Edexcel business studies unit one notes

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Unit One ­ Staring up a business
Characteristics of successful entrepreneurs
Characteristics of entrepreneurs
An entrepreneur is someone who organises and runs a business.
Characteristics:
Risk Taking
Time and energy
Initiative ­ readiness to come up with ideas, makes decisions and they take action.
Creative skills
Interpersonal and communication skills
What motivates entrepreneurs:
Motivation is the effort or drive to satisfy an individual need.
Profit motives:
Survival
Profit
Provide for family
Increased Revenue
Sales maximisation
Profit maximisation
Nonprofit motives:
to be own boss
Ethical reasons
to help others
to work from home
convenient hours
Why take an ethical stance:
Good publicity ­ Ethics can be used to make your business different, E.g. the Cooperative Bank
Additional Sales ­ This can occur due to good publicity, and may lead to increased profits
It helps others ­ Many ethical businesses make a positive contribution to the community

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Leadership styles:
Autocratic The boss takes decisions and criticism is unwelcome
Democratic Persuasive Asks for decisions off staff but tries to convince them to what he thinks
Democratic Consultation Asks for decisions off staff and is looking to do what they think is best
Paternalistic The boss takes decisions and looks after staff
Laissezfaire Maximum independence/responsibility for each worker
McGregor's Theory X and Theory Y:
Theory X managers ­ managers think that staff are lazy and need close supervision.…read more

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Identifying a business opportunity?
What makes a market ?
What should firms supply?
A market is a place where buyers and sellers meet, in order to exchange goods and services for money.
Price ­ is the amount paid by the buyer in a transaction to the seller for a good or service.
Supply ­ the quantity of a good or service available for sale at any specified price.…read more

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When prices are high
Demand will be low
When prices are low
Demand will be high
Demand and supply curve:
(market price/equilibrium)
Too high (north of market price/equilibrium) = excess in supply
Too low (south of market price/equilibrium) = excess in demand
Market orientation ­ businesses using the wishes of customers and what they are willing to pay to guide
production and marketing decisions.
Benefits:
Specific to market
It can respond more quickly to changes in the market because of its use of market information.…read more

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Product orientation ­ A business approach or philosophy in which whatever a company makes or
suppliers is the focus of the management's attention.
Benefits:
Quality of output should be assured.…read more

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Evaluating a business opportunity
Researching Demand for the business idea:
Primary research:
Primary research ­ is data that you collect or if others are commissioned to do the research.
Advantages:
Up to date
Specific to your business
Disadvantage:
Time consuming
Expensive
There are a number of examples of primary research Questionnaires, Surveys (e.g. postal surveys), Focus
groups, Observation, Test marketing, Consumer panels and ITbased research.
Quantitative market research ­ numerical research, e.g.…read more

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Sales Figures Government publications
Stock movements Internet website pages
Both primary and secondary research is used to quantify demand and gain insight into consumer behaviour,
this means that bot researches can be used to make a numerical estimate of how high demand will be over
your companies product, and to gain insight into consumer behaviour is selfexplanatory.
Sampling
Sampling ­ is the selection of a (small) proportion of individuals from the total population.…read more

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Is there a market for the business idea?
A market ­ is a system that allows buyers and sellers to agree prices and to trade.
Market size:
The size of a market can be estimated or calculated by the total sales of all businesses in the market.
Market size is usually estimated in a number of ways:
Value ­ Total amount spent by customers buying products.
Volume ­ This is the physical quantity of products which are produced and sold.…read more

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Positioning the business idea
Market Mapping ­ plotting the position of suppliers/brands against key characteristics of a product.
Market positioning ­ focusing a product and its market on a particular market segment.
Product positioning ­ choosing key characteristics in comparison to the competition, perhaps using market
mapping.
There are many ways to get a competitive advantage over competitors:
Adding value ­ changing inputs (e.g. materials) in a way that customers see as beneficial or attractive.…read more

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