Business - Unit 1

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What is primary research?
Collecting information that didn't exist before
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Give examples of primary research.(4)
Surveys, Questionnaires, Focus groups, Observations
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What are the advantages to using primary research? (4)
Up to date, specific to needs, Accurate, Direct customer contact.
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What are the disadvantages to primary research? (2)
Time-consuming, Can be expensive
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What is secondary data?
Gathering data that already exists
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Give examples of secondary data. (5)
Market reports, Government stats, Internet, Books, Newspapers
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What are the advantages of secondary data? (2)
Low cost, less time-consuming
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What are the disadvantages? (2)
More general, Might not find what you want
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What is qualitative data?
Information about opinions, judgements and attitudes.
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What is quantitative data?
Information that can be expressed as numbers and shown on graphs
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What is a market segment?
A group of buyers with similar characteristics and buying habits.
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Name 4 ways a market can be segmented.
Age, Gender, Income, Lifestyle
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What does segmentation allow a business to do? (4)
Meet specific customer needs, differentiate, focus on specific group, build close customer relationships.
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What is a market map?
A diagram that can be used to position and compare products in a market and identify opportunities where customer needs aren't being met
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How can a business differentiate their products? (6)
Better design/quality, better features, stronger brand image, wider product range, more enjoyable experience
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What is a brand?
A named product that customers see as being different from other products and can associate/ identify with.
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What is added value? (The proper definition)
The difference between what a business pays its suppliers and what a customer pays the business.
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How can a business add value? (6)
Convenience, USP, better design, high quality, branding, speed
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Why is added value important?
The added value goes towards paying off business's costs, the quicker it can do that, the quicker it can make profits.
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What does added value mean for the business in the long run?
More chance of success, survival and growth due to higher profits being made.
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What does USP stand for?
Unique Selling Point
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What is a franchisor?
The business that gives fanchisees the right to sell its products.
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What is a franchisee?
A business that agrees to manufacture, distribute or provide a branded product under licence by a franchisor.
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What do you get when buying a franchise? (7)
Established brand name, access to goods, advertisement and promotion, equipment, ongoing support, operate in exclusive area
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What are the benefits of a franchise? (6)
Brand image/reputation, No marketing costs, Established customer base, already tested products, high chance of survival, support and training provided
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What are the drawbacks of a franchise? (7)
Lack of control, limited flexibility, royalty payments, Start-up costs
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What are the 3 main enterprise skills?
Showing initiative, taking risks, willing to undertake new ventures
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What is deliberate creativity?
The intentional creation of new ideas through recognised and accepted techniques
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Give examples of techniques used in deliberate creativity. (2)
Mind maps, creating lists
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What is blue skies thinking?
Coming up with as many ideas to solve a problem
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What is lateral thinking?
Thinking differently to try to find new and unexpected ideas.
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How does asking questions help a business? (4)
Helps make decisions, identifies problems, develop aspects of a business plan, identify business objectives
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What is an invention?
the discovery of new processes and potential new products, typically after a period of research
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What is innovation?
The process of turning those inventions into products that can be sold to customers.
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How can invention/innovation be risky?
They're expensive ad time-consuming and have a chance of failing to make it into the market.
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What is a patent?
Right of ownership of an invention, design or process when it's registered with the government
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What is copyright?
Legal ownership of material (books, films. music) to prevent them being copied by others
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What is a trademark?
The logo, symbol or sign of a product/business that can't be copied by others.
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What is a calculated risk?
The likelihood of a negative event occuring
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What are 5 other important enterprise skills?
Planning, Determination, Thinking Ahead, Drive, Seeing oppertunities
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What's the difference between financial and non-financial objectives?
Financial involve money whereas non-financial don't.
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What are potential financial objectives of a small business? (4)
Survival, Profit, Wealth, financial security
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What are non-financial objectives of a small business? (3)
Helping others, independence and control, personal satisfaction
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What's the equation for revenue?
Price x Quantity
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What are fixed costs?
Costs that don't vary with the output produced by a business
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Give examples of fixed costs. (4)
Rent, interest, loans, advertisement
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What are variable costs?
Costs that change directly with the number of products made.
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Give examples of variable costs. (4)
Raw materials, fuel, electricity, wages
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What's the equation for variable costs?
Cost per one unit x quantity produced
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What's the formula for total costs?
Fixed costs + Variable costs
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When does profit occur?
When revenues are higher than total costs
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What's the formula for profit or loss?
Total revenue - total costs
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What does profit allow a business to do? (4)
Survive, generate wealth for owner, reward employees, reinvest for expansion
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How can you increase profit? (2)
Reduce costs and increase sales/sales price
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When a business makes a loss, what's it unable to do? (4)
repay loans, repay bills, solve cash-flow problems, suvive
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How is net cash flow different to profit or loss?
It is either positive or negative
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How do you work out net cash flow?
Two ways: 1) total receipts - total payments 2) opening balance - closing balance
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How do you find the closing balance?
Net cash flow + opening balance
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What impacts cash flow? (6)
Change in: credit terms, revenue/demand, costs, stock levels. Also business expansion/contraction and seasonality in sales
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What does insolvency mean?
A business being unable to pay its debts, loans, wages, promote the business or buy raw materials
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What's the purpose of a business plan? (4)
Convince a bank to give loans, identify needs, formulate market research, info on competitors
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What are the long-term sources of finance? (8)
Retained profit, leasing, mortgage, personal savings, loans, grants, venture capitalist, share capital (ltd only)
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What is a share?
Part ownership in a business that is a limited company
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What are the investors that have a share called?
Share holders
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What is collateral?
Asset owned by the borrower used to guarantee repayment
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What is the collateral in the case of mortgage?
The property
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What is the incentive for a bank to loan money?
The interest they receive
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What are the three stages of being customer focused?
Identifying, anticipating and meeting customer needs
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What are the four aspects of the marketing mix?
Price, Place Product, Promotion
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What does the product have to do? How?
Meet customer needs through differentiating
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What is promotion?
The communication between the business and the customer
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What is place?
The way a product is distributed
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What does the price of a product reflect?
The quality of it
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What are sole traders?
Businesses owned by one person
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What does a sole trader have?
Unlimited liability
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What does this mean?
They are legally responsible for their debts and could potentially lose their belongings
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What do private limited companies have?
Limited liability
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What does limited liability mean?
The owner and the business and separate legal entities
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How much can the owner in a limited company lose?
Only up to the amount they have invested
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What are the benefits of being a sole trader?
They have all the control and keep all profits as well as having a lot of privacy
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What are the benefits of a limited company?
Limited liability reduces risk for owners
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Wht are the legal requirements of a small business? (4)
Register and trade under unique name, keep records of sales, puchases and names of businesses they have traded with, register with HMRC and pay appropriate level of tax to it
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Why is there legislation? (3)
To keep track of business activity, collect taxes, protect businesses and customers
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What are the taxes on a small business? (4)
Value added tax, income tax, corporation tax, national insurance contributions
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What is value added tax paid on?
The products you sell
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What things are exempt from VAT?
Food
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What are national insurance contributions taken off of?
Any profits a business makes
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What does it go towards? (2)
Pensions and benefits
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What is Corporation tax? Where is it taken from?
Only paid by LTD's on the profits they make
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Where are income taxes deducted from?
Staff wages
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If you're a sole trader, when is income tax taken from you?
When you make profit
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How can businesses improve customer service? (5)
Quick service, accuracy, convenience, responding to complaints, Good after-sales service
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What are the benefits of customer satisfaction? (4)
Repeat purchase, customer loyalty, Improves reputation and allows differentiation
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How can repeat purchases be stimulated? (4)
Cheaper prices, easy and convenient, good customer service, good relationships with customers
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How can a business motivate staff? (6)
Paying fair wages, good working conditions, perks (company car), giving power and responsibility, training, encouraging teamwork/relationships
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What ares does legislation protect employees in? (5)
Age, Gender, Pay, Discipline, Working hours
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What is supply?
The amount that sellers are willing and able to sell at any given price
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What is demand?
The amount that buyers are willing and able to buy at any given price
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When does a shortage happen?
High demand, low supply
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What is a surplus?
High supply, low demand
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What is a market?
Where buyers and sellers meet to exchange products and services
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What are commodities?
Raw materials
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Give example of commodities. (3)
oil, steel and wheat
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What are goods markets?
Markets for everyday products
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What is credit?
Borrowed money
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What is an interest rate?
Percentage reward over period of time given to lenders by borrowers on loans
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When does a business have to pay interest?
When returning its repayments for a loan or on any money its overdrawn
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What's the difference between fixed and variable rates?
Fixed don't change but variable do over the period of borrowing
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What impact does a rise in interest rates have? (3)
On variable rate struggle to pay back, small businesses less likey to start up, borrow or expand, customers less likely to spend
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What impact does a fall in interest rates have?
Businesses have more money to spend, cash flow improves, people borrow and spend more, businesses more likely to start up or expand.
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What is the exchange rate?
Cost of buying foreign currency
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What are imports and exports?
Imports: Goods bought from abroad Exports: Goods sold abroad
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What happens to UK exporters if value of pound falls?
Price of exports falls so more people from foreign countries buy goods - sales increase
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What happens to UK tourism if value of pound falls?
Prices to tourists are cheaper, more tourism
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What happens to UK businesses if value of pound falls?
Imports are more expensive, more people buy UK goods
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What happens to UK importers if value of pound falls?
It is bad, imports are more expensive so costs rise
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What happens to UK exporters if value of pound rises?
Bad - price of exports increases so less people from foreign countries buy UK goods
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What happens to UK tourism if value of pound falls?
Prices more expensive to foreigners so tourism falls
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What happens to UK businesses if value of pound falls?
Bad - imports are cheaper so less people buy UK goods
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What happens to UK importers if value of pound falls?
Good- imports are cheaper so costs fall
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What are the stages of the life cycle? (4)
Boom, downturn, recession, recovery
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What happens during a boom? (5)
Consumer confidence is high, people borrow and spend more, sales increas, business takes on more employees, business expand and invest
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What happens in a downturn? (6)
Consumer confidence is low, borrow and spend less, sales fall, business cut back and make redundancies, cash-flow problems
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What is a stakeholder?
Someone who has an interest or is affected by the activities of the business
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Give examples of stakeholders. (8)
Workers, customers, competitors, community, government, suppliers, owners, managers
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What can stakeholders have?
Conflicts
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Other cards in this set

Card 2

Front

Give examples of primary research.(4)

Back

Surveys, Questionnaires, Focus groups, Observations

Card 3

Front

What are the advantages to using primary research? (4)

Back

Preview of the front of card 3

Card 4

Front

What are the disadvantages to primary research? (2)

Back

Preview of the front of card 4

Card 5

Front

What is secondary data?

Back

Preview of the front of card 5
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