Flashcards in Unit 1 Revision Deck (100):
What does market research tell a business?
How much they are willing to pay
What features customers want
Who their competitors are
What are examples of primary research?
What are examples of secondary research?
What are the advantages of primary research?
Up to date
Specific to needs
What are the advantages/ disadvantages of secondary research?
Less time consuming
Data may be out of date
What is qualitative data?
Information about opinions, judgements and attitudes
What is quantitative data?
Data that can be expressed as number and statistically analysed
What is market mapping?
It helps businesses to identify market segments and position their products through identifying gaps in the market
How can businesses analyse potential customers buying preferences?
Finding information about customers
Observations and surveys
What is a market segment?
It’s a group of buyers with similar characteristics and buying habits
How can markets be segmented?
What does market segmentation allow a business to?
Meet specific customer needs
Differentiate their products
Develop a unique brand image
What is market mapping?
A market map is a diagram that can be used to position and compare products in a market and identify opportunities where customer needs aren’t being met
What are the ways a business can compete?
Wider product range
Stronger brand image
A brand is a named product that customers see as being different from other profits and that they can associate or identify with
What is added value?
The increased worth that a business creates for a product. It’s the difference between what a business pays its suppliers and how much the product is charged
How can a business add value to its products
What is the importance of added value?
The more value a business can add to its products, the more chance the business has of success, survival and long term growth
What is a USP?
It’s another way to add value to a product. Also helps a business to compete
What is a franchise?
It’s the right given by one business to other businesses to sell goods or services using its name
What is a franchisor?
The business that gives franchisees the right to sell its product or service
What is a franchisee?
A business that agrees to manufacture, distribute or provide a branded product, under licence by a franchisor
What is the principle of franchising?
The expansion of an established business through licensing the right for entrepreneurs to set up their own business using their name
What does the franchisee get when they buy a franchise?
An established brand name
What are the benefits of a franchise ?
Brand image and an established reputation
Expensive marketing costs are covered
Higher chance of survival
What are the drawbacks of a franchise?
Start up costs can be expensive
Lack of control
What is an enterprise?
The initial spark and idea for a business and the willingness by an individual to show initiative, take a risk and undertake a new venture
What is an entrepreneur?
A person who owns and runs their own business and takes risks
What are enterprises?
Another word used for businesses
What are the skills an entrepreneur must have?
To take risks
To show initiative
Willingness to understate new ventures
What are the aspects of thinking creatively?
Considering ‘what if’ questions
Unique ideas and products
Improved customer service
What is deliberate creativity?
The intentional creation of new ideas through recognised and accepted techniques
What are examples of deliberate creativity?
What is blue skies thinking?
Coming up with as many ideas as possible to solve a problem
What is lateral thinking?
Involves thinking differently to try to find new and unexpected ideas. De Bono’s six thinking hats is an example of lateral thinking
What does the white hat represent?
Facts about an idea
What does the green hat represent?
How to get around a problem creatively
What does the blue hat represent?
Thinking about what they are thinking
What does the red hat represent?
Emotions are gut feelings about an idea
What does the black hat represent?
Difficulties of the idea
What does the yellow hat represent?
Positive aspects of the idea
What is invention?
The thought process using research and development
What is innovation?
Bringing a product into the market
What are the drawbacks of innovation and invention?
Many products fail before they reach the market
What is a patent?
Right of ownership of an invention, design or process when it’s registered with the government
What is copyright?
Legal ownership of material such as books, music and films which prevent these being copied by others
What are trademarks?
The logo, symbol, sign or other features of a product or business that cannot be copied by others
What is a calculated risk?
Putting a numerical value or probability on a risk and the likelihood of it coming true
What are examples of a calculated risk?
50:50 chance of an adverts success
1 in 3 chance of a business failing
10% of customers will return products
What are important enterprise skills?
What are fixed costs?
They don’t vary e.g. salaries and rent
What are variable costs?
They change due to how many products are sold. E.g if there is an increase in demand in a product, the amount of packaging needed will increase
What does profit do for a business?
Allows them to:
What are ways that businesses can increase their profits?
Lower variable costs
Lower fixed costs
Increase sale price
Why does making a loss impact a business?
Unable to repay loans
Unable to pay bills e.g wages
Leading to the business needing to close
What impacts on cash flow?
Change in costs
Business expanding or closing stores
Change in stock levels
What does insolvency mean?
When the business doesn’t have sufficient cash within the business.
What does insolvency lead to?
Won’t be able to pay debts
What is cash flow?
The amount of money flowing into and out of a business on a daily business
What is a business plan?
A plan for the development of a business
What does a business plan allow businesses to do?
Get a bank loan
Identify the needs of customers
Provide the owner with a plan of action that will minimise risk
What goes into a business plan?
Overview, objectives, market research, personnel, finances and production
What are long term sources of finance?
What is a venture capitalist?
An external investor looking for fast growth and return on their investment
What is a share?
A share is part ownership in a business
What is a start up?
A limited compared can sell shares to potential investors to raise capital
What are shareholders?
Investors that own a part of the business
What are short term sources of finance?
What are the three stages of being customer focused?
Meeting customer needs
What are the aspects of the marketing mix?
What is unlimited liability?
Sole traders are businesses owned by one person
What are the disadvantages of being a sole trader?
The owner is legally responsible for any debts of the business. There is a risk of losing personal belongings
What is limited liability?
Private limited companies. Those that invest only lose what they’ve invested. Their personal belongings are not liable
Why is important to have legislation?
Government keep track of business activity
Taxes can be collected
Protect businesses from illegal activity
What are the taxes on a small business?
Value added tax
What is VAT?
A tax on the value of sales of a business
What is income tax?
A tax on the income earned by workers and sole traders
What is national insurance?
A tax on earnings of workers and sole traders to state benefits
What is corporation tax?
A tax paid by limited companies on the profits of the company
What is customer satisfaction?
A measure of how much a business or its products meet customer expectations
What factors contribute to god customer service?
Being polite and friendly
Dispatching orders quickly
Benefits of good customer satisfaction?
Can differentiate a business and become their USP
How can repeat purchases be stimulated?
Cheaper prices than competitors
Easy and convenient service
Effective customer service
Why is a motivated work force a good thing?
Paying fair wages
Providing good working conditions
Encouraging and rewarding staff
What does supply mean?
Supply for a product is the amount that sellers are willing and able to sell at any given price
What is the definition for demand?
Demand for a product is the amount that buyers are willing and able to purchase at any given price
What is the definition of a market?
A market is where buyers and sellers meet to exchange products and services
What is a stakeholder?
An individual or a group that has an interest in and is affected by the activities of a business
What are examples of stakeholders?
What is the formula for total revenue?
Price x quantity
What is the formula for total costs?
Fixed costs+variable costs
What is the formula for breakeven?
Fixed costs divided by (price - variable costs per unit)
What is the formula for margin of safety?
Actual output- variable costs per unit
What is the formula for net cash flow?
Total inflow-total outflow
What is the formula for closing balance?
Opening balance- or + net cash flow
What is the recruitment process?
Drawing up recruitment documents
What happens if Interest rates increase?
People will be reluctant to spend as the longer they keep their money in the bank, the more interest they will receive
What happens if there is a fall in interest rates?
Customers are more willing to spend their money as the longer they keep the money in the bank ,they won’t get as much interest on their money
What is a benefit of a fall in the value of the pound?
The prices of exports falls. Sales increase