business studies
- Created by: kavish791
- Created on: 24-04-22 01:03
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- Topic 1 investigating small businesses (kavish)
- 1.1
- enterprise & entrepreneur
- dynamic nature of business
- changing technology: faster products and service, compact products, cheaper, easier to use and safer
- changing consumer needs: change in- fashion, economy, national demographics, lifestyle and technology
- products may go obsolete due to change in demands
- risk and reward
- risk: business failure, financial loss and lack of security
- business success, profit and independence
- reduce risk: market research, business plan and start-up finance
- role of business enterprise
- added value: more convenience, esp, more efficient, branding, improved quality, better design
- businesses either sell products to customers or to suppliers
- customer buys the product. consumer uses the product
- entrepreneurs create products buy novation or invention
- dynamic nature of business
- enterprise & entrepreneur
- 1.3
- putting a business idea into practice
- aims and objectives
- objectives can be financial and non-financial
- aims and objectives can change due to competition and demand
- revenue cost and profit
- revenue = price x quantity
- total costs = fixed + variable costs
- profit= sales revenue - costs
- interest is the% reward saving or the % cost of borrowing
- cash and cash-flow
- cash flow is the money flowing in and out of a business
- cash forecast can predict cash flow of a business using data from previous months
- source of business finance
- short-term source of finance
- bank overdraft and trade credit
- long-term source of finance
- savings, venture capital, share capital, loan retained profit and crowd funding
- short-term source of finance
- aims and objectives
- putting a business idea into practice
- 1.5
- understanding external influences on a business
- business stakeholders
- owners, managers, pressure groups, suppliers, employees, government, local community and customers
- effects: stakeholders get return on investment, employees receive income, customers receive products and local community may benefit with development
- effects: pollution in local area, employees may work in poor conditions, pressure groups will protest and employees may loose job .
- technology and business
- e-commerce, social media, electronic payment, and digital communication
- new technology can create new opportunities due to the change in demand in the market
- consumer and employment law
- consumers have right to return goods, goods should be delivered safely, service should take place with care
- redundancy procedures should be fair, health and safety requirements should me met, recruitment processes should be fair and no discrimination
- the economy and business
- high demand impact: consumer income rise, inflation may rise, unemployment may fall, interest rates may rise and pound may become stronger
- low demand impact: consumer income fall, inflation may fall, unemployment may fall, interest may fall and the pound may become weak
- exchange rates is the price of buying foreign currency
- external influences
- opportunities: rise in economic activity therefore higher income, new legislation increases demand, new tech lowers production cost
- threats: new competitors entering the market, new legislation making products illegal and fall in economic activity leading to lower demand
- response to external influence
- cut investment and spending with economic activity is low, lower prices to counteract the entrance of a new competitor
- change company policy to adhere to employment or consumer legislation
- increase productivity and recruit new employees when economic forecast look positive
- stop producing a product line that has become obsolete due to rise of new technology
- business stakeholders
- understanding external influences on a business
- 1.4
- making the business effective
- option for start-up and small businesses
- limited liability: plc's owners and business are separate legal entities.
- unlimited liability: sole traders are businesses owned by one person. responsible for any debts
- franchising
- established brand image, higher chance of survival, specific suport and training and marketing cost is covered by franchise
- high initial costs, royalty payment, little freedom to make decisions and restrictions where it can be set up
- business location
- location can be based on market, materials, labour, competitors and transport
- nature of business can affect location: manufacturing, exporting, retailing and tourism
- marketing mix
- 4 p's : product, place, price and promotion
- a business must develop an integrated marketing mix where each p complements the others
- business plan
- purpose: convince banks for loan, forecast financial projects, identify needs of customers and provide information
- elements of business plans: business idea, aims and objectives, market research, market mix, production and financial forecast
- option for start-up and small businesses
- making the business effective
- 1.2
- spotting business opportunity
- customer needs
- understanding customers: family needs, financial needs, personal taste and preference emotional needs
- customer needs: price, choice, convenience and quality
- market research
- market research purpose: understand and identify trends, competitors, customer needs and opportunities
- primary research: surveys, social media, experiments and observations
- secondary research: internet sites, local newspapers, sales data and market reports
- qualitative data includes opinions and judgement
- quantitative data can be expressed as numbers and analysed in graphs
- market segmentation
- groups with similar characteristic and interests
- differentiate products, target marketing activity, develop unique brand image and meet specific customer needs
- focusing on one group means another gap is left, can be very niche, customer interests can change over time and can be costly
- market map can find gaps in the market by comparing existing products in the market
- helps: identify closest competitors, support market segmentation and make decisions on marketing
- can be difficult to find appropriate variables, based on opinions not accurate data and compares businesses upon only 2 variables
- competitive environment
- decisions for high competition: improving efficiency, competitiveness, differentiating products and services
- drawbacks of high competition: lower prices, lower profit margins, change of aims and objectives
- customer needs
- spotting business opportunity
- 1.1
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