business studies paper 1

• why do new business idea's come about?

  -change in technology

  -changes in consumer demands

  -obsolescence of products and services
• what does change in technology mean for the business?

  creates new opportunities creates new opportunities for businesses to develop innovative products and services
• give an example of change in consumer wants 


  growing demand for plant based food
• how do new business ideas come about?


  through original ideas or adapting existing products/services
• how do original ideas come about?

  when entrepreneurs identify a gap in the market
• give an example of an adapting idea


  uber adapting existing taxi's by offering a more convenient way by it being accessible through an app
• what are some risks to a business?

  financial loss, failure, lack of security
• what are some rewards to a business?

  success, profit, independence
• ways to add value


  -convenience

  -branding

  -quality

  -design

  -USP's
• what does adding value mean?


  the difference between the price and the costs required to make the product
• what do entrepreneurs do?

  -organise resources

  -make business decisions

  -take risks
• what is a market?


  where buyers and sellers can meet
• what are the benefits of understanding customers?


  -customer needs

  -relationship building

  -targeted marketing
• what does market research to do a business?


  -reduce risk

  -identify competitors

  -identify gaps in the market

  -identify future wants and needs of customers
• what is primary research?


  gathering information directly from customers using interviews/surveys
• what is secondary research?


  collection of data which already exists including internet
• what is market research?


  businesses identifying gaps in the market and business opportunities
• what are the disadvantages of qualitative data?


  • sample size may be too small leading to unreliable results
  • may need to hire a specialist - time consuming and expensive
• what are some disadvantages of quantitative data?


  • can be expensive
  • numerical data may be out of date
• what are some advantages for businesses using social media to collect market research data?


  • speed of communication between businesses and customers is quick
  • cost of gathering this information can be very low
• what is market segmentation?


  the process of dividing a single market into sub markets
• what are some ways to segment a market?


  • location
  • age
  • gender
  • behavior and lifestyle
• what are some advantages of market segmentation?


  • increases loyalty
  • recognises that consumers are not all the same
• what are some disadvantages of market segmentation?


  • difficult to identify a segment
  • segment may be too small and unprofitable to cater for
• what are some advantages of using market mapping?


  • market gaps can be identified
  • simple to construct
• what are some disadvantages of using market mapping?


  • requires primary research which can be expensive
  • only two criteria can be chosen
• what does aim mean for a business?


  a goal for a business
• what does an objective mean for a business?


  short term steps needed to achieve aims
• what are some aims to a business?


  • survival
  • profit
  • sales
  • market share
• what are some objectives to a business?


  • independence
  • control
• what does profit allow a business to do?


  • reward employees
  • survive
  • provide security
• what is break even?


  the point at which total revenue equals total costs
• what is the formula for break even?


  fixed costs / (selling price - variable costs per unit)
• what is margin of safety?


  actual sales - break even point
• if a business pays higher rent, what effect will it have on its breakeven?


  increases - need to sell more to break even
• what are the advantages of using break even?


  • allows businesses to see output needed for profit
  • calculations are quick
  • helps entrepreneur to understand risks
• what are the disadvantages of using break even?


  • unrealistic assumptions
  • variable costs do not always stay the same
• what is cash flow?


  the money moving in and out of a business
• what is insolvency?


  inability to pay debts
• what is cash flow forecasting?


  predicting future cash inflows and outflows