What is a franchise?

When one business gives another business permission to sell its goods and services using its name/brand

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76

What are the disadvantages of a partnership?

-conflicting ideas -shared profits

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77

What are the advantages of a partnership?

-business owners may have more ideas -risk is shared -easy to set up -financial information is kept private

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78

What is a partnership?

A business where 2-20 people run a business: -share financial risk -share decision making -share the profits

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79

What are the disadvantages of a sole trader?

-unlimited liability -difficult to raise enough money to expand -lots of pressure on the one owner -not flexible because if the owner isn't working, no money is being made

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80

What are the advantages of a sole trader?

-complete control of the business -quick and easy to set up -keeps all profits -financial information is private

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81

What is a sole trader?

A type of unincorporated business that is just owned by one person -unlimited liability

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82

What are the disadvantages of public liability companies?

-limited liability -can be easier to raise finance to establish or grow the business -continues to trade even if shareholders change

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83

What are the disadvantages of public limited companies?

-complex to set up -disagreements between shareholders -financial information is published

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84

What are shareholders?

Investors who are part-owners of the company

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85

What is a private limited company (PLC)?

An incorporated business that is owned by shareholders that have limited liability

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86

What is unlimited liability?

The level of risk goes beyond the amount of money invested so personal assets would have to be sold to pay of the businesses debt

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87

What is limited liability?

The level of risk is limited to the amount of money that has been invested into the business

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88

What is qualitative data?

Data that can be specified with numbers

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89

What is the formula for sales revenue?

quantity sold x selling price per unit

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90

In what TWO ways does technology impact ways of working today?

-more efficient -remote working: less office space needed, employee satisfaction, lack of conflict

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91

How does the marketing mix integrate?

-different products can be sold in different places

-if a business uses high volume margin pricing strategy, it is likely that there will be very little budget available for promotion

-a product targeted at a premium market must be promoted using appropriate channels to ensure that the message reaches its target audience

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92

What does technology have an affect on?

-flexibility -cost -productivity -quality

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93

How can an integrated marketing mix influence competitive advantage?

PLACE - if the location of your business is more competitive than your competitors then consumers are more likely to purchase from your store

PRICE - customers want a reasonable price - high or low

PROMOTION - marketing campaigns etc

PRODUCT - USP, quality

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94

What are the 4 P's?

PRICE

PRODUCT

PLACE

PROMOTION

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95

what is the formula for interest?

(total repayment - borrowed amount/borrowed repayment)x100 = %

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96

what is a business aim?

what a business strives to achieve

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97

what is a business objective?

steps in order to achieve their aims

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98

what are examples of financial aims and objectives?

survival, profit, sales, market share, financial security

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99

what are examples of non-financial aims and objectives?

social objectives, personal satisfaction, challenge, independence, control

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100

why is cash important to a business?

-to pay suppliers -to prevent business failure

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