Business Studies

Just a small mindmap on product differentation, adding value, goods, consumers & profit and calculated risk taking

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  • What is a business?
    • A business is any organisation that makes goods or provides services.
      • Goods are physical products - such as burgers or cars.
      • Services are non-physical items - such as hairdressing.
      • Customer needs are the wants and desires of buyers.
    • Suppliers, consumers and markets
      • Businesses buy the products they need from suppliers – firms selling products to other businesses - and sell to customers. The individual who uses the product is called a consumer.
      • Adding value
        • Inputs: things like raw materials, equipment, buildings and staff.
        • Outputs: products
        • A business adds value when the selling price of an item produced is higher than the cost of all the resources used to make it.
        • Production is the business activity of using resources to make goods and services.
    • Calculated risk taking
      • a chance of failure, the probability of which is estimated before some action is undertaken.
        • The way failure is estimated is by planning ahead.
          • So businesses draw up business plans.
            • A business plan is a report by a new or existing business that contains all of its research findings and explains why the firm hopes to succeed. A business plan includes the results of market research and competitor analysis. Analysis is when a business interprets information.
    • Product differentation
      • Businesses operate in competition with each other.
        • businesses become more competitive by making products that stand out from the competition in terms of price, quality or service. This is called product differentiation.
      • Establishing a strong brand image (personality) for a good or service.
      • Making the unique selling point of a good or service clear. For example, opening a chain of discount shops with the tagline Quality items under a pound.
      • Other competitive factors, such as a product having a better location, design, appearance or price than rivals.

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