BUSINESS THEME ONE - MISS TAUNTON

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aim
what a business wants to achieve
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objective
stated, measurable targets of how to achieve measurable business aims
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SMART aims
specific, measurable, agreed, realistic and timed
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non-financial objectives (3)
customer satisfaction, Independence, challenge
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financial objectives (3)
maximise profits, sell abroad, increase market share
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nine common aims and objectives
profit/market share/survival/satisfaction/challenge/control/financial security/social objective
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conflict: growth VS profit
to boost sales the company might lower its prices, however this will lower their profits
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how to meet customer needs (3)
research market/make good decisions about price, quality, choice and convienience/keep up to date with changes in the market in order to attract new customers
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customer needs - price
businesses use pricing strategies depending on market conditions. Price also depends on the amount of
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customer needs - quality
quality is about meeting the expectations of a customer - if these are met, a business has satisfied its customer
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customer needs - choice
choice is important as different customers have different tastes
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customer needs - convenience
ease of access/time taken to receive product/store opening or closing time
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by identifying customer needs businesses are able to....
generate sales and business survival
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generate sales
as customers will be able to continue to buy products as the business understands their requirements. Clearly, this is crucial to their business
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business survival
is a major consequence of meeting customers needs. As the reputation of the business grows, more and more customers are likely to buy its products
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4 factors that influence a business location
labor, market, materials, competitors
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market
who we sell to
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labor
where workers come from
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materials
raw materials
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competitors
who a business competes with
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proximity to labor
adequate supply of workers. The local labor force must have the appropriate skills. A business may choose to locate in an area of high unemployment as here - wages will be lower
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raw materials
physical inputs that go into producing goods or providing a service
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footfall
no. of people passing a particular location with a given time period
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demographics
characteristics of the population - age/gender
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bulk reducing product
a product that is smaller than the raw materials used to make it, eg paper
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bulk gaining product
an end product that is bigger than the raw materials used to make it eg bike
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convenience good
a product that a customer buys frequently or routinely
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shopping good
a product that a customer takes to consider before purchasing, by looking at and weighing up a number of options before choosing one
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topography
physical characteristics of landscape, such as being flat or hilly
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EG of businesses that might locate close to competitors
fast food and clothes stores
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EG of businesses that might locate far away from competitors
restaurants
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factors of location - infrastructure required
businesses that deliver goods and need a road, rail and air network in order to deliver these quick and effectively
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factors of location - pool of skilled workers required
finance/legal sector often locate in large urban centres EG london
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6 main factors of location choice
infrastructure, climate,
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internally sourced information
data, statistics and research that a business has accumulated in the past
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example of internally sourced information
for a small store it might be getting sales from tills about whats being bought
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where does externally sourced information come from
people or organisations that aren't related to the business
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two examples of externally sourced information
government agencies and trade unions
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what does ONS stand for
office of national statistics
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what information does ONS gather
data about people in the UK
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what is a trade association
valuable resources of information used in secondary research
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What is market research
process of gathering information about the market and customer needs and what they want, in order to help inform business decisions. this includes product design and marketing
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Market segmentation is.....
dividing the market into different sections to enable the business to specifically target customers with the most appropriate products
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customers offer differ in (5) .........
what they want/ how much they're able to or willing to pay/ amount of a good or service they want/ how and where they buy it/ types of media they encounter
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6 market segments
age, location, behaviour, income, lifestyle, demographics
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segment - location
based on where people live. People in different geographical areas display different characteristics.
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segment - demographics
based on their demographic profile; age, gender, level of education, race, religion family or not and stage in life
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segment - lifestyle
based on the way people live their lives. These will look at activities, interests and opinions of individuals. Businesses will customize based on these.
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segment - income
direct influence on what customers are willing to and able to pay. Products can have higher added value to attract a more affluent market segment. income segmentation sometimes makes use of socio-economic groups.
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segment - age
may target a specific age group
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segment - behaviour
people can behave differently depending on the time of year - e.g christmas
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impulse buying
marketing can be used to encourage consumers to buy prodcuts/services that they might not necessarily need
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advantages of segmentation - adverts
targeted at a specific market so advertising is more effective
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advantages of segmentation (3)
1 - becomes easy to identify new products 2 - helps business advertise 3 - ability to dominate within a segmetn
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what is market mapping
market mapping can help a new or established business identify a gap in the market. it can see what segment of the market is unprovided for and look at producing a product to fill that gap
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market mapping looks at...
quality and price
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market is....
the place where buyers and sellers come together to exchange goods and services for money
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competition is....
the rivalry between businesses who operate in the same market
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competitive market - price
businesses that keep costs to a minimum have a distant advantage as they buy in bulk, reducing costs and keeping prices low. This leads to lower costs and increased market share
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competitive market - quality
other businesses compete on being highly differentiated with better quality products. This allows them to charge high prices. However other business will benefit from producing lower quality for cheaper prodcuts
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competitive market - location
certain products require there to be a high footfall. For other businesses low cost is more important. This is why some businesses relocate abroad to produce goods
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product range
some businesses will sell a large range of products, meaning that they can use their brand awareness to increase overall sales. As there is greater choice, this will attract more customers
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customer service
good quality customers service will lead a strong reputation, improving brand awareness. This will increase sales and repeat custom, leading to greater market share.
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direct competitors
another company that sells the same products e.g. McDonalds
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indirect competitors
are businesses that do not sell the same product or service but they still find themselves in competition with one another
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monopoly
occurs when one company dominates the market e.g apple
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oligopoly
occurs when a few companies dominate the market e.g vodafone and EE
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monopolistic competition
occurs when there are many companies in the market but there is some form of product differentiation
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perfect competiton
occurs when there are many companies in the market, products are the same, large numbers of buyers and sellers
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strategies businesses use to compete (5)
new product design/ price change/ quality assurance/ changing or improving exisitng products/ promotions
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revenue looks at....
the money coming into the business
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income steam
source of regular income that a business receives. This could be money from customers or investment income.
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REVENUE FORMULA
price X quantity
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costs are...
the costs incurred by a business
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variable cost
a cost that can change
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fixed cost
a cost that stays the same
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e.g of fixed costs
rent, salaries, machinary
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e.g of variable costs
raw materials, wages, commission on sales
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profit
financial gain/difference between the amount earned and amount spent buying, operating or producing something.
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fixed costs stay...
the same regardless of output.
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formula for total costs
total cost = fixed cost + total cost variable
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profit of loss formula
revenue - costs = profit/loss
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BREAKEVEN FORMULA
total revenue = total costs
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graphs - fixed costs
stay the same and are therefore a straight line
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graphs - variable costs
change in relation to the number produced and therefore it slopes upwards form zero
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graphs - total costs
fixed costs plus variable costs so therefore it starts at the fixed cost price and slope upwards
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graphs - total revenue
line increases with the amount of units sold and slopes upwards
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total revenue and total cost lines on a graph
on a graph where the total revenue lines and the total costs crossover is the breakeven number
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formula for breakeven level of output
fixed costs divided by contribution
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contribution formula
selling price - variable costs
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margin of safety
difference between current level of output and breakeven point
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Other cards in this set

Card 2

Front

stated, measurable targets of how to achieve measurable business aims

Back

objective

Card 3

Front

specific, measurable, agreed, realistic and timed

Back

Preview of the back of card 3

Card 4

Front

customer satisfaction, Independence, challenge

Back

Preview of the back of card 4

Card 5

Front

maximise profits, sell abroad, increase market share

Back

Preview of the back of card 5
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