BUSINESS

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What is the difference between a good and a service?
A good is a physical tanglible product (you can touch it)
A service is an experince that is intagible (can't touch it)
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What is the difference between a consumer and a customer?
A customer purchases the product and the consumer uses the product
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For what three reasons do new business ideas come about?
- Changes in technology
- Changes in consumer needs
- A product becoming obsolete
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What does it mean if a product is obsolete?
It is outdated and no longer in use
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What are payment platforms?
Enable businesses to take online payments from customers. They are usually free for the customer to use, but take a small amount of commission from
the seller and provide the customer with peace of mind.
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What is an entrepreneur?
Someone who creates a business, taking on
financial risks with the aim of making a profit from the business.
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In what two ways do new business ideas come about?
- Original ideas
- Adapting existing concepts
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What are three risks that start-ups face?
- Business failure
- Lack of (financial) security
- Financial loss
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What is the difference between variable and fixed cost?
- Variable costs are costs that depend on the amount of products you manufacture (e.g. Raw materials)
- Fixed costs (overheads) are costs that remain no matter your production rate (e.g. Rent)
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How do you work out variable cost?
Cost per unit x sales volume
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What are financial rewards for a start-up?
- Survival
- Profit
- Wealth
- Income
- Financial Security
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What are non-financial rewards for a start-up?
- Personal Satisfaction
- Challenge
- Independence
- Control
- Helping Others
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What is a stakeholder?
Any person with interest in the business
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What are the thee purposes of business enterprise?
- To meet customer needs
- To add value
- To provide goods and services
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How may a business add value?
- Convenience
- Quality
- Branding
- Design
- USP
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What are the roles of an entrepreneur?
- Organise resources
- Make business desicions
- Take risks
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What are the four main customer needs?
- Choice: When buying products, customers like to have a choice because different customers have different tastes and needs.
- Quality: Customers assess quality as a product’s suitability and their opinion will depend on expectations.
- Price: Customers w
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Why is it crucial for businesses to meet customer needs?
- Generate sales:
- Customers will continue to buy products
- Repeat custom ensures that the business generates
cash flow.
- Business survival:
- As the reputation of the business grows, more and
more consumers are likely to buy its products.
- This shoul
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What are the reasons for market research?
- To identify and understand customer needs
- To identify gaps in the market
- To reduce risk
- To inform business decisions.
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What is primary research and how may businesses do this?
Market research carried out for the first time:
- Survey/ Questionnaire
- Observation
- Interviews
- Focus Group (small group of people discussing a product)
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What is secondary research and how may businesses carry this out?
Market research which is information that has already been gathered:
- Internet
- Government Statistics
- Company Reports
- Newspapers
- Trade Associations
- Books
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What is the difference between quantitative and qualitative data?
Quantitative - Data is non-measurable opinions and judgement
Quantitative - Data is measurable numbers and statistics
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Why is social media crucial to market research?
Social media is a cheap way of understanding customers. It allows a business to:
- Deepen their understanding of the market
- Identify popular trends
- Improve their products and marketing
- Save time conducting market research
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Why is validity and reliability of research data important?
All your business decisions are based off it and so invalid and unreliable information will lead to a business making harmful mistakes that will limit their chance of profit and growth.
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What are market segments?
- Part of a market that groups buyers with similar buying habits, such as:
- Location
- Demographic
- Age
- Income
- Lifestyle
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What is a market map and what is it used for?
A market map is a four quadrant map based on two features of a product (e.g. high/low price and high/low quality) to allow a business to identify a gap in the market
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What features of competitors products may businesses monitor?
- Price (Are their prices in a similar competitive range)
- Product range
- Quality (Are they delivering quality similar/ better)
- Customer service
- Location (Are they closer to their target market)
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1.2.4 - What may a business conduct to analyse its competitors and how they should effect their decisions?
A SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)
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What do businesses need to have to get what they want to achieve?
+Businesses need to have aims - overall goals that they want to achieve.

+They also need objectives, which are like mini aims.

+Aims and objectives can be financial or non-financial.
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How can financial aims be measured?
+Financial aims can be measured in terms of money

Financial aims include:

Survival
Maximise Profit
Increase Market Share
Maximise Sale
Achieve Financial Security
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How is Survival a financial aim for a business?
+Around 60% of new firms close within five years of starting, so just surviving is the main and most important short-term aim of all new businesses.

+This means the business needs to have enough money to stay open, eg. to buy stock and pay staff.
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How is maximising profit a financial aim for a business?
+The vast majority of firms will aim to maximise profits.

+However, it may take a few years for a new firm to make any profit at all.
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How is increasing market share a financial aim for a business?
+Market share tells you what percentage of a market's total sales a particular product or company has made.

+When a business first starts up it has zero market share... so one of its first aims is to capture a part of the market and establish itself.

+I
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How is maximizing sales a financial aim for a business?
+Increasing sales is a good way for a business to grow its market share

+The business can monitor sales in terms of how many of a particular product it sells, or by how much money it takes from selling its products - this is not the same as maximising pr
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How is achieving financial security a financial aim for a business?
+Many businesses will depend on external sources of finance such as loans or the business owners' personal savings when they first start.

+So an aim for a new business is likely to be achieving a point where it can depend on its own revenue to fund its a
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What other aims can there be for starting a business?
+There may also be non-financial aims for starting a business - many new businesses have aims that aren't centred around money; These aims include:

Accomplishing a personal challenge
Achieving personal satisfaction
Gaining independence and control
Doing
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How is accomplishing a personal challenge a non-financial aim for starting a business?
+Some people want the challenge of setting up and running a new business.

+And if the risks pay off, there could be big rewards.
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How is achieving personal satisfaction a non-financial aim for starting a business?
+Some people want the satisfaction that comes with owning their own business, particularly if their company allows them to follow an interest.

+Eg. a history-lover might set up a tour company for a historical site.

+Being interested in what they do can
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How is gaining independence and control a non-financial aim for starting a business?
+Some people might want the independence of being their own boss.

+This means they have control over what they do each day, and make the decisions about how the business will be run.

+They might have flexible working hours, meaning it's easier to fit wo
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What is the difference between a consumer and a customer?

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A customer purchases the product and the consumer uses the product

Card 3

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For what three reasons do new business ideas come about?

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Card 4

Front

What does it mean if a product is obsolete?

Back

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Card 5

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What are payment platforms?

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