2200140
Description
Flashcards by Libby Rose, updated more than 1 year ago
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Created by Libby Rose
almost 10 years ago
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| Question | Answer |
| What is a Business? | An organisation whose PURPOSE is to produce goods and services to meet the needs of customers |
| List 5 things to think about before setting up a business... | 1) Is there a business opportunity? 2) How will the business be financed? 3) What is required to get the business up and running? 4) What legal aspects have to be considered? 5) What products or services will be sold and to whom? |
| What is a supplier? | A business that sells (supplies) products to another business. |
| What is production? | Using raw materials, labour and machinery to make products |
| What is meant by a customer? | A person or organisation that buys the product or service |
| What is a consumer? | The person that uses (consumes) the product |
| What is the market? | Where the buyers and sellers meet to exchange goods and services |
| What is the purpose of a business? | To provide goods and services |
| Which one of the following is most likely to be a supplier to a small business making costumes for parties? A) A clown who entertains children at parties B) A manufacturer of buttons C) People who buy costumes D) A taxi that takes people to parties | B) A manufacturer of buttons |
| Name 6 things Market Research can tell a business | 1) What features customers want 2) What age and gender they are 3) If the market is growing or shrinking 4) Where they shop 5) Who the main competitors are 6) How much they are willing to pay |
| Name 5 things customer needs a based on... | Good quality, good product range, convenient location, good customer service and a fair price |
| What is primary research? | Collecting data that did not exist before (eg. questionnaires) |
| Give 5 examples of Primary research | 1) Surveys 2) Focus groups 3) Questionnaires 4) Experiments 5) Observations |
| Name 5 advantages of primary research | 1) More accurate 2) Up to date 3) Specific to needs 4) Effective at collecting qualitative data 5) Direct customer contact |
| What is secondary research? | Collecting data that already exists (eg. internet research) |
| List 6 examples of secondary research | 1) Internet sites 2) Market reports 3) Government statistics 4) Telephone directories 5) Local newspapers 6) Sales data |
| Name 3 advantages of secondary research | 1) More general 2) Less time-consuming 3) Effective at collecting quantitative data |
| What is qualitative data? | Information about opinions, judgements and attitudes |
| What is quantitative data? | Data that can be expressed as numbers and statistically analysed |
| What 3 things should businesses look for when interpreting data? | 1) Issues to identify the size of the market 2) Trends in the market 3) An indication of what customers want |
| What does market mapping help businesses to do? | Identify market segments and position their products through identifying gaps in the market |
| What is a market segment? | A group of buyers with similar characteristics and buying habits |
| List 5 market segments | Age (eg. 18-24) Gender (eg. Female) Income (eg. socio-economic group) Lifestyle (eg. adventure) Life-stage (eg. newlyweds) |
| What are 4 ways in which a business can analyse customer buying habits? | 1) Finding information about customers 2) Using their own experience 3) Looking at existing businesses and trying competitors' products 4) Observation and surveys |
| Name 6 things segmentation allows a business to do... | 1) Meet specific customer needs 2) Differentiate their products 3) Focus on a specific group of customers 4) Target marketing activity 5) Develop a unique brand image 6) Build close customer relationships |
| What is a market map used for? | To position and compare products in a market, and identify opportunities where customer needs are not being met. |
| Name 7 ways in which a business can compete... | 1) Wider product range 2) Better design 3) More enjoyable experience 4) Higher quality 5) Better product features 6) Stronger brand image 7) Better after-sales service |
| What is a brand? | A named product that customers see as being different from other products, and that they can associate or identify with. A company or product can develop a unique brand image that customers associate them with. |
| Instead of competing head-to-head, how else can a business compete? | Differentiation Eg. Customer service and Quality etc |
| What is added value? | The increased worth that a business creates for a product; it is the difference between what a business pays its suppliers and the price that it is able to charge for the product. |
| Name 6 ways a business can add value... | 1) Unique selling point 2) Branding 3) Improved quality 4) Better design 5) More convenience 6) Greater speed of service |
| What does the added value of a product go towards? | Paying off a company's cost. The higher the added value, the sooner the costs can be paid off and the quicker a business will make a profit. 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? What does it stand for? | A USP is one another way to add value to a product. A USP will also help a business compete. |
| What is a franchise? | 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 |
| Explain the principle of franchising... | The principle behind a franchise is the expansion of an established business through licensing the right for ENTREPRENEURS to set up their own business using the name, equipment and products of the franchise in return for a fee or share of the sales revenue |
| What does the franchisee get when they buy a franchise? | 1. An established brand name 2. Training 3. Equipment 4. Ongoing support 5. Access to goods and services 6. Advertising and promotion 7. Operate in an exclusive area |
| What type of business is set up 'under licence' to use an established business name? | Franchise |
| List 6 benefits of a franchise | 1. Expensive marketing costs covered by the franchise 2. Brand image/reputation already established 3. Access to tried and tested products 4. Possibly an established customer base 5. Higher chance of survival 6. Specific support and training provided |
| List 5 drawbacks of a franchise... | 1. Start-up costs can be expensive 2. Royalty payments 3. Complicated application process 4. Lack of autonomy and control 5. Limited flexibility to make your own decisions |
| List 4 factors choosing a location might include... | 1. Cost 2. Busy (passing trade) 3. Access (parking etc.) 4. Proximity to competition |
| What does the word enterprise represent? | The ideas and initiatives involved in starting a new business. |
| What is an entrepreneur? | A person who owns and runs their own business and takes risks |
| What is 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 |
| Name 3 enterprise skills? | Risk-taking Showing initiative Willingness to undertake a new venture |
| Explain the importance of risk | Entrepreneurs take risks when they start their own business. There is a chance their businesses will not survive and therefore they risk their own time, livelihood and money. Enterprise is important because new businesses create jobs and wealth in the economy |
| Name 5 outcomes of 'Thinking Creatively' | 1. Better products 2. Consider 'what if' questions 3. Cheaper production techniques 4. Unique ideas and products 5. Identify new opportunities and markets |
| What is DELIBERATE CREATIVITY? | The intentional creation of new ideas through recognised and accepted techniques. For example: Creating lists Mind maps Make it bigger/smaller Combining things together |
| What is blue skies thinking? | Coming up with as many ideas as possible to solve a problem |
| What is lateral thinking and what is an example? | Involves thinking differently to try and find new and unexpected ideas. DE BONO'S SIX THINKING HATS is an example. |
| What does the blue hat represent? | Thinking about what they are thinking |
| What does the white hat represent? | Facts about an idea |
| 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 does the green hat represent? | How to get around a problem creatively |
| Why ask questions as an entrepreneur? | 1. Helps identify business objectives 2. Helps develop aspects of the business plan 3. Identifies potential problems and pitfalls 4. Helps make important decisions |
| What will "WHY?" and "WHY NOT?" questions help to identify? | The purpose and direction of the business: -Why do I want to start my own business? -Why do I want to change? - Why not set up my own website business? |
| What do "HOW?", "WHERE?" and "WHEN?" questions help to identify? | Specifics about the business that can help form parts of the business plan -How do I set up the business? -How do I build a customer base? -How will I research my market? -Where can I get help and advice? -When could I open the business? |
| What do "WHAT IF?" questions allow an entrepreneur to do? | Access the value and likelihood of any possible outcome. Solutions can then be identified from these questions. -What if my business loses money? -What if my customers do not like my products? -What if there is too much competition? -What if I am ill for a long period of time? |
| What is innovation? | The ability to develop new ideas that build upon those that already exist |
| What is invention? | To develop a completely new product |
| What does import mean? | The purchase of products and/or services from overseas |
| What are incentives? | Financial or equivalent reward to stimulate action from staff or customers. Examples might include holidays or company cars |
| What is income tax? | A government tax on an individual's income |
| What is incorporation? | The process of becoming a corporate body, meaning that the business has a separate legal entity from its owners |
| What is indirect cost? | A cost not directly related to the production of a product |
| What is induction? | The training programme that is designed to familiarise new workers with the layout, health and safety and security systems in operation in their new place of employment |
| What is industrial action? | Measures taken by the workforce that will slow or halt output. The types of industrial action that can be taken by workers includes: strike, work to rule, overtime ban and go slow |
| What is inelastic demand? | A product that continues to sell at roughly the same rate, despite price increases. This is because consumers believe that they cannot do without it. An example would be petrol |
| What is inflation? | A general and sustained rise in the level of prices over a period of time, which reduces the buying power of money, It is measured by the Consumer Price Index (CPI), and usually expressed as a percentage |
| What is an interest rate? | The cost of borrowing money |
| Why can invention and innovation be 'risky'? | They can be expensive and time consuming, and many new products fail to make it to the market. |
| What is a patent? | A right of ownership of an invention, design or process when it is registered with the government |
| What is a 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 does the term CALCULATED RISK mean? | Putting a numerical value or probability on a risk and the likelihood of it coming true. Weighing up the risks and rewards of a new business idea is important in judging the outcome and viability of a start-up |
| What are 5 other important enterprise skills | Planning, Drive, Thinking ahead, Determination, Seeing opportunities |
| What does the skill of planning involve? | Identifying a direction and plan of action for the business |
| What does the skill of drive involve? | Being hardworking and motivated to achieve success |
| What does the skill of thinking ahead involve? | Having the foresight to identify potential problems |
| What does the skill of determination involve? | Being resilient when things go wrong/not giving up |
| What does the skill of seeing opportunities involve? | Having the creativity and imagination to do things differently |
| When are mind maps often used and why are they useful? | Mind maps are often used in blue skies thinking. They are useful in helping an entrepreneur get their ideas down on paper when thinking ahead, planning the business and trying to identify new opportunities. |
| What are the objectives of a business? | The goals that a business is trying to achieve. they are important for all businesses, especially business start-ups. |
| What do setting opportunities give a business? | A direction and a target to measure success against |
| What are some examples of financial objectives? | Survival, wealth, profit and income and financial security |
| What are examples of non-financial objectives? | Personal satisfaction, independence and control and helping others |
| What are the 7 entrepreneurial qualities? | Planning, initiative, taking risks, determination, making decisions, persuasion and leadership |
| What does the quality of initiative involve? | Being proactive and getting a job done. |
| What is Revenue/sales revenue/turnover? | The amount of income received from selling goods or services over a period of time |
| What is the formula for total revenue? | Price x quantity = total revenue |
| What does a profit allow a business to do? | 1. Survive 2. Reinvest profits for expansion 3. Give an incentive to start the business 4. Provide security and savings 5. Reward employees 6. Generate wealth for the owner |
| Name the 4 ways to increase profit | 1. Lower variable costs 2. Lower fixed costs 3. Increase the sales price 4. Increase the quantity of sales |
| Name the 4 impacts a loss can have on a business | 1. Unable to repay loans 2. Unable to pay bills such as wages 3. Experiencing cash-flow problems 4. Unable to survive, leading to the business stopping trading |
| What is cash flow? | The money flowing into and out of a business on a day-to-day basis |
| What does a cash flow forecast do? | Predicts how cash will flow through a business over time. |
| What can businesses use a cash flow forecast to do? | Identify periods where it could have a cash flow problem, where it does not have enough money flowing into the business in order to pay its day-to-day bills |
| Give examples of inflows/receipts | * Money from owners * Bank loans * Cash from sales |
| Give examples of outflows/payments | *Wages *Raw materials * Interest on loans * Advertising *Bills |
| What is the net cash flow? | The receipts of a business minus its payments, either positive or negative |
| What is the opening balance? | The amount of money in a business at the start of a month |
| What is cumulative cash flow? | The sum of cash that flows into a business over time |
| What is the closing balance? | The amount of money in a business at the end of a month (net cash flow + opening balance) |
| What impacts on cash flow? | 1. Change in costs 2. Seasonality in sales 3. Business expansion or contraction 4. Change in stock levels 5. Change in sales revenue/change in demand 6. Credit terms can change |
| Without sufficient cash within the business what would the business become? | INSOLVENT |
| What does a being 'insolvent' mean for the business? | 1. Unable to pay its debts 2. Unable to repay bank loans 3. Unable to pay wages to employees 4. Unable to buy raw materials and products to sell 5. Unable to promote the business |
| What is a business plan? | The plan for the development of a business, giving forecasts of items such as sales, costs and cash flows |
| Name 6 purposes of a business plan | 1. Convince a bank to loan the business money 2. Forecast financial projections 3. Identify the needs of customers 4. Formulate market research into important information 5. Provide information 6. Provide the owner with a 'plan of action' that will minimise risk |
| What goes into a business plan? | Over view Objectives Market research Personnel Finances Production |
| Name 8 long term sources of finance | 1. Share capital (limited companies only) 2. Personal savings (from the owner) 3. Venture capitalist 4. Grants 5. Loans 6. Mortgage 7. Retained profit 8. Leasing |
| Name 5 short term sources of finance | 1. Trade credit 2. Credit cards 3. Bank overdraft 4. Delayed payment 5. Factoring |
| What are the three stages of BEING CUSTOMER FOCUSED? | 1. Identifying needs - using techniques such as market research to find out what customers want 2. Anticipating needs - the best businesses are able to identify needs in advance to give them a competitive advantage 3. Meeting customer needs - a business must be able to provide whatever customers want |
| What are the 4 parts to the marketing mix? | 1. PRODUCT 2. PRICE 3. PLACE 4. PROMOTION |
| Who has limited liability? | Private limited companies and Private limited companies |
| Who has unlimited liability | Sole traders and Partnerships |
| What is unlimited liability? | The owner is legally responsible for any debts of the business. Therefore there is potential for the owner to lose their personal belongings to pay off any debts |
| What is limited liability? | The owners and the business are separate legal entities. Any debts incurred by the business belong to the business and the owners can only lose up to the amount that they have invested. Their personal belongings are not liable |
| What are the benefits to a sole trader over a Ltd? | 1. The owner has 100% control of decisions 2. The owners keep 100 of the profits 3. There is more privacy |
| What is a disadvantage of a sole trader over a Ltd? | More risk |
| Why do businesses have to adhere to legal requirements? | 1. So that the government can keep track of business activity 2. So taxes can be collected 3. To protect businesses from illegal activity 4. To protect customers from illegal business practices |
| What are the 4 legal requirements of a small business? | 1. Register and trade under a unique name that promotes the business 2. Keep records of sales, purchases and names of businesses they have worked with. 3. Register with Her Majesty's Revenue & Customs (the government authority in the UK responsible for collecting tax) 4. Pay the appropriate level of tax to HMRC |
| Name 4 taxes on small businesses | Value Added Tax (VAT) Income Tax National Insurance Contributions (NIC) Corporation Tax |
| What is VAT? | A tax on the value of sales of a business. Businesses that sell more than a certain amount will register to pay VAT. |
| What is income tax? | A tax on the income earned by workers and sole traders |
| What is NIC? | A tax on earnings of workers and sole traders linked to state benfits |
| 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 customers' expectations |
| How can effective customer service be achieved? | 1. Dispatching orders quickly 2. Being 100% accurate in orders 3. Offering excellent after-sales care 4.Providing a personal service 5. Going the 'extra mile' to get what customers want 6. Being convenient 7. Being polite and friendly 8. Responding immediately to any complaints |
| What are benefits of good customer satisfaction? | 1. Repeat purchase 2. Loyalty 3. Can charge premium price 4. Improves reputation 5. Can differentiate a business and become their USP |
| How can repeat purchases be stimulated? | 1. Cheaper prices than competitors 2. Easy and convenient service 3. Effective customer service 4. Promotions and special offers 5. Building good relationships with customers |
| Explain the five steps of recruitment | 1. Draw up recruitment documents -Job ads, descriptions and specifications 2. Receive applications -CVs, application forms and letters 3. Shortlisting - A list of suitable candidates 4. Selection - Interviews and assessments 5. Training - To develop skills using on-the-job and off-the-job training |
| How can a business motivate its staff? | 1. Paying fair and competitive wages 2. Providing good working conditions 3. Providing perks 4. Delegating power and responsibility 5. Training and nurturing staff development 6. Encouraging teamwork and good relationships |
| Employers must abide by laws that protect employees in what areas? | Recruitment Pay Discipline Working hours |
| What is SUPPLY for a product? | The amount that sellers are willing and able to sell at any given price |
| What is DEMAND for a product? | The amount that buyers are willing and able to purchase at any given price |
| What will the surplus and shortage of commodities affect? | Prices |
| What is a market? | Where buyers and sellers meet to exchange products and services |
| What are commodity markets? | Markets for raw materials, such as oil, steel and wheat, used in the production of other goods |
| What are GOODS MARKETS? | Markets for everyday products, such as clothes and food |
| Changes in raw materials and energy costs affect the costs of a small business. How much it affects them depends on what? | 1. Their production of total costs 2. How much costs go up 3. The ability to pass on costs to customers or to absorb them |
| What is an interest rate? | The percentage reward or payment over a period of time that is given to savers on savings or paid by borrowers on loans |
| What are the impacts of a rise in interest rates? | INCREASE THE COST OF BORROWING 1. businesses on a variable rate may struggle to repay loans 2. Small businesses are less likely to borrow money to start up or to expand 3. Customers are less likely to spend money as borrowed money costs more. so consumer spending falls |
| What are the impacts of a fall in interest rates? | LOWERS THE COST OF BORROWING 1. Businesses will have more money to spend and cash flow may improve 2. Businesses may borrow money for a start-up or expansion 3. Customers are more likely to borrow and to spend their money. Consumer spending rises |
| Explain a 'Fixed interest rate' | Don't change over the life of a loan. A business could lose out on a fixed contract if the interest rate falls |
| Explain a 'Variable interest rate' | Change over the life of a loan. They can be more risky and hard for the business to plan against |
| What is the exchange rate? | The price of buying foreign currency. It tells the UK people and businesses how much foreign currency they get for every pound, or may pounds they have to give up to acquire foreign currency |
| What are imports? | Goods and service bought from abroad |
| What are exports? | Goods and services sold abroad |
| List the effects of a fall in the value of the pound? | 1. Good for UK exporters of goods - price of export falls > sales increase 2. Good for UK tourism - prices cheaper to foreigners > tourism increase 3. Good for UK businesses - imports more expensive - more goods bought from UK 4. Bad for UK importers of materials - Imports more expensive > costs rise |
| What are some effects of a rise in the value of the pound? | 1. Bad for UK exporters of goods - price of exports rises > sales fall 2. Bad for UK tourism - Prices more expensive to foreigners > tourism falls 3. Bad for UK businesses - imports cheaper > fewer but UK goods 4. Good for UK importers of materials - imports cheaper > costs fail |
| What does the business cycle refer to? | Fluctuations in the level of economic activity over time |
| Which businesses are most likely to be affected by the business cycle? | Businesses selling luxuries |
| What are the four sections of the business cycle? | 1. Boom - strong increase in economic activity 2. Slowdown/downturn - Economic activity begins to slow down 3. Recession - When economic growth is negative 4. Recovery/upturn - Economic activity begins to rise |
| What does ECONOMIC ACTIVITY refer to? | The amount of buying and selling that takes place between businesses and consumers in a period of time. If this rises it is known as economic growth |
| Explain impacts of a boom | 1. Consumer and business confidence high 2. Consumers borrow and spend more 3. Sales increase 4. Businesses take on more employees 5. Businesses invest and expand |
| Explain the impacts of a downturn or recession | 1. Consumer & business confidence low 2. Consumers borrow and spend less 3. Sales fall. Prices may have to be cut 4. Businesses may make some employees redundant 5. Businesses may save & cut back spending 6. Likely to suffer cash-flow problems |
| Name 8 stakeholders and what they would want out of the business | The local community- local investment, limited pollution Government - low unemployment, competitive markets Suppliers - regular orders Owners - profits Managers - bonuses, long term success Workers - good pay, conditions Customers - value for money Competitors - sometimes support |
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