Business- 1-2 Business activity & Marketing

three purposes of business enterprise and entrepreneurship

spotting an opportunity, developing an idea, satisfying customer needs

characteristics of an entreprenueur

creativity, confidence, risk-taking, determination

financial risks of entrepreneurship

losing savings to pay of debts

financial rewards of entrepreneurship

potential to make a lot of money

non financial risks of entrepreneurship

health- strain of running a business

non financial rewards of entrepreneurship

independance, salf satisfaction, making a difference

steps involved in developing a business idea

the idea, the people, market research, finance, competitors

business plan

indentifying the market, the rescources, the finance needed to start or grow up the business, achieve the business’ aims and objectives

what happens when a business becomes incorporated

it has a seperate and distinct legal entity that is independent of the business owners

what business ownerships are NOT incorporated

sole traders, partnerships

what business ownerships ARE incorporated

private limited companies and public limited companies

what do incorporated business ownerships have

limited liability

advantages of being a sole trader

easy to set up, easy for the owners to control, business info privated, workload

easy to set up

few forms to complete

easy for owners to control

owner makes all the decisions

business info private

no info about profits must be published

workload

the owner makes all the decisions but may have to work for long hours

disadvantages of being a sole trader

continuity, raising finance, level of liability

continuity

the business stops when the owner dies

raising finance

this is limited because there is only one person to invest savings and banks may think they are risky to lend to, the business cannot sell shares to raise finance

level of liability

owner has unlimited liability

advantages of partnerships

easy to set up, easy for the owners to control, business info private

easy to set up

only needs a deed of partnershipe

easy for the owners control

partners make decisions between themselves

business info priv

no info about profits must be published

disadvantages of partnerships

easy for owners to control, continuity, raising finance, level of liability, workload

easy for owners to control

it is possible that the partners may disagree which would lead to problems making decisions, profits will have to be shared between all the owners

continuity

a new deed of partnership will be needed when an owner leaves or joins

raising finance

usually only a few partners to invest in it so banks might think its risky to lend money- limits finance, partnership cannot sell shares to raise finance

level of liability

the owners have unlimited liability

workload

the work is shared between owners but fewer partners means more workload

advantages of private limited companies

easy to control continuity, raising finance, level of liability

level of liability

owners benefits from limited liability

easy to control

shareholders can restrict who can buy shares

continuity

business continues even if shareholders sell their shares or die

raising finance

new shareholders can invest and banks are willing to lend

disadvantages of private limited companies

easy to set up, business info priv, workload

workload

managers are employed to make decisions

easy to set up

legal documents required which take time to produce

business info priv

public can see info about hte business

advantages of public limited company

continuity, raising finance, level of liability

continuity

busness continues even if shareholders sell their shares of die

raising finance

new shareholders can invest and banks are willing to lend

level of liability

the owners have and benefit from limited liability

disadvantages of public limited companies

easy to set up, easy to control, business info, workload

easy to set up

rewuires legal documents- take time to produce

easy to control

anybody can buys ahresb

business info priv

public can see info about the business

workload

managers are employed to make decisions

effect of limited liability on owner

shareholders do not need to use their own savings or other private possessions to pay off debts of the company if the business fails

effect of limited liability on business

helps business start up , raise extra finance to expand because people are prepared to invest knowing that they are not risking all their personal possessions

other impacts of limited liability

can be complicated as various legal documents need to prepared and sent

effect of unlimited liability on the owner

owners must pay back all the debts, business going bankrupt- owners must sell any assets the business has, e

effect of unlimited liabilty on the business

people may be discouraged from setting up a business because of the risk to their savings and other personal assets, can limity the creation and expansion of sole trader and partenrship businesses

other impacts of unlimited liability

easier to start up as a sole trader or partnership because legal documents do not have ton be sent

suitability of sole trader

suitable for people that:

only need a small amount of finance

low financial risk

limited, non specialist skills

suitability of private limited companies

suitable for people that:

need larger amounts of finance

have in increased or high financial risk

have owners who wish to keep control of the business

suitability of partnserships

suitable for people that:

need larger amounts of finace

have low financial risk

wider range of skills

owners who want to keep control of business

suitability of public limited companies

wishes to row

needs very large amounts of finance

has very high financial risk

business objectives

survival, profit, growth, providing a service

survival

concerned with business’ ability to continue to trade in the long termp

rofit

reward to owners for taking a risk by investing their money in the business

growth

increasing sales or market share

a way of increasing profits

providing a service

some owners want satisfaction of giving customers good service

can be seen as a way of making a profit as customers will return and new customers will use the business

reasons behind business objectives

survival, profit, growth, rpoviding a service

survival reason

objective for a new business so that it can become estabilished and secure by gaining customers and then aim to make profit in the longer term, market may by competitive

growth

may set objectives for growth of sales or market share to help them survive, established businesses may want to grow to gain more power in the market, reduce competition and increase profits

providing a service

help business to get a good reputation enabling it to attract new customers as well as retain its existing customers

help a business survive or increase its profits

owners get satisfaction from its customers

internal stakeholders

owners, employees

owners

role: provide finance to start up and expand the business

may manage or run business or may employ managers to run it on their behalf

objectives: make profits

employees

role: produce goods and services

objectives: satisfaction of having a job and earning an income

be treated fairly by employers

enjoyment of social aspects of working with colleagues

external stakeholders

customers, suppliers, government, local community

customers

role: buy goods ans ervices

objectives: enjoy the beeneifts provided by goods and services

pay affordable prices

suppliers

role: sell goods for resale or components and materials needed to manufacture goods or provide a service

objectives: make sales, earn profits

government

role: help businesses, workers and communities

objectives: encourage businesses as this leads to high employment and prosperous communities

government wants to encourage businesses because this increases the taxes paid to governemnt

local community

role: provide workers, monitor and influence business activities

objectives: have a local area which is prosperous healthy and safe

organic growth

increasing output, gaining new customers, increasing market share, developing new products

main purposes of marketing

indentifiying and understanding customers, informing customers, increasing sales

market research

identifying and understanding customer needs in order to produce goods and services to meet those needs

market research aims to find out info about the target market

their age, economic status, culture, location, what they want in a product/service

types of market research

primary and secondary

alternative names for primary research

field research

methods of primary research

questionaires, interviews, trials, focus groups

advantages of questionaires

cheaper, can easily target particular consumers

disadvantages of questionaires

difficult to predict how many completed questionaires will be available, people may not understand what is being asked

advantages of interviews

interviewer can explain questions, sonsumers can be targetted easily

disadvantages of interviews

expensive, consumers may feel uncomfortable

advantages of trials

business can save money

disadvantages of trials

costly to set up

advantages of focus groups

represents target market for business —> accurate data

disadvantages of focus groups

from small groups —> expensive data

sources of secondary research

census, websites, internal data, newspapaers/magazines

advantages of secondary research

already completed —> cheaper

disadvantages of secondary research

might not be exactly what the business wants

advantages of uk census

info comes from a lot of people, already collected → reduces business costs

disadvantages of uk census

has not been collected to meet the specific needs of the business, info will need careful interpretation

advantages of data from newspapers and magazines

up to date, cheap

disadvantages of data from newspapers and magazines

general info, not specific to the business

advantages of data from websites

cheap to collect

disadvantages of data from websites

info will need careful interpretation