Business AS unit 1

Business AS level Unit 1

Enterprise and Entrepreneurs.

Enterprise- Process in which new businesses are formed and new products and services are produced and services created and brought to the market. They are lead by Entrepreneurs.

Entrepreneurs- Individual that have an idea that they develop by setting up there own business. Take risks but can receive huge profits, others may not.

Characteristics of a successful entrepreneur:

  • Determination/ Persistence.
  • Passionate about the business.
  • Ability to spot and take good opportunities.
  • Relevant skills and expertise.
  • Creativity.
  • Motivation.
  • Willingness to take risks.
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Reasons why Businesses fail

  • Lack of finance.
  • Poor infrastructure.
  • Skills Shortages.
  • Complexity of regulation or red tape.
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Oppotunity costs.

Opportunity cost: The real cost of taking a particular action or the next alternative forgone.

Example: the 'real cost' of an evening spent revising could be the missed opportunity of attending a concert.

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Motives for becoming an entrepreneur

Motives for becoming an entrepreneur:

  • Long term interest rates that make it easier to borrow money to start a business.
  • Change in political climate so that the government supports enterprise and the entrepreneurial spirit.
  • Increasing affluence, this means that people start to look for meaning in there lives (maybe fulfilling a dream).

Government support entrepreneurs by:

  • reducing business taxes.
  • improving support to businesses.
  • introducing legislation to promote competition.
  • giving financial support to not for profit orgainisations.
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Franchising: when a business (the franchisor) gives another business (the franchise) the right to supply its products or services.

Benifits of a franchise:

  • Involve the least risk due to the fact that they have already got an established name
  • financing the business is easier because banks are more willing to lend money to someone with a good reputation.
  • Franchisors are going to offer training


  • may fail due to lack of market research
  • costs may be higher than expected
  • Have to approved by the franchisor
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Protecting business ideas

Protecting business ideas

Copyright- legal protection against copy for authors, composers and artists.

Patent- an official document granting the holder the right to be the only user or producer of a newly invented product or process for a specified period.

Trademark- signs, logos or words displayed on a companies products or on its advertisement including sound and music which distinguish its brands from those of its competitors.

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Transforming resournces into goods and services

Transforming resournces into goods and services

Resources (inputs) - the elements that go into producing goods or services.

Factors of Production - the four elements Land, labour, capital and enterprise.

Land - all the natural resources used in making your product.

Labour - the physical and mental effort involved in production.

Capital - goods that are made to help produce other goods e.g. machienery.

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Improving the effiency of the FOP

  • improving the fertility of the land
  • using renewable / recycled resources
  • greater education and training of the work force
  • increase the level of investment in capital equipment
  • improvements in entrepreneurial skills

Production: the process wherby resources are cnverted into a form that is intended to satisfy the requirements of potential customers

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Outputs: the finished products resulting from the transformation process.

Main outputs:

  • Natural resources.
  • semi-finished / finished goods.
  • services.

3 Types:

  • Primary production. (farming, fishing, forestry etc.)
  • Secondary production.
  • Tertiary production. education, restaurants hairdressing.
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Adding Value.

The process of increasing the worth of the resources by modifying them.

Other services such as marketing also add value by:

  • creating a Unique Selling point.
  • Identify an attractive mix of design, function, image and service.

Value added.

Sales revenue - cost of materials of brought in materials.

Unique selling point- a feature product or service that allows it to be differentiated from other products.

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Developing business plans

Purpose of a business plan:

  • important part of a business plan.

Business plan: A report describing the marketing stratergy, operational issues and finanicial implications of a business start up.


  • useful in helping entrepreneurs to clarify there objectives.
  • you know exactly what needs to be done.
  • essential document in persuading lenders to invest capital into the business.


  • needs to be very accurate and realistic.
  • many underestimate how much this business will cost.
  • many overly optimistic on the potential business and sales.
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Content of a business plan:

  • Details of the business.
  • personal information.
  • objectives.
  • marketing plan.
  • production plan.
  • fixed assets (premises and equipment).
  • financial forecasts.
  • details of finance needed and repayment.
  • collateral offered (offering personal assets as security).
  • Long term plans.
  • SWOT analysis.
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Conducting market research.

Marketing: anticipation and satisifying customers wants in a way that delights customers and also meets the needs of the business.

Marketing research: the systematic and objective collection, analysis and evaluation of information that is intended to assist the marketing process.

Purpose of marketing research:

  • Achieving objectives (target sales figure).
  • identifying trends.
  • comparisons.

Primary research: the collection of information first-hand for a specific purpose. e.g. questionnaires.

Secondary research: the use of information that has already been collected for a different purpose.

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Qualitative / Quantitatve data.

Qualitative market research: the collection of informatin about the market based on subjective factors such as opinions and reasons.


  • get a greater insight into what it needs to do to appeal to its consumer and new customers.
  • can highlight issues the business was not aware of.


  • Hard to interpret data.

Quantitative data- the collection of info about the market based on numbers.

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Random sampling: a group of respondants in which each member of the target population has an equal chance of being chosen.

Quota sampling: a group of respondants comprising several different segments, each share a common feature (e.g. Gender). The number of interviews in each classification is fixed to reflect their percentage in total target population, but their interviews are selected non-randomly by interviewer.

Stratified sample: a group of respondants selected according to particular features.

Problems with sampling:

  • may not be representative
  • may be bias.
  • difficult to locate suitable respondents.
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Factors influencing sampling method.

Factors influencing sampling method:

  • cost and avaliability of finance
  • time.
  • importance of market segmentation.
  • whether business targeting a specific group of customers.

Understanding Markets:

What is a market? A place where buyers and sellers come together

Geographical classification

based on area targeted by businesses. such an area maybe local, national and international.

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Factors affecting demand.

  • price
  • competitors action
  • consumers incomes
  • success of businesses' marketing.
  • Seasonal factors.

Types of market segmentation:

1.) Demographic segmentation- age, sex, income

2.) Geographic segmentation - regions, cities and neighbourhoods.

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Benifits of market segmentation.

  • advertising can be targeted at specific market segments so that advertising spend is more effective.
  • the most profitable and least profitable customers can be identified.
  • least profitable markets can be avoided
  • it becomes easier to identify new products
  • helps the firm improve exsisting products and customer service.
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Market size, Growth and share

Market size - this is the total value or volume of sales in the market. it can be measured in money terms.

Market size =.

number of units sold X price.

market growth =.

change in size of market / original size X 100.

Market shares=.

Company sales/ market sales X 100.

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Factors influencing market.

  • Economic growth.
  • nature of product.
  • change in taste.
  • social changes.
  • fashion.
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Choosing legal structures

Unincorporated and incorporated businesses

Private sector

  • unincorporated.
  • sole trader.
  • partnership.
  • incorporated.
  • Private limited company.
  • Public limited company.

Limited liability: a situation in which the liability of the owners of a business is limited to the fully paid-up value of the share capital.

Unlimited liability - businesses are liable for all the debt they may get into.

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Types of Legal Structure.

Sole trader- business owned by one person.

Partnership - businesses with 2 or more people to operate.

Private limited company - small to medium sized business that is usually run by family or small group of individuals who own it.

Public limited company - A business with limited liability. a share capital of over £50,000, at least 2 share holders.

Advantages of sole trader:

  • easy and cheap.
  • independence.
  • more privacy.


  • unlimited liability.
  • limited skills.
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Ownership - providing finance and therefore taking risks

Control - managing the orgai

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pretty good :) 

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