CH1 - Business Plans Flashcards
(38 cards)
What is a Business?
A single person or a group of people producing and producing a product
Trading and selling of goods and services in exchange of revenue
What is Revenue?
Profit
What is a Consumer ?
not buyer, can just looking/ Buyer is a customer
Definition of a Product/Good
Tangible ( Spend money to get a physical object in return)
Definition of a Service
In/non tangible (Spend money to get a service in return)
How would you identify a customers wants and needs?
By looking at Market habits and share, questionnaires
Customer wants and needs can be seen through their buying habits at the company, through questionnaires. Looking at what the market share is, looking at social media.
Surveys, Market research, focus group
What are the Factors of Productions?
Land , Labour , Capital & Enterprise
What is land ?
(Factors of Production)
Where which either the factory resides or the company owns the land from which their materials are farmed (Renewable and no-renewable energy)
What is labour ?
(Factors of Production)
People - Work done by people
What is Capital ?
(Factors of Production)
What the company owns such as finances, land, factories
What is Enterprise ?
(Factors of Production)
The combined abilities of a person, who is often the owner of the business, to create and make a product/service ……..
What is an Entrepreneur ?
A Person who sets up a business or businesses taking on a financial risks in hope of profit.
Attributes of an entrepreneur ?
- Someone who is innovative (they have new ideas and methods)
- Someone who has the motivation to commit to long hours and work through failures
- Have may skills and learns quickly
- Leadership skills and are able to delegate while being able to encourage others
- Risk taker who has money (useful if they have a good reputation)
Someone who is confident with themselves to see things through and not have failures affect them much
What are the Production Factors ?
Land, Capital , Enterprise & Labour
What is Land ?
(Production Factors)
Raw materials e.g. Oil, ore (Site upon which they are farmed also - land and sea)
What is Capital ?
(Production Factors)
Money, cash flow and capital goods
What is Enterprise ?
(Production Factors)
Risk takers (Entrepreneurs), Decision makers and coordinators
What is Labour?
(Production Factors)
Skilled, unskilled, temporary, seasonal and permeant
What is creating value?
- Increasing selling price
- Buying cheaper versions of the material and keep the same price
- Using raw materials so cost of item falls
Problems with Creating Value?
- Will existing customers buy if the selling price is increased?
- Will the new price turn away new customers if increase?
- What will happen to quality of product if materials are swapped with lower grade yet cheaper materials?]
- Dose the business have the equipment and capability to use raw materials?
Are the staff properly trained skilled workers or would the business need to hire to produce products with raw materials
What is Opportunity cost ?
The cost or benefit of the next best item given up
Why is a business environment dynamic?
- Political environment
- Other businesses
- Technological advancements
- Social and demographic factors
- Government economics
- Social policies
- Labour market
- Legal framework (for businesses e.g.
- Customer demand and taste
Business is a dynamic situation, it’s always changing.
What are common reasons for business failing?
- Lack of record keeping ( Includes : Inventory, employee details, invoices, inventory, stock takes etc.)
- Lack of capital ( no cashflow forecasts, not starting with enough capital, poor skills with marketing and cash handling etc.)
- Poor management skills ( No ; leadership skills, sales and marketing skills, poor at decision making, bad communication skills)
- Changes in business environment ( New competition, legal changes, economic changes, technical changes)
Business is a dynamic situation, it’s always changing.
What are the “basic” business sizes?
Local Business
National business
International business (MNC)
