Business - Enterprise and Entrepreneurship

• Enterprise - identifying new business opportunities and taking advantage of them
• Entrepreneur - someone who owns and runs a business and takes risks
• Demographic - a particular sector of a population
• Consumer - someone who buys and uses goods and services
• Risk - the possibility that the business will experience a lower profit than expected or a loss
• Calculated risk - working out the probability of a negative event occuring
• Added value - the insrease in a products value as a result of a business producing that product. The difference between the final price and the cost of production is the value added.
• Direct competitor 
• Indirect competitor - Businesses that don't sell the same type of product/service but are stil in competition e.g. ferrys, trains, flights

• To provide goods and services

                  -Goods are physical (tangible) products.

                  -Services are non-physical (intangible) products.

• To satisfy needs and wants

                  -Needs are items that are essential to our survival.

                                           -e.g. Warmth, clothing, shelter, food and water.

                  -Wants are items that are not essential to our survival

                                           -e.g. Cars, holidays, phones and education.

• To add value

• Changes in what customers want

                        -e.g. Changes in lifestyle (more people cycling) = new cycle equipment

                        -e.g. Concern for environment = environmentally friendly products

• Changes in technology

                        -e.g. More ppl with tablets = more apps

• Obsolete goods and services

                        -e.g. Video tapes = DVDs = Netflix

New ideas can be:

                 -adaptions of existing products

                                   -Advantage = cheaper than making new product

                                   -Disadvantage = hard to stand out as the product is similar

                -entirely original 

                                  -Advantages = can respond to new trends.

                                                       = can become brand leader

                                  -Disadvantages = expensive

                                                            = can be slow to respond to new trends

Must be able to:

             -organise the business

                          -recruit staff

                          -buy raw materials

             -take risks

                          -invest own money

                          -might give up current job

             -make business decisions

                          -decide the aims of business

                          -decide the structure of the business

Risks

• Financial                                                                                                    Rewards

            -Own money or loan                                                                           -Success

                     -if loss made, unable to pay back loan                                      -Profit

• Failure                                                                                                       -Independence

            -Recession

            -Competition

            -Cash flow problem

• Lack of security

             -business fails = no job = no money 

• Make a business plan

• Carry out market research

• Speak to a bank for loans and financial advice

• Be organised

• Keep control of finances

• Quality - the better the quality, the more customers will pay

• Convenience - the easier something is to use, the more people will pay

• Branding - a way of defining a product or business

• USP - something that makes a product different to other products

• Design - having a unusual design makes customers want to pay more

• Speed and quality of service - the higher the level of service, the more a customer will pay

• Advertising - an appealing advert encourages customers to pay more

• Packaging - the more interesting, the more a customer will pay

• creates brand awareness

• people more likely to recognise the business

• creates trust with customer (loyalty)

• gives the ability to charge premium prices = increased profits

Own brand = product sold under the brand name of a supermarket e.g Tesco

Brand = product identifiable as being made by a particular manufacturer e.g Heinz

• Price - competitive prices and special offers are atractive

• Quality - a products suitability or fitness for purpose

• Product range (choice) - large range makes business more attractive to ppl

• Convenience - location and opening times

• Customer service - good customer service attracts customers

The process of gathering information about the market and customers needs to help inform business decisions.

Why conduct market research?

• know the needs and wants of customers
• identify trends
• find out about competition
• look for gaps in the market

Types of research

• Primary research - collecting your own information from customers/potential customers e.g focus groups, interviews, questionairres and observations
• Secondary research - collecting previously gathered information e.g books, the internet, newspapeers/magazines
• Social media

• Quantitative - information about quantities. Numerical data (measurable)

Advantages - easy analysis of data

                    - can be used to test hypotheses

Disadvantages - large sample needed

                        - doesn't study things in natural setting

• Qualitative - information about qualities (feelings and opinions)

Advantages - doesn't need strict design plan

                   - more detail gained

Disadvantages - difficult to analyse

                        - time consuming

The breaking down of a market into groups of ppl with similar characteristics.

Methods of semgmentation

• Demographics
  

    .           -population data e,g, age, gender etc.

• Geographic locaton

               - where customers live e.g. urban or rural

• Lifestyle

              - how a customer lives e.g. hobbies

• Income

              - amount of money a customer earns

• A diagram that identifies all of the products in a market and maps them against two of their features.

• It allows a business to identify competitors and allows them to spot a gap in the market.

• If a gap is found, they then need to do some market research to see if there is a demand for that product.