OCR Business Paper 1

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  • Created by: simran
  • Created on: 20-01-20 22:51
What is an entrepreneur?
A person who sets up their own business and is willing to take a risk
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What is forward vertical growth?
Is when a business mergers/takeovers a business that it supplies goods and services to
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What are the characteristics of an entrepreneur?
Creativity, Risk taking, Determination, Confidence
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What is a business plan?
A document that outlines the businesses aim and objectives and how they will achieve them
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What is the purpose of a business plan?
To obtain finance e.g. A bank loan
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What is a sole trader?
A business set up by 1 person
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Advantages of being an sole trader:
Can keep all the profits, can make decisions quickly
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Disadvantage of being an soul trader:
No one to develop ideas with unlimited liability
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What is a partnership?
A business set up between 2 to 20 people
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Advantage of being a partnership:
More ideas, can share the set-up costs
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Disadvantage of being a partnership:
Have to spilt the profits, unlimited liability
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What is an LTD?
A private limited company that sells shares to friends and family
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What is an PLC?
A public limited company that sells shares on the stock exchange
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Advantage of being a limited company:
Can gain a high gain of capital Limited liability
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Disadvantage of being a limited liability:
Can lose control of your business
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What is unlimited liability?
When the business bank account and the personal bank account are not separate. All the business debts rest with the owner. Your personal assets can be taken away.
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What is limited liability?
When the business bank account and the personal bank account are separate. The debts of the business is limited to the amount that was invested. Your personal assets can not be taken away.
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What 2 businesses have unlimited liability?
Sole trader, partnership
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What 2 businesses have limited liability?
LTD and PLC
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What are the 5 business objective?
Survival, Profit, Provide a service, Growth, Increase market share
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Who are internal stakeholders?
Owners, Employees
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Who are external stakeholders?
Customers, Suppliers, Government, Local community
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What is organic growth?
Growing inside the business
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What are the methods of organic growth?
Increasing output, Gaining new customers, Developing new products, Increasing market share
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Advantages of organic growth:
Cheaper method of growth, Can stay in control of business
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Disadvantage of organic growth:
Slow method of growth
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What is eternal growth?
Growing externally through mergers and takeovers
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Advantage of external growth:
Quicker way to grow, Access more customers
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Disadvantage of external growth:
Costly, Conflict between 2 businesses
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What is horizontal growth?
A merger or take over where 2 businesses are involved in a similar operation
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What is backwards vertical growth?
Is when a business mergers/takeovers a business that supplies it with its goods and services
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What is diversification?
Is when a business mergers/takeovers a business that is completely different (have no connection)
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Advantage of diversification:
Reduces risk due to having another market as a back up
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Disadvantage of diversification:
Lack of knowledge and expertise of the market
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What is the purpose of marketing within the business?
Identifying and understanding its customers, Informing customers and increasing sales
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What is the purpose of marketing research?
Identifying & Understanding customers needs
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What is primary research? 4 Examples:
Reserach conducted first hand e.g questionnaries, inteviews, trialling, focus groups
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Advantage of primary research:
Reliable
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Disadvantage of primary research:
Higher costs, More time-consuming
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What is secondary research? 5 examples:
Using secondhand research that already exist e.g. newspapers, magazines, sensors, website, internal data
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Advantage of secondary research:
Quick, Cheap
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Disadvantage of secondary research:
Less reliable
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What is qualitative data?
Collecting data about peoples thoughts and opinions (open questions)
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Advantage of using qualitative data:
More in-depth data collected
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Disadvantage of using qualitative data:
Harder to analyse
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Advantage of using quantitive data:
Easier to analyse
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What is quantitative data?
Collecting is this statistical data (close questions)
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Disadvantage of using quantitive data:
Does not tell you why? Lacks depth
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What does market segmentation mean?
Breaking down the market to identify a target market
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How does a business segment the market?
Age, Income, Location, Lifestyle
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What is the marketing mix?
Product, Price, Place, Promotion
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What is innovation?
The improvement of an original idea
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What are the stages of the life-cycle?
Introduction, Growth, Maturity. Decline, (extension plan)
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Advantage of the product life-cycle:
Know when to do advertising, Can develop extension plan strategies
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Disadvantage of product life-cycle:
Does not tell you how long it takes for a product to go through life-cycle
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What is price skimming?
Setting prices higher when you enter the market
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Advantage of price skimming:
Customers will perceive the product as having high quality
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Disadvantage of price skimming:
May put of customers, lack of cells. Requires a strong brand
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What is cost plus pricing?
Adding a markup to the cost of the product
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Advantage of cost plus pricing:
Ensure that you make profit on each item
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Disadvantage of cost plus pricing:
Prices may come out too high, might not be competitive prices
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What is penetration pricing?
Setting price is low when you enter the market
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Advantage of penetration pricing:
High sales
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Disadvantage of penetration pricing
May be perceived to have poor quality
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What is competitive pricing?
Setting price is based on the competition
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Advantages of competitive pricing:
Enables you to stay competitive
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Disadvantage of competitive pricing:
Not unique from competition
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What is promotional pricing?
Promotional pricing is a reduction in price
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Advantage of promotional pricing:
Attracts more customers
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Disadvantage of promotional pricing:
Customers may always expect to buy the product as the reduced price
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What is the traditional chain of distribution?
Manufacturer -> wholesaler -> retailer -> customer
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What is a physical distribution channel?
The distribution of goods using a physical presence such a shop or office
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Advantage of Digital distribution:
Customers can access 24/7
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Disadvantage of digital distribution:
Not all customers have access to Internet
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What are point of sales promotion?
Includes price reductions, loss leader, competitions, and free samples
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What are advertising promotions?
Advertising using different types of media
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Market Share Formula
Total sales of business / Total Market Sales x 100
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What is the purpose of the HR department?
Identifying and meeting the HR needs of the business
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What is a tall structure?
An organisational structure with four or more layers
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Advantage of a tall structure:
More chance of promotion - motivation of workers, smaller span of control - less stress on managers
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Disadvantage of tall structure:
Communication is slower
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What is a flat structure?
An organisational structure with three or less layers to go through
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Advantage of flat structure:
Better communication due to less layers to go through
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Disadvantage of flat structure:
Less chance of promotion
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What does span of control means?
The number of subordinates a manager overseas
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What does chain of command mean?
The link in the level of authority from those at the top with the most authority
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What does delegation means?
Passing down tasks and aurthority to a subordinate
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What does subordinate mean?
Subordinate are the workers that a line manager is responisble for
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What does authority mean?
Authority is the power that a person has to make decision
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What does full time mean?
When a worker works 35 hours a week or more
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What does part time mean?
When a worker works less than 35 hours a week
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What does flexible working mean?
Is the practice of employees either working from home or in the office, working flexi time or shift working
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What does temporary mean?
Workers only work for the business for a short period time
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What does working from home means?
Workers complete work from home
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What does working whilst mobile mean?
When people work not from the office or home. E.g. on a train, in a café, in holiday
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What does self-employed mean?
Is when people work as their own boss
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Advantage of letter:
Can keep a record of the message
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Disadvantage of letter:
May not get delivered
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Advantage of mail:
Can send to multiple people at once, Cheap, Instant
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Disadvantage of mail
Spam, Might get deleted
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Advantage of meeting:
Can check the message has been understood
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Disadvantage of meeting:
Not all people may be able to attend the meeting - they miss the message
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Advantage of presentation:
Can use visuals
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Disadvantage of presentation:
People may not listen to the message Can be boring
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Advantage of social media:
Information can be updated reguarly
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Disadvantage of social media
Need to employ someone to manage the social media - COSTS
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Advantage of a website:
Can communicate 24/7
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Disadvantage of a website:
Website could crash and then the message is lost
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Why do business need to recruit?
To replace employee who have left, Business Growth, Skills gaps
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What are the difference recruitment methods?
Internal method (E-mail, newsletter), External methods (Advertisement, recruitment agency, newspaper), Job description and person specification
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Advantage of recruiting internally:
Cheaper
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Disadvantage of recruiting internally:
Creates another vacancy within the business
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Advantage of recruiting externally:
Get fresh new people - develop new ideas
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Disadvantage of recruiting externally:
Expensive
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What are the methods of selection?
CV, Application form, Letter of application, Interview, Tests, Group activities, Reference
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What financial methods can be used to motivate staff?
Pay, Bonus, Profit Sharing, Fringe benefit
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Advantages of using financial method to motivate staff::
Staff feel more motivated and productivity increases
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Disadvantages of using financial method to motivate staff::
High costs for the business
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What non-financial methods can be used to motivate staff?
Praise, Award scheme, Working environment
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Advantages of using non-financial method to motivate staff::
Cheap to implement
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ADisadvantages of using non-financial method to motivate staff::
May not have much value to employee
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Why is employee motivation important?
Improved employee performance, Help employee retention
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Why is employee retention important?
Already familiar with the business and the customers, Saves time and the expense of recuitment
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What is induction?
Training to introduce the new worker to the business. It tends to happen when the employee first joins
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Advantage of induction:
Get to know collegues, feels welcomed.
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Disadvantage of induction:
Cost
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Wht is on the job trainiing?
This is happens while the employee is working onsite
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Advantage of on the job:
Cheaper than off the job training, Produces goods and services whilst training so the business can still ear money
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Disadvantage of on the job:
Not suitable for groups May provide poor service to customers
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What is off the job training?
Off the job training is when employees are trained away from the place of work
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Advantage of off the job training:
More focused, Can get expert trainers, Workers are more motivated
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Disadvantage of off the job training:
High cost ,Workers are absent from work resulting in a decrease in productivity
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Why do businesses train their workers?
Development of the business ,Improve productivity, Skills shortage, Customer service, Motivation, Retention
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What is vocational qualification?
Vocational qualification are work related qualifications. They are designed to give knowledge and skills relating to a specific career eg. BTEC
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What are academic qualification?
Academic qualification provides knowledge of a subject eg. GCSE, A-Levels
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What is an apprenticeship?
Is along term development programme for workers to learn job skills while they work, This will leads to a qualification
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Advantage of an apprenticeship:
Good way of recruiting staff, Training is tailored to specific needs of the business
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Disadvantage of an apprenticeship:
If the apprentice does not finish the training the business has wasted money, the apprentice could leave once they have the qualification
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What is the impact of current legislation on recruitment and employment?
Discrimination, Employee's right to a contact, Holidays, Hours of work
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What is invention?
The introduction of a new product
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What is a stakeholder?
Different groups of people that have an interest in the business
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What is the distrubtion channel?
Is the distrubition of goods and services digitally though a website
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Card 2

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What is forward vertical growth?

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Is when a business mergers/takeovers a business that it supplies goods and services to

Card 3

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What are the characteristics of an entrepreneur?

Back

Preview of the front of card 3

Card 4

Front

What is a business plan?

Back

Preview of the front of card 4

Card 5

Front

What is the purpose of a business plan?

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