Business Flashcards
(71 cards)
1
Q
Why do new business ideas come about (there are 3) and what do they mean
A
Changes in customer wants
Changes in technology
When goods or services become obsolete
2
Q
How do original business ideas come about (there are 2)
A
Original ideas
Adapting existing products/services/ideas
3
Q
What are examples of risks and rewards for a business
A
risk: business failure, financial loss, lack of security
reward: business success, profit, independence
4
Q
What is the role of business enterprise and the purpose of business activity (there are 3)
A
To provide goods/services
to meet customer needs
to add value (convenience, branding, quality, design, unique selling points\0
5
Q
What is the role of entrepreneurship (there are 4)
A
organise resources
make business decisions
take risks
6
Q
What are customer needs (there are 4)
A
price
quality
choice
convenience
7
Q
Why is it import to identity and understand customers
A
generate more sales
business survival
8
Q
What is the purpose of market research (there are 4)
A
to identify and understand customer needs
to identify gaps in the market
to reduce risk
to inform business decisions
9
Q
What are the methods of market research and what do they require (there are 2)
A
primary research (survey, questionnaire, focus group and observations)
secondary research (internet, market reports, government reports)
10
Q
What is the two types of market data
A
qualitative
quantitative
11
Q
How is market data from market research used
A
12
Q
Why is the reliability of market research important
A
because reliable market research represents the people that the business is interested in accurately. The more reliable the data is, the more useful it is for a business
13
Q
What is market segmentation
A
dividing the market into different groups of people
14
Q
How can a business use market segmentation to target customer
A
the business can create a marketing strategy aimed at the target market to make sure that their marketing is as effective as possible
15
Q
What are different market segments
A
location
demographic
lifestyle
income
age
16
Q
What is the impact of competition on business decision making
A
17
Q
What are business aims and objectives
A
aims - overall goals that businesses want to achieve
objectives - mini aims (mesurable steps on the way to aim)
18
Q
What are business aims and objectives when starting up
A
19
Q
What are financial aims and objectives (there are 5)
A
survival
profit
sales
market share
financial security
20
Q
What are non financial aims and objectives (there are 5)
A
social objectives
personal satisfaction
challenge
independence
control
21
Q
What do aims and objectives differ between business
A
Because of different factors like:
The size and age of a business (small business may focus on survival while larger business may focus on gaining more market share and financial security)
Who owns the business (people want different things)
The level of competition that the business faces
22
Q
How do you calculate revenue
A
revenue = quantity sold * price
23
Q
How do you calculate fixed and variable costs
A
- Variable costs are cost that will increase as the firm expands output:
- Total variable cost = quantity sold * variable cost per unit
- Fixed costs are cost that don’t vary with output:
- Fixed Cost = Total Cost – (Variable Cost Per Unit *
Units Produced)
24
Q
How do you calculate total costs
A
total cost = total variable cost + total fixed costs
25
How do you calculate profit and loss
profit/loss = revenue - costs
26
How do you calculate interest
interest = ((total repayment - borrowed amount)/borrowed amount ) * 100
27
What is the break even point
the level of sales (output) a firm needs to cover its costs
28
How do you calculate break even level of output
break even point in units = (fixed cost)/sales price - variable cost
break even point for revenue (or costs) = break-even point in units * sales price
29
How do you calculate margin of safety
The margin of safety is the gap between the current level output and the break even point
Margin of safety = actual sales (or budgeted sales) - break even sales
30
What is a break even diagram
a break even diagram shows the effect of output changing
it has the number of sales or the output on the x-axis and the cost and revenues on the y-axis
31
How do you interpret break even diagrams
32
What is cash important to a business
Cash is the amount of money a company can spend immediately. A business needs cash in order to pay its employees, its suppliers and overheads (lighting etc)
33
What is the difference between cash and profit
profit is the amount of money a company ears after cost have been taken into account.
34
How do you interpret cash flow forecasts
a cash flow forecast lists all the inflows and outflows of cash that appear in the budget ( a forecast of all of the firm's likely expenses and revenue)
35
What is cash inflow
money that goes into the business
36
What is cash outflow
money that goes out of the business
37
What is net cash flow and what is the formulae for net cash flow
Net cash flow is the difference between all the company's cash inflows and cash outflows in a given period
Net cash flow = cash inflows - cash outflows for a given period of time
38
What are opening and closing balances
Opening balance is the amount of money a business starts with at the beginning of the reporting period, usually the first day of the month : opening balance = closing balance of the previous period.
Closing balance is the amount of money the business has at the end of the reporting period, usually the last day of the month: closing balance = net cash flow + opening balance.
39
What are sources of finances for a startup or an established business
Short-term sources: overdraft and trade credit
Long-term sources: personal savings, venture capital, share capital, loans, retained profit and crowd funding.
40
What are short term sources of finance and long term sources of finance
Short-term sources: overdraft and trade credit
Long-term sources: personal savings, venture capital, share capital, loans, retained profit and crowd funding.
41
What is limited liability
Limited liability means that the business owner or owner are only responsible for business debts up to the value of their financial investment in the business
42
What is unlimited liability
Unlimited liability means that the business owner or owners are personally responsible for all of the debts of the business, no matter what the value.
43
What are the implication for the business owner of limited and unlimited liability
Unlimited liability means that the business owner can lose all of their personal possessions if their business goes bankrupt while with limited liability that cannot happen
44
What are the types of ownership for startups (there are 3) and what are the advantages and disadvantages of each
45
What are the advantages and disadvantages of being a sole trader?
Advantages:
- They are easy to set up
- you get to be your own boss
- you alone decide what happens to any profit
Disadvantages:
- You might have to work long hours and may not get very many holidays
- you are unincorporated meaning that the business doesn't have legal identity meaning if your business gets sued they will sue you as-well
- you have unlimited liability
- it can be hard to raise money because banks see sole traders as risky so it may be hard to get a loan
46
What are the advantages and disadvantages of being a partnership?
Advantages:
- more owners means more ideas and a greater range of skills and expertise
- it also means more people to share the work
- more owner means more capital can be put into the business, so it can grow faster
Disadvantages:
- each partner is legally responsible for what all the other partners do
- unlimited liability
- more disagreements
- profits are shared between partners
47
What are the advantages and disadvantages of being a private limited company?
Advantages:
- limited liability
- easier to get a loan or mortgage
Disadvanages:
- they're most expensive to set up because of all the legal paper work
- the company is legally obliged to publish its accounts every year (they dont have to be made public)
48
What is franchising
where businesses sell the products or use the trademarks of another firm. They give the company they're franchising form a fee
49
What are the advantages and disadvantages of franchising
Advantages:
- customers will recognise the franchisors brand so they are more likely to buy from the franchisee
- less risky, easier to get a bank loan
- the franchisor may provide the franchisee with training or help with things like accounting and management
Disadvantages:
- less freedom
- expensive up front and have to pay regular payments
50
What factors influence business location (there are 4)
- proximity to market
- proximity to labour
- proximity to marterials
- proximity to competitors
51
What is the nature of the businesses activity
Businesses are set up by entrepreneurs for a number of reasons and with different aims and objectives . Businesses ultimately aim to provide a good or a service .
52
What is the impact of the internet on business decision
makes location more flexible as businesses can sell using e commerce and dont have to be close to their market and can be closer to the raw materials
53
What is the marketing mix
the marketing mix are the four key elements to marketing. if they achieve the elements more customers are likely to buy their products
54
What are the elements in the marketing mix
- product (product that fulfils customers needs)
- price
- promotion
- place
55
How do the elements of the marketing mix work together
some parts of the marketing mix will influence other parts (ie quality will affect price). considering all the elements of the marketing mix will mean that your product is marketed well
56
How do you balance the market mix based on the competitive environment
you can do this by adapting to what you competitors are doing by either trying to compete will them on one element (like having lower prices) or trying to market using a different element
57
What is the impact of consumer needs on the marketing mix
as customer needs change, your use of the elements will need to adapt (price older products/technologies lower)
58
What is the impact of technology on the marketing mix with e commerce and digital communication
- Improvement in e commerce means that business can now sell their products online rather than in stores
- Changes in Digital communication have also affect how companies promote their products online
59
What is the role and importance of a business plan (there are 10)
A business plan is an outline of what a business will do , and how it aims to do it. They should include:
- the business idea
- business aims and objectives
- target market (market research)
- forecast revenue
- cost and profit
- cash-flow forecast
- sources of finance
- location
- marketing mix
60
The purpose of planning business activity
- a business pan forces the owner to think carefully about what the business is going to do, how it will be organised and what resources it needs which allows the business to calculate how much money it needs
- helps businesses decide if the business is a bad idea
- reduce the risks of a business idea
- convince financial backers
- help entrepreneurs make business decisions
61
who are business stakeholders and what are their different objectives (there are 8) and how do they impact/are impacted by business activity
a stakeholder is anyone who is affected by a business. They include:
- shareholders (owners)
- employees
- customers
- managers,
- suppliers
- local community
- pressure groups
- the government
62
What are the different types of technology used by businesses (there are 4)
- e-commerse
- social media
- digital communication
- payment systems
63
How does technology influence business activity in terms of sales, cost and marketing mix
- technology is more convient for customers so the should be more likely to buy the product (commerce) and allows the business to reach wider market
- Digital communication allows more effective communication within a business and with the customer with websites and video calls etc. It might lead also to more customer seeing your brand if you are on social media
- social media can also help with customer service
- payment systems has made it easier to and safer for customers to pay for products ( online payments and, chip and pin and contactless) which may encourage customers to shop at the firm. they can also serve more customers in any given time
64
What is the purpose of legislation
Legislation is a set of laws put in place by the government to protect businesses, employees and consumers
65
What is legislation
Legislation is a set of laws put in place by the government to protect businesses, employees and consumers
66
What are the principles of consumer law (consumer rights act 2015)
- quality (product must be well made. they shouldn't cause other issues for the customers)
- the product should match its description
- the product should be fit for purpose
67
What are the principles of employment law (there are 4)
- recruitment (shouldn't discriminate against religion, gender, race etc and recruits should have the legal right to work in the UK)
- pay (business have to pay employees the minimum wage)
- discrimination (all employees must be paid the same if they do the same job or the business will have to pay compensation)
- health and safety (risk assessments have to be carries out and staff should be trained with their equipment)
68
What is the impact of legislation on business
- sanctions if legislation is not followed
- reputation of the business may be harmed (reduction in sales)
- business may have to spend extra money to make sure that they are meeting the requirements to follow the legislation
69
What is the impact of the economic climate on a business (there are 6)
- unemployment
- changing levels of consumer income
- inflation (increase prices of goods and services)
- changes in interest rates (strong pound bard for exporters and good for importer and vice versa)
- government taxation
- changes in exchange rates
70
What is the importance of external influence on a business
These will affect the main internal functions of the business and possibly the objectives of the business and its strategies
71
What are possible response in a business to climate change, legislation and the economic climate
- climate change may cause a business to try create eco friendly products to gain a better brand image
- legislation may cause a business to spent money making sure they meet the legislation so they dont get sanctioned
- business may have to adapt to the e economic climate by working oversees when the UK has a strong pound
