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Business Unit 1.1
- Key Words and
Definitions
- GOODS - Physical objects
that we can buy and
touch
- SERVICES -
Non-physical
products
- CUSTOMER - Any
person/organisation which
buys or is supplied with a
product by a business
- CONSUMER - The person
who ultimately use
(consumes) a product
- SUPPLIER - A business that
provides products or sells
products to another
business
- MARKETS - Where buyers
and sellers meet to
exchange goods/services
- LAND -
Somewhere to
put the business
- ENTREPRENEURSHIP -
A person with an idea
who is willing to take a
risk
- CAPITAL - Equipment or
the means to buy it
- LABOUR - People
to work in the
business
- ADDED VALUE - The increase worth that a
business creates for a product. The difference
between what a business pays its supplies and
the prices it charges
- GOODS - Physical objects
that we can buy and
touch
- BUSINESS
OWNERSHIP, SOLE
TRADERS,
PARTNERSHIPS
- Two types of private business ownership
- SOLE
TRADER/PROPRIETOR -
The one person
business
- Have UNLIMITED LIABILITY,
meaning if their businesses fails,
they would have to sell any
personal belongings if necessary
in order to pay off the debts
owned by their business
- ADVANTAGES:
Easy to set up,
full control of
the business
without any
need to share,
make your
own
decisions, you
decide on
profit, hours
etc.
- DISADVANTAGES:
Unlimited liability,
stressful for one person to
deal with, do not have all
the skills or experience
- Have UNLIMITED LIABILITY,
meaning if their businesses fails,
they would have to sell any
personal belongings if necessary
in order to pay off the debts
owned by their business
- PARTNERSHIP - Between
two/twenty people sharing
ownership of a business
- SOLE
TRADER/PROPRIETOR -
The one person
business
- IN LAW, there is no distinction between a sole
trader and their business; they are regarded as
one and the same thing. The sole trader is
therefore personally responsible for all the
activities and debts of the business
- Two types of private business ownership
- FRANCHISES
- FRANCHISE - An Arrangement
in which an established
business name is sold to an
individual or company who
can then start trading under
that name
- FRANCHISOR - The business
selling the right to trade its
products/service.
FRANCHISEE - The
company/person buying the
franchise
- ADVANTAGES: Part of a global brand -
more recognition, more opportunities,
provided with the equipment, uniform
and training, a part of a team, gives
confidence and responsibility
- DISADVANTAGES: No independence, no differences,
expensive to start a franchise, badly-ran franchise can
damage the franchisor's reputation, no ideas of your
own, if anything happens to the original franchiser, you
don't have the business anymore
- Franchises need to pay a fee (also known as a royalty) to the
franchisor - which is expensive, and a percentage of the profit
earned has to go to the franchisor. In return, the entrepreneur
will be provided with training and other support
- FRANCHISE - An Arrangement
in which an established
business name is sold to an
individual or company who
can then start trading under
that name
- UNDERSTANDING CUSTOMER NEEDS
- RESEARCH
- PRIMARY - FIELD RESEARCH
- Collecting data no one has collected
- Surveys, observations, focus groups
- Surveys, observations, focus groups
- Collecting data no one has collected
- SECONDARY - DESK RESEARCH
- Information is already available from
within and outside the company
- Telephone directory, local newspaper, internet
- Telephone directory, local newspaper, internet
- Information is already available from
within and outside the company
- PRIMARY - FIELD RESEARCH
- DATA
- QUALITATIVE DATA
- Information about people's opinions,
judgements and attitudes
- Information about people's opinions,
judgements and attitudes
- QUANTITIVE DATA
- Data that can be
interpreted in a
numerical way
- Data that can be
interpreted in a
numerical way
- QUALITATIVE DATA
- RESEARCH
- MARKET MAPPING
- A diagram which allows you to analyse a
company which can be compared to different
competition between two variables (e.g. price
and quality)
- When businesses start up, they
can use the market map to
identify a "gap in the market" - a
position that they can fill in
- When businesses start up, they
can use the market map to
identify a "gap in the market" - a
position that they can fill in
- A diagram which allows you to analyse a
company which can be compared to different
competition between two variables (e.g. price
and quality)
- COMPETITION
- The basic aim of consumers is to buy as many
gods as possible for the cheapest price.
Businesses aim to MAXIMISE profits for their
shareholders or business owners.
- Consumers WANT markets tp be
competitive to keep prices down and
have a lot of choice
- Consumers WANT markets tp be
competitive to keep prices down and
have a lot of choice
- COMPARING COMPETITION
- PRODUCT RANGE - Do they offer anything different?
QUALITY - Higher/lower? DESIGN - Logo, shop
window, decor SELLING EXPERIENCE - Customer
service AFTER-SALES SERVICE - Refund/exchanges
PRICE - Higher/lower? BRAND IMAGE -
Idea/impression that customers have in mind about
the brand
- PRODUCT RANGE - Do they offer anything different?
QUALITY - Higher/lower? DESIGN - Logo, shop
window, decor SELLING EXPERIENCE - Customer
service AFTER-SALES SERVICE - Refund/exchanges
PRICE - Higher/lower? BRAND IMAGE -
Idea/impression that customers have in mind about
the brand
- The basic aim of consumers is to buy as many
gods as possible for the cheapest price.
Businesses aim to MAXIMISE profits for their
shareholders or business owners.
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