Business Studies and Economics AS revision notes

Unit 1 Business Studies

A sole trader is a business set up, owned and run by one person with unlimited liability.

Competitive advantage is any positive feature that distinguishes a company from its competitors

Leasing allows a company to rent the use of a fixed asset, on payment of a regular fee.

Demographics refers to changes in and the structure of the population.

Retained Profit is the amount of profit kept in the business rather than paid out to the owners or shareholders and held as cash for reinvestment

Venture capital: is money provided by investors to risky/new or emerging growth companies with potential for high returns/usually in return for a say in company decisions and a portion of the equity

Cost plus pricing is based on determining the cost of producing a product and adding an additional amount to generate profits

Product orientation is about selling the products the company develops rather than what the customer wants/needs

External source of finance is money that is provided from outside of the business/ a commercial bank loan is when finance is borrowed from an external source such as bank and is repaid over a period of time with interest

• A bank loan is a medium term source of finance and is therefore suitable for purchasing an asset such as a van

Entrepreneur e.g. someone who combines the factors of production in order to create a business/willingness to take risks involved in running a business

Product trials e.g. launching a product on a limited scale to measure initial reactions

• Feedback from customers can be used to adapt or modify the product

Market segmentation categorises potential customers according to common characteristics such as gender, age, income, location, because they all have different tastes and preferences

 Trademark is a name, symbol or other device (logo. strapline) used to identify and promote a product or service that is protected against use from others.

Patent e.g. is a legal document guaranteeing the holder the exclusive right to use or license inventions/innovations

Supply is the amount of goods and/or services a firm is able and willing to produce/provide at a given price and at a given time

Non-price demand factors e.g. tastes and fashions/income/price of   substitutes/innovation/safety/brand/advertising and    complements/demographics/seasonality/external shocks

 Premium Pricing means charging a comparatively higher price than many rival products usually because of brand name, quality or reputation. OR gives a reason(s) for using this strategy e.g. to make more profit/branding/quality

Supplier e.g. a business or is a person that provides goods and/or services to other businesses/companies OR close relationships involve effective communications/improved service/better understanding/access to trade credit

Ethics is about doing the right thing. E.g. ethical behaviour requires firms to act in ways that stakeholders consider to be both fair and honest. Ethical consideration e.g. set of moral values that a business follows for the greater good

Responsible marketing an ethical approach to marketing a product/service OR identifying a reason e.g. to increase sales/to act ethically  

Profit is total revenue minus total…