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Business Paper 1 (general) Flashcards

(73 cards)

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1
Q

Why do new businesses come around?

A

Advances in tech, change in consumer needs, products becoming obsolete

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2
Q

How do new businesses come around?

A

Adapting existing ideas, creating an original product

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3
Q

What are some risks to a business?

A

Business failure, financial loss, lack of security

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4
Q

What are some financial rewards of a business?

A

Financial gain, independence, business success

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5
Q

What is the purpose of business activity?

A

Meet customer needs, produce goods and services, add value to products

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6
Q

What are some ways of adding value to a product?

A

Choice, branding, quality, design, unique selling point

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7
Q

What is an entrepreneur?

A

Someone that takes risks to set up a business

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8
Q

What is the role of an entrepreneur?

A

Make decisions, take risks, organise resources

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9
Q

What are the 4 customer needs?

A

Quality, choice, convenience, price

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10
Q

What are the 2 types of market research?

A

Primary and secondary

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11
Q

What are the two ways of market research?

A

Quantitative and qualitative data

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12
Q

What are some ways of primary research?

A

Surveys, focus groups, observation

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13
Q

What are some ways of secondary research?

A

Government reports, market reports, internet

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14
Q

What data could you find in market segmentation?

A

Demographic data (age , gender, etc) , lifestyle, income, location

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15
Q

What is it called when exchange rate increases?

A

Appreciation

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16
Q

What is it called when exchange rate decreases?

A

Depreciation

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17
Q

What are some benefits to customers if exchange rate appreciates?

A

Import prices decrease meaning customers can buy different products and cheaper products

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18
Q

What are the benefits of exchange rate appreciating for a business?

A

The business can buy more raw materials for the same uk converted price, this reduces costs for the business

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19
Q

What are the drawbacks to a business is exchange rate appreciates?

A

Exported goods become more expensive meaning there are potentially less sales, small businesses cant compete against cheap imports

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20
Q

What are the two types of aims and objectives?

A

Financial and non-financial

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21
Q

What are some financial aims?

A

Survival, profit, market share, financial security, sales

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22
Q

What are some non-financial aims and objectives?

A

Independence and control, personal satisfaction, challenge, social objectives

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23
Q

Why are aims and objectives different for each business?

A

They change because businesses want different things and may be at different stages

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24
Q

What are the two types of costs?

A

Variable and fixed costs

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25
What are some types of variable costs?
Supplies, raw materials, packaging, anything to do with the product or service sold
26
What are some types of fixed costs?
Rent, wages, utility bills
27
What is the formula for profit?
Total revenue - total costs
28
What is the formula for the break even point?
Fixed costs / selling price - variable costs
29
What is the formula for margin of safety?
Sales - break even point
30
What is the margin of safety?
Amount of products needed to be sold to cover costs
31
On a break even graph, what does the fixed costs line look like?
Its flat
32
On the break even graph, what does the revenue line look like?
It is a directly proportional graph that starts from 0
33
On the break even graph, what does the total costs line look like?
Directly proportional line from the fixed costs line
34
On the break even graph, what does the break even point look like?
It is where total costs crosses over the revenue line
35
On the break even graph, what does the profit look like?
It is the triangle above the fc line
36
On the break even graph, what does the loss look like?
It is the triangle under the fc line
37
What are some things a business needs cash for?
Overheads (bills) , employees, suppliers
38
What is cash?
Cash is any money that you have
39
What is profit?
The money after paying for everything
40
What is on a cashflow forecast?
Inflows, outflows, opening and closing balance, net cashflow
41
What are inflows?
All the money that comes into the business
42
What are outflows?
All the money coming out of a business
43
What is the formula for net cashflow?
Inflows - outflows
44
How do you work out closing balance?
Opening balance + net cash flow
45
How do you work out opening balance?
It is the closing balance of last time period
46
What are the types of finance?
Short term and long term finance
47
What are all the long term finance ways? (6)
Retained profit, personal savings, loan, venture capital, share capital, crowd funding
48
What are all the short term ways of finance? (2)
Trade credit, overdraft
49
What is retained profit?
These are profits that the business owners have decided to put back into the business after theyve paid themselves a dividend, it can also be known as profits that were saved from a long time ago
50
What are personal savings?
Personal savings are the business owners own items, they can reinvest their own cash into the business, this can be upon starting the business or when the business is having cash flow problems
51
What is a loan?
It is something that can be taken out of a bank but it has to be payed back
52
What is venture capital?
This is where an individual investor buys shares within a business and gives the business money to get it started
53
What is share capital?
It is where individuals can buy shares within the business, this means that some ownership will go towards those who have bought the shares and the business can use the money that came with buying the shares
54
What is crowd funding?
This is where many people contribute money towards the business idea to help it start up, this is usually done online
55
What is trade credit?
Businesses may give you some time to pay for purchases , e.g a supplier could give raw materials to a business and they wouldn’t have to pay it back until a certain time
56
What is an overdraft?
Overdrafts let businesses take out more money out of its bank account than it has paid into the bank account
57
What might a business look at to combat competitors?
Price, customer service, quality, product range, location
58
Why might a business carry out market research?
To help the business to make informed decisions, spot a gap in the market and reduce risks
59
What kind of data is quantitative data?
Numerical data
60
What kind of data is qualitative data?
It is opinionated and detailed data
61
What does market mapping help a business to see?
It helps a business to understand its location within the market and the markets key features
62
What can a market map help the business to see?
Competitors selling similar products and how customers perceive them, any gaps in the market
63
What is interest?
The cost of borrowing money, this is usually added onto things like loans and savings
64
what can affect a business?
legislation, economic, environmental, technological and social
65
what are some sources of business ideas?
original, adapting, business and personal experience
66
what are some reasons for business failure? (7)
poor management, poor market research, sales lower than anticipated, start up costs too high, unexpected shocks, poor quality, reliance on a small number of customers
67
how does poor management lead to business failure?
planning will be bad and that leads to poor decision making, costs aren't kept under control, business doesnt understand customers enough and a poor quality product is provided
68
how does poor market research lead to business failure?
too expensive, sometimes if completed it will be out of date meaning that the data is unreliable
69
how does the sales being lower than expected lead to business failure?
the business may overestimate the price and volumes that the customers will accept meaning that less profit is generated
70
how do high start up costs lead to business failure?
finance is limited in the early stages of production meaning that they may have less money to keep the business afloat
71
how do unexpected shocks lead to business failure?
flash floods, new competitors and changes in the government can all be sudden changes for businesses, they will have to adapt suddenly and may fall behind in the market
72
how does relying on a small amount of customers lead to business failure?
there is a greater risk of failure than if the business had a broad more diverse customer base, if the relationships between the small amount of customer breaks, then the business is put at risk
73
how does poor quality lead to business failure?
constantly poor products will put the business at a bad reputation and people will buy the competitors products instead of theirs

business gcse (7 decks)

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