Business

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  • Created by: JoshBeard
  • Created on: 11-07-19 10:13
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  • Business
    • Topic 1.1 Enterprise and entrepreneurship
      • The dynamic nature of business
        • Businesses operate in dynamic markets. New opportunities arise and new businesses and business ideas are created. Wherever there is a need for a product or service, an entrepreneur may take the chance to meet that need with a new business venture.
        • Changing technology can:
          • Make new Products and services faster
          • Make products smaller (More cheaper)
          • Make products and services cheaper
          • Make products and services easier to use
          • Make products safer.
        • Changing consumer Needs can be caused by:
          • Changes in national demographic
          • Changes in the economy
          • Changes in lifestyle, such as the way consumers spend their leisure time
          • Changes in fashions
          • Changes in Technology
      • Risk and reward
        • Before an entrepreneur starts their own business or sets up their own company, they will consider the risk and rewards associated with their business venture. some businesses may be considered higher risk than others, but they may also offer greater rewards to their owners.
        • Rewards
          • Business success - personal satisfaction, excellent products/ services, growth, and awards and recognition
          • Profit - Where revenue exceeds costs over a period of time
          • Independence - many business owners will value the freedom of working for themselves over working for someone else.
        • Risk
          • Business failure - through poor cash flow, fall in revenue or the action of competitors
          • Financial loss - an owner my lose the capital they invest in the business if it fails. This in sales revenue or the action of competitors
          • Lack of security - Not working for someone else means no guaranteed income, sick pay or holidays
      • The role of business enterprise
        • A business or enterprise is a person or organisation with the purpose of producing goods and services to meet the needs of customers. A business might produce its own goods or buy them from a supplier and sell them to customers
        • The purpose of all products and services is to meet the needs of customers, often in order to make a profit.
    • Topic 1.2 Spotting a Business opportunity
      • Customer needs
        • Customer needs 1
          • If a business is to make products and services that desirable and profitable, they must be able to meet customer needs successfully. A business that can meet customer needs will encourage repeat purchase and attract new customers
          • What customer want:
            • When making decisions about products and services, customers will make decision based on the balance of the four factors shown in the diagram. All of the factors are linked through price, because a business's ability to provide a product at the right price will depend on the level at which it meets the other factors. For example, improving the standard of product quality by using better quality raw materials may increase costs, which will have an effect on the price
        • Customer needs 2
          • A business cannot treat all of its customers the same way. Customer with similar needs will be influenced in different ways by their personal circumstances and characteristics. A business must understand the differing needs of its customers os that it can continue to generate sales and survive.
      • Market research
        • The role of market research
          • A business will carry out market research appropriate to its size and the nature of its market. The purpose of market research is to help a business to understand its customers, competitors and the market in which it operates, in order to make informed decisions about its products and services
        • Types of market research
          • Secondary research (desk research) is the process of gathering secondary data, which is information that already exists.
          • Primary research (field research is collecting information that did not exist before. this first-hand contact with customers is valuable to a business in understanding its market.
      • Market segments
        • A market segment is a group of buyers with similar characteristics and buying habits. segmenting a market allows a business to understand its customer needs and to target its customers better.
      • The competitive environment
        • A market is competitive when there are a large number of businesses telative to the number of potential customers. competition is also high in markets where businesses sell very similar products and services that are difficult to differentiate
    • Topic 1.5 Understand external influences on business
    • Topic 1.3 Putting a business idea into practise
      • Aims and Objectives
        • All businesses set objectives. sometimes these are financial objectives, which can be expressed in money terms. Businesses also have non-financial. these are more personal and may involve helping others.
        • The objectives hierarchy
          • Aims are the general goals that a business sets. and aim can be thepurpose for a business's existence.
          • Objectives are more specific than aims, but they contribute to a business achieving it aims. Objectives can be either financial or non-financial
      • Revenues + Cost + Profit
        • A business must understand the difference between the price its charges to customers and the cost of producing its products. If it knows how many products it sells, it can calculate its total revenue and its total costs. It can then calculate profit.
        • Calculating revenue
          • Revenue, Sales revenue or turnover is the amount of income received from selling goods or services over a period of time it can be calculated using the formula:
            • Revenue = Price x quantity
        • Fixed and variable costs
          • Variable costs change directly with the number of products made, e.g. raw materials
          • Fixed costs do not vary with the output produced by a business, e.g. business rates
          • Variable costs = Cost of one unit x quantity produced.
        • Total costs are all the costs of a business. It can be calculated using the formula:
          • Total Costs = Total fixed costs + Total variable costs
        • Profit
          • Profit occurs when revenues of a business are greater than its total costs. If a business's costs are greater than its revenues then it will make a loss. Profit or loss can be calculated using formula.
          • Profit = Sales revenue - Cost of sales
      • Cash and Cash flow
        • Calculating cash flow
          • Cash flow is the money flowing into and out of a business on a day-to-day basis. A cash-flow forecast predicts how cash will flow through a business over time. a business can use it to identify periods where it could have a cash flow problem.
    • Topic 1.4 Making the business effective

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