Theme 1 Flashcards
(122 cards)
1
Q
Who are people that want to start up a business?
A
Entrepreneurs
2
Q
What are some reasons why new business ideas come about?
A
- Changes in consumer preferences
- Products becoming obsolete
- Advances in technology
3
Q
How do entrepreneurs gather data on customer preferences?
A
Through customer engagement on social media and analyzing purchase history
4
Q
What is the impact of changing tastes and designs on products?
A
It can lead to products becoming obsolete or less in demand
5
Q
What advantages does e-commerce offer to businesses?
A
- Lower operational costs
- Easier and faster purchasing options for customers
6
Q
What are two ways new ideas can come about?
A
- Adapting existing products
- Creating completely original products
7
Q
What is a risk that entrepreneurs face?
A
- Business failure
- Financial loss
- Lack of security
8
Q
How can risks be minimized for entrepreneurs?
A
Through market research and cash flow forecasting
9
Q
What can cause cash flow problems for a business?
A
- Unexpected drops in sales
- Increased competition
- Economic recession
10
Q
What is one reward that entrepreneurs seek?
A
Business success
11
Q
What are three categories that define the role of a business enterprise?
A
- Producing goods or services
- Meeting customer needs
- Adding value
12
Q
What does ‘adding value’ mean in a business context?
A
Increasing a product’s value through branding, convenience, quality, or unique selling points
13
Q
What is the importance of understanding customer needs?
A
It helps ensure business success and customer loyalty
14
Q
What are the four customer needs that should be considered?
A
- Price
- Quality
- Choice
- Convenience
15
Q
What are the two types of market research?
A
- Primary Research (Field Research)
- Secondary Research (Desk Research)
16
Q
What is one advantage of secondary market research?
A
It is quick and cheap
17
Q
What is one disadvantage of secondary market research?
A
Data may not be specific or up to date
18
Q
What is a method of gathering primary market research?
A
- Observing
- Experimenting
- Surveying
19
Q
What is a focus group in market research?
A
A small group selected to give in-depth feedback on a business
20
Q
What can cause problems in startup research?
A
- It can be time-consuming and expensive
- Lack of money may limit research
21
Q
True or False: Market research guarantees business success.
A
False
22
Q
What is market research (MR)?
A
Systematic gathering and analysis of data about customers, competitors, and market trends.
MR helps businesses make informed decisions.
23
Q
What are the two types of data used in market research?
A
- Qualitative data
- Quantitative data
24
Q
What is qualitative data?
A
Data that reflects people’s opinions and thoughts, often gathered through open-ended questions.
Useful for understanding customer reactions to new products.
25
What are the advantages of qualitative data?
* Provides a detailed picture of customer behavior
* Captures customer opinions and feelings
26
What are the disadvantages of qualitative data?
* Often based on small, biased groups
* Expensive to collect on a large scale
* Results can be subjective based on interviewer bias
27
What is quantitative data?
Data based on numerical responses from large groups, often collected through closed questions.
## Footnote
Useful for statistical analysis.
28
What is one way businesses can use social media for market research?
Set up a Facebook page to communicate with and gather feedback from target audiences.
29
What does reliability of market research data depend on?
The quality of research and whether the findings can be trusted.
30
True or False: Direct competitors sell the same type of product or service.
True
31
What is market segmentation?
Dividing a market into smaller categories based on customer needs or interests.
32
List the criteria by which market segments can be split.
* Location
* Demographics
* Behaviour
* Lifestyle
* Income
* Age
33
What is a market map?
A diagram that identifies products in a market and maps them against two features, such as price and quality.
34
What is a SWOT analysis?
A framework for analyzing Strengths, Weaknesses, Opportunities, and Threats of a business or competitor.
35
What are the objectives of a business?
* Survival
* Providing a good product
* Earning a profit
* Customer satisfaction
* Market share
* Being ethical
* Environmental targets
36
Fill in the blank: Objectives should state what the target is, when it should be achieved, who is to achieve it, and how it is to be _______.
achieved
37
What are running costs?
Ongoing expenses paid regularly, such as wages and rent.
38
What are start-up costs?
Initial expenses paid before a business begins operations.
39
What are fixed costs?
Costs that do not change with the level of production or sales.
40
What are variable costs?
Costs that vary directly with the level of production or sales.
41
What is revenue?
Money received from sales, calculated as selling price multiplied by amount sold.
42
What is the formula for profit?
Profit = Total Revenue - Total Costs
43
What is the difference between gross profit and net profit?
Gross Profit = Sales Revenue - Cost of Sales; Net Profit = Gross Profit - Expenses.
44
What does the break-even point represent?
The level of output where total revenue equals total costs.
45
How is interest calculated on a borrowed amount?
Interest = (Total Repayment - Borrowed Amount) / Borrowed Amount x 100
## Footnote
Example: If 5,000 is borrowed and total repayment is 8,000, the interest is 60%.
46
What is the break-even level of output?
The point where total revenue (TR) equals total costs (TC)
## Footnote
It indicates the number of units a business needs to sell to cover its costs.
47
How is the break-even point calculated?
Break-even Point = Fixed Costs / (Selling Price - Variable Cost)
## Footnote
Example: If FC = 500, SP = 8, VC = 3, then Break-even Point = 500 / (8 - 3) = 100 units.
48
What is a margin of safety?
Margin of Safety = Total Sales - Break-even Sales
## Footnote
Example: If a plane sells 400 seats and break-even is 250, margin of safety is 150.
49
True or False: If revenue increases and costs do not rise, profits will increase.
True
50
What happens if costs rise more than revenue?
Profits will decrease.
51
What is cash flow?
The total money flowing into and out of a business.
52
What are inflows in cash flow forecasts?
Inflows are also known as revenue or receipts.
53
What are outflows in cash flow forecasts?
Outflows are known as expenditure or overheads.
54
How is net cash flow calculated?
Net Cash Flow = Revenue - Expenditure.
55
What does a negative net cash flow indicate?
It indicates a potential financial problem.
56
What is the difference between cash and profit?
Cash is used to pay costs; profit is calculated after all costs are deducted from revenues.
57
What are internal sources of finance?
Retained profits and selling assets.
58
What is a government grant?
Money given to help set up a business that does not need to be repaid.
59
What are the advantages of a bank loan?
* Quick access to funds
* Fixed monthly repayments
* Helps control cash flow.
60
What is an overdraft?
A short-term, flexible loan where interest is only paid when used.
61
What is venture capital?
Investment from a larger business in exchange for a share of profits.
62
What is crowdfunding?
Raising money from a large number of people, typically for a small amount each.
63
What is a sole trader?
A business owned and managed by one person.
64
What are the advantages of being a sole trader?
* Quick and easy to set up
* Full control over decisions
* Keep all profits.
65
What is unlimited liability?
The owner is personally responsible for all business debts.
66
What is a partnership?
A business owned by two or more people who share responsibilities.
67
What is a Deed of Partnership?
A legal document outlining how profits are divided and decisions are made.
68
What is a private limited company (ltd)?
A company where shareholders know each other and shares cannot be publicly advertised.
69
What are the advantages of a private limited company?
* Limited liability
* Higher status
* Attracts more favorable lending terms.
70
What are the disadvantages of a private limited company?
* Legal procedures take time and money
* Public accounts
* Corporation tax obligations.
71
What factors influence the choice of business ownership?
Risk level and the need for limited liability.
72
What is the main tax consideration for limited companies?
Corporation tax has to be paid, which can be more than what sole traders may pay in tax.
73
How can additional shareholders affect decision-making in a company?
They can slow down decision making and may have different objectives and values than the original shareholders.
74
What is limited liability?
Limited liability protects owners so that they can only lose what they invested.
75
What type of business structure may be easier if there is not much risk?
Unlimited liability business, such as a sole trader or partnership.
76
What are the key factors to consider when comparing types of legal structures?
* Liability of the business (limited or unlimited)
* Control of the business
* Skills and experience required
* Willingness to work with others
77
What is a franchise?
A franchise is when a larger firm (franchisor) sells the rights to use its product/brand name to another business (franchisee).
78
What is an advantage of buying a franchise?
* Idea already exists, reducing risk
* Established brand name
* Franchisor provides support and training
* Costs of national marketing shared
* Franchisees can share ideas and experiences
79
What is a disadvantage of buying a franchise?
* Must share profits with the franchisor
* Quality issues of one franchisee can affect all
* Power disputes between franchisor and franchisee
80
What factors impact the location of a business?
* Type of business
* Availability of locations
* Competitors' locations
* Availability of materials
* Availability and cost of labor
* Costs of buildings and land
* Transport links
81
What is inertia in business location?
Inertia is when a business sets up in an area simply because the owner is from there, without considering other benefits.
82
What are benefits of e-commerce?
* Lower operating costs
* Wider audience reach
* Easier adaptation to changing buying habits
83
What is the marketing mix composed of?
* Product
* Promotion
* Price
* Place
84
What does 'Product' refer to in the marketing mix?
The design and features of the item being sold.
85
What is the role of 'Promotion' in marketing?
To let people know the business and the product exists, involving advertising and other promotional activities.
86
What factors should be considered when setting the 'Price' in the marketing mix?
* Payment terms
* Comparison to competitors' prices
* Customer perception of value for money
87
What does 'Place' refer to in the marketing mix?
Where products are distributed from, such as a physical shop or online sales.
88
What is brand loyalty?
Customer preference for a particular brand, often leading to repeat purchases.
89
What is the purpose of business planning?
To state what the business is trying to achieve and how it intends to do this.
90
What should a business plan include?
* Information on owners and experiences
* Market analysis
* Firm's objectives
* Competitive strategy
* Financial analysis
91
What is a significant problem in business planning?
Uncertainty about future market conditions and sales.
92
What defines a stakeholder?
An individual or organization that affects and is affected by the activities of an organization.
93
How do employees impact a business?
They may seek promotional opportunities and pay increases, and can go on strike if dissatisfied.
94
What can customers influence in a business?
They demand value for money and can switch to competitors if dissatisfied.
95
What are the potential impacts of business growth on stakeholders?
* Employees gain job security but may feel isolated
* Suppliers could receive more orders but face competition
* Local community may see job creation but could lose business if relocated
96
What types of conflicts can arise between stakeholders?
* Suppliers want higher pay, owners want higher profits
* Employees want higher wages, suppliers want higher prices
* Customers want lower prices, owners want higher profits
97
What is e-commerce?
Using the internet for trading through computers and laptops.
98
What is m-commerce?
Using mobile devices, both phones and pads, for trading.
99
What is a downside of e-commerce?
* Need for regular technology maintenance
* Security risks of fraud
* Lack of face-to-face customer interaction
100
What is e-commerce?
Using the internet through computers and laptops to trade
## Footnote
E-commerce allows trading at any time and from anywhere, leading to quick order processing and reduced overhead costs.
101
What is m-commerce?
Use of mobiles, both phones and pads
## Footnote
M-commerce enables trading through mobile devices, enhancing accessibility.
102
What are some advantages of e-commerce?
* Trading at any time
* Quick order processing
* Reduced overheads if not running a retail shop
## Footnote
E-commerce can significantly lower operational costs.
103
What are some disadvantages of e-commerce?
* Requires regular technology maintenance
* Security risks of fraud
* Lack of face-to-face customer relationships
## Footnote
These factors can impact customer service and business reliability.
104
What role does social media play in business?
* Cheap communication
* Quick reach to targeted customers
* Feedback collection
## Footnote
Platforms like Facebook and Instagram can enhance customer engagement and brand visibility.
105
What is digital communication?
Email and texting that targets specific customers
## Footnote
This allows businesses to reach their target market effectively and maintain communication.
106
How do payment systems benefit from technology?
* 24/7 availability
* Use of services like PayPal and Apple Pay
## Footnote
Technology simplifies transactions and enhances customer convenience.
107
How does technology impact sales?
Sales can be made at any time and from anywhere, meaning a shop never closes
## Footnote
This constant availability can significantly boost sales volume.
108
How does technology influence costs?
* Reduces paperwork
* Lowers general costs
* Cheap website setup
## Footnote
These factors contribute to higher profitability for businesses.
109
What is the impact of online shopping on pricing?
It forces prices to drop due to competition
## Footnote
The competitive nature of online markets leads to lower consumer prices.
110
What does the Health and Safety Act 1974 ensure?
* Safeguards the health of employees
* Requires good working conditions
* Mandates safety equipment maintenance
## Footnote
Compliance with this act is crucial for employee well-being.
111
What is the minimum wage?
The lowest hourly wage that can be paid to workers, changing with age groups
## Footnote
Current adult minimum wage is around £6.50.
112
What are the Sex Discrimination Acts?
Laws preventing gender-based discrimination in hiring and promotions
## Footnote
These laws ensure equal treatment regardless of gender.
113
What is the Race Relations Act?
Prohibits discrimination based on marital status, color, or race
## Footnote
This act promotes equality in employment practices.
114
What is the Disability Act?
Protects disabled persons from discrimination and requires reasonable adjustments for employment
## Footnote
This includes modifications like ramps or specialized equipment.
115
What are Consumer Protection Laws?
* Prevent unfair treatment of customers
* Ensure product safety and accurate descriptions
## Footnote
These laws safeguard consumer rights and maintain market integrity.
116
What is the Sale of Goods Act?
Ensures that sold items meet expected quality and functionality
## Footnote
This act protects consumers when purchasing goods.
117
What is inflation?
The general increase in prices over time
## Footnote
Higher inflation can lead to increased costs for businesses and consumers.
118
How do interest rates affect consumer behavior?
* Low rates encourage borrowing and spending
* High rates discourage borrowing
## Footnote
Interest rates directly influence purchasing power and demand.
119
What happens to demand when taxes increase?
Demand typically falls due to reduced disposable income
## Footnote
Higher taxes can limit consumer spending.
120
How do exchange rates impact international trade?
* A weaker pound makes exports cheaper
* A stronger pound makes imports cheaper
## Footnote
Exchange rates affect the competitiveness of products in global markets.
121
What are the consequences of not adapting to technology in business?
Falling behind competitors and losing sales
## Footnote
Failure to innovate can harm a business's market position.
122
What is the impact of economic climate on pricing strategies?
Businesses may lower prices during economic downturns to maintain customer demand
## Footnote
Adapting pricing strategies can help sustain sales during recessions.
