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Business Paper 1 > Theme 1 > Flashcards

Theme 1 Flashcards

1
Q

Mass market

A

Tries to make products and/ or services for all consumers. Larger and products are more generalised

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2
Q

Niche market

A

Appeal to a much smaller market, much smaller than mass market. Products are focused on specialised wants or needs.

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3
Q

Benefits/drawbacks of mass markets

A

Benefits

  1. More customers
  2. Economies of scale
  3. Build strong market presence

Drawbacks

  1. More competition
  2. Lower profit margins
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4
Q

Benefits/drawbacks of niche markets

A

Benefits

  1. Less competition
  2. Specific market
  3. Customer loyalty

Drawbacks

  1. No economies of scale
  2. Vulnerable due to small product portfolio
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5
Q

Brands

A

A brand is a good or service that has something unique. A brand is more likely to become strong if it is easily recognised and distinctive.

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6
Q

Strong brands

A

Usually benefit from Higher customer loyalty.

Create higher profitability as people are more likely to buy the product.

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7
Q

Impact of competition

A

Competition will affect costs and demands.
Competition can force lower prices or increase in sales.
The presence of a competitor will increase business costs as a business will spend more on promotion or R&D to improve products

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8
Q

Market share

A

Sales of a business/total sales in market * 100

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9
Q

Risk and uncertainty

A

Uncertainty is when a business is u able to foresee problems.

Risk is where there is a chance something could go wrong and not end up as expected.

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10
Q

Benefits of offering online retailing services

A

> market goods further
marketing costs are lower
reach larger audience
open 24/7

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11
Q

A market may grow due to the following reasons

A

> economic growth
innovation
social changes
demographic changes

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12
Q

Adapting to change

A 
>flexibility 
>market research
>investment
>continuous development 
>develop a niche
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13
Q

Product orientated

A

Business focuses on the production process and the product itself

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14
Q

Market orientated

A

Product is led by the market, looking at consumers needs and wants.

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15
Q

Whether a business will be market or product orientated

A

> nature of the product
views of those in control
nature and size of the market
degree of competition

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16
Q

Market research

A

Gathering data about the marketing and consumption of goods and services

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17
Q

What does market research do

A

> identify customer needs and wants
quantify likely demand for the product
provide an insight into consumer behaviour

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18
Q

Primary research

A

Collecting data which did not exist before research has began. Must be collected by the researcher

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19
Q

Methods of primary research

A 
>telephone interviews
> personal interviews
>focus groups/consumer panels 
>questionnaires —> postal surveys
>test marketing 
>observation
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20
Q

Secondary research

A

Information that already exists in some form. It is either internal or external data.

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21
Q

Limitations of market research

A 
>Human behaviour 
>sampling and bias
>questionnaires must be carefully put together 
>secondary may be outdated
>costly
>time consuming
>opportunity cost
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22
Q

Use of ICT on market research

A

> company websites

>social media

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23
Q

Advantage of social media for research

A 
>free/low cost
>reach millions
>fast
>allows specific people to be targeted 
>easy
>communication on personal level
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24
Q

Database?

A

Is an electronic filing system, that allows a great deal of data to be stored

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25
Q

Market segmentation

A

Markets can be divided into different segments, each segment has consumers who have similar needs

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26
Q

Geographic segmentation

A

Different customer groups are likely to have different needs depending on where they live

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27
Q

Demographic segmentation

A 
>age
>gender
>income
>social class
>religion
>ethnicity
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28
Q

Psychographic segmentation

A

Groups customers depending on attitudes, opinions and lifestyles

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29
Q

Behavioural segmentation

A

Segments markets according to how consumers relate to a product

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30
Q

Benefits of market segmentation

A

> higher revenue
higher loyalty
avoid wasting promotional resources
market wider range of goods

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31
Q

Supply

A

Supply is the amoun of a product that suppliers will offer to the market at a given price. The higher the demand the more that will be supplied.

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32
Q

Total Revenue

A

Price * quantity

Cost per unit * number of units sold

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33
Q

The equilibrium price

A

Where supply and demand are equal

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34
Q

Changes in demand to price

A

If demand increases price will rise

If demand decreases price will drop

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35
Q

Changes in supply

A

If supply increase price will fall

If supply decreases price will rise

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36
Q

Excess demand

A

Where demand is greater than supply at a given price and there are shortages in the market

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37
Q

Excess supply

A

Where supply is greater than demand at a given price and there are unsold goods in the market

38
Q

Distribution

A

Refers to the location where consumers can buy products from

39
Q

Distribution channels

A

The route taken by a product from producer to consumer.

40
Q

Direct selling

A 
Some producers market products directly to consumers. This can be done by:
>internet
>direct mail
>door to door selling
>mail order catalogues 
>direct response adverts
41
Q

Retailers

A

A business that buys goods from manufacturers and wholesalers and sells them to consumers in small quantities

42
Q

Wholesalers

A

Buys from manufactures and sells to retailers

43
Q

Agent/broker

A

An intermediary that brings together buyers and sellers

44
Q

Choosing a channel

A

> the cost
the market
control
the nature of the product

45
Q

Changes in distribution to reflect social trends

A 
>growth in social media
>building of large shopping malls
>sellers using call centres
>supermarkets extending product range and opening hours
>growth in use of tv shopping channels
46
Q

Online distribution/E-commerce

A

The use of electronic systems to sell goods and services. 2 main types Business to business (B2B) and Business to consumer (B2C)

47
Q

Entrepreneur

A

Individuals who typically set up and run a business and take the risks associated with it

48
Q

Characteristics of an entrepreneur

A 
>self determination 
>initiative
>judgement
>commitment
>being a self starter
>self confidence
49
Q

Skills required by an entrepreneur

A 
>Financial managing 
>managing people
>negotiating
>communication
>organising
>IT skills
50
Q

Sole trader

A

A business organisation which has a single owner

51
Q

Partnerships

A

A business organisation ran by 2-20 people

52
Q

Private limited companies (Ltds)

A

Small or medium sized however some may be the same size as Plcs
>directors will be shareholders
>family business
>shares transferred privately

53
Q

Franchise

A

A business model in which a business allows another operator to trade under their name

54
Q

Social enterprise

A

A business that trades with the objective of improving human or environmental well being (charities and workers cooperatives)

55
Q

Lifestyle business

A

A business that aims to make enough money to support and provide the flexibility needs to support a particular lifestyle of a person

56
Q

Online business

A

A business that uses the global communication infrastructure of the internet as a trading base

57
Q

Stock market floatation

A

When a business goes public which means a company’s shares are offered to the public for the first time

58
Q

Advantages of a plc

A 
>more power
>limited liability 
>lots of money can be raised
>pressure from media may make them work harder
>easier to raise finance
59
Q

Disadvantages of a plc

A

> high set up costs
outsider may take control
may be a divorce of control and ownership
harder to deal with public/consumers
financial accounts can be seen by anyone

60
Q

Exports

A

Goods and services that firms produce in a home market but sell in a foreign market

61
Q

Imports

A

Goods and services that a bought into one market from an international one

62
Q

Specialisation

A

Can increase the speed and skill with which a task can be done and also save time improving efficiency

63
Q

Comparative advantage

A

The theory that a country should specialise in products and services that it can produce more efficiently than other countries

64
Q

Competitive advantage

A

The idea that a business should specialise in any area where it can perform better than it’s competitors

65
Q

FDI

A

(Foreign direct investment) business investment undertaken by a firm in another country

66
Q

Horizontal FDI

A

Refers to producing the same product/service as it does at home

67
Q

Vertical FDI

A

Is where a firm is seeking to squire materials or support for its own products or services. The firm is looking to move into another part of the value chain

68
Q

Globalisation

A

The growing intervention of the worlds economies

69
Q

Factors contributing to increased globalisation

A 
>reduction of trade barriers/trade liberalisation
>political change
>reduced cost of transport
>increased significance of global companies 
>increased investment flows 
>technological change
>migration
>growth in global labour force
>structural change
70
Q

Trading blocs

A

A group of countries that has signed an RTA to reduce or eliminate tariffs, quotas and other protectionist barriers between themselves

71
Q

RTA

A

(Regional Trade agreement) an agreement made between two or more countries within a geographical region, which is designed to facilitate trade by bringing down barriers.
They create trade blocs.

72
Q

PTAs

A

(Preferential trading area) a trading bloc where certain types of products from participating countries receive a reduced tariff rate

73
Q

FTA

A

(Free trade area) a region where member states remove all trade barriers between themselves, but each member states keeps different barriers against non member states

74
Q

Custom union

A

A union where members remove all trade barriers between themselves and members adopt a common set of barriers against non members

75
Q

Common market

A

A market where goods, labour and capital can move freely across the member states

76
Q

Single market

A

A market where almost all trade barriers between members are removed and common polices and laws aim to make the movement of goods, services, labour and capital between countries as easy as the movement between each country

77
Q

Economic union

A

An economic union that uses the same currency

78
Q

What is the EU union?

A

Single market

79
Q

What is the ASEAN

A

Free trade agreement / common market

80
Q

what is NAFTA

A

A free trade agreement. (Canada America and Mexico)

81
Q

Factors to consider in a trading bloc

A

> where to produce
where to sell
business strategy
how to enter a market

82
Q

Impacts of trading blocks on businesses

OPPORTUNITIES

A 
>economies of scale
>specialise in countries comparative advantage
>FDI
>more efficiency due to more competition
>easier to source resources
>give power to negotiate better deals
>markets will grow more
83
Q

Impacts of trading blocs on businesses

DRAWBACKS

A

> may lead to tension with outsiders
may result in more competition for smaller firms
benefits are distributed unequally
overall benefits may be small if agreements have limits on goods

84
Q

Global competitiveness

A

The extent to which a business or a geographical areas such as a country, can compete successfully against rivals

85
Q

Competitive advantage

A

Is the advantage one company has over another or several others in the provision of a particular product or service

86
Q

Cost competitiveness

A

This allows the firm to deliver the same product or service as its competitors but at a lower cost, which allows it to make more profit

87
Q

Differentiation

A

This is where the firm select certain attributes of its products or services and then tries to match this with the specific customers

88
Q

Skill shortages

A

Are when potential employees do not have the skills needed by the firms.

89
Q

Impact of MNCs on local economy

A

> job creation
higher wages
better working conditions
local businesses — giving better work ethics, can negatively affect by taking employees

> impact on local community — better infrastructure. Help in local communities.
However, pollution and environmental harm

90
Q

Impact of MNCs on national economy

A

> positive on country’s balance of payments
higher tax revenues
tech and skills transfer
improve business culture
gives consumers more choice, lower prices and improved quality
FDI flows improve, higher income, higher revenue, more employment less nation debt

Business Paper 1 (1 decks)

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