1.4

• What must an entrepreneur consider when starting a business?

  The legal structure of the business
• What is the difference between sole traders and partnerships regarding liability?

  Sole traders and partnerships have unlimited liability
• What does limited liability mean for business owners?

  Owners are not personally responsible for business debts
• What are the implications of unlimited liability for business owners?

  • Owners are fully responsible for all business debts
  • Legally responsible for unlawful acts by the business
  • Personal assets may be used to pay debts
• What are the implications of limited liability for business owners?

  • Owners can only lose their initial investment
  • Not responsible for business debts
  • Shareholders are not liable for unlawful acts by the business
• What are the three common forms of business ownership for start-ups?

  Sole traders, partnerships, and private limited companies

  
• What are the advantages and disadvantages of being a sole trader?

  Advantages:

  • Easy and inexpensive to set up
  • Complete control over the business
  • Simple tax arrangements

  
  

  Disadvantages:

  • Unlimited liability
  • Limited access to finance
  • Limited skill set of the owner
• What are the advantages and disadvantages of partnerships?

  Advantages:

  • Easy to set up
  • Shared responsibilities and decision-making
  • Increased access to finance

  
  

  Disadvantages:

  • Unlimited liability
  • Potential for disputes
  • Profits shared equally
• What are the advantages and disadvantages of private limited companies?

  Advantages:

  • Limited liability
  • Access to greater finance
  • Easier to transfer ownership

  
  

  Disadvantages:

  • More expensive and time-consuming to set up
  • Complex legal requirements
  • Annual financial reporting required
• What is franchising?

  A business model where an individual buys rights to operate a business using its branding
• What are the advantages of owning a franchise?

  • Centralized advertising
  • Training provided by the franchisor
  • Exclusive location rights
  • Ongoing support services
• What are the disadvantages of owning a franchise?

  • Fixed overhead/startup costs
  • Royalty costs based on sales
  • Potentially inflated supply costs
  • Quality control management issues
• What factors influence business location decisions?

  Proximity to market, labor, materials, and competitors

  
• Why is proximity to the market important for a business?

  • Reduces transportation costs
  • Increases accessibility to customers
• How does proximity to labor affect business location decisions?

  • Availability of qualified workers
  • Ensures efficient operations
• What is the impact of the internet on business location?

  • Businesses can reach customers from anywhere
  • Physical location may be less critical for e-commerce

  
• What is the marketing mix?

  • A framework for creating marketing strategies
  • Comprises product, price, place, and promotion

  
• What role does promotion play in the marketing mix?

  • Generates customer awareness and interest
  • Builds brand loyalty and leads to repeat purchases
• What elements make up the product design mix?

  • Function
  • Aesthetics
  • Cost
• How do manufacturers balance the elements of the product design mix?

  • Aim for functionality, attractiveness, and cost-effectiveness
• How might a business like Fentimans ginger beer balance the product design mix?

  By offering a good quality product at an affordable price with attractive packaging
• What might be a reason for a business to choose a location with high foot traffic?

  To attract more customers and increase sales
• What is the purpose of promotion in marketing?

  To build brand awareness and loyalty, leading to repeat purchases and referrals
• What are the main methods included in the promotion element of the marketing mix?

  • Advertising
  • Direct selling
  • Public relations
• What does the product design mix consist of?

  Function, aesthetics, and cost
• Why is balancing function, aesthetics, and cost important in product design?

  It ensures the product is functional, attractive, and cost-effective
• How does Fentimans ginger beer exemplify a balanced product design mix?

  It is affordable, packaged attractively, and is of high quality
• What strategy does Asda's own brand of ginger beer focus on?

  Producing at the lowest possible cost for a low selling price
• What must businesses balance regarding customers' quality expectations?

  They must balance quality expectations with price sensitivity
• How can developing a strong brand benefit a business?

  It can differentiate products and allow for higher pricing
• What factors should businesses consider when setting prices?

  Customers, competitors, and costs
• What does 'place' refer to in the marketing mix?

  The physical location of the business and the distribution journey of the product
• How can choosing an efficient location impact a business?

  It can lower costs and increase profits
• How might the marketing mix change in a competitive environment?

  • Businesses adapt product, price, promotion, or place
  • Changes depend on industry, competition, and target market needs
• Why might businesses lower prices in a market with many substitutes?

  To remain competitive
• How can businesses differentiate their product in a competitive market?

  By improving quality, functionality, or unique features
• What might businesses need to do regarding promotion in a competitive environment?

  Increase marketing expenditure to reach potential customers
• How can location and distribution channels provide a competitive advantage?

  By attracting customers through high foot traffic or innovative online channels
• What has led to the rise of smaller convenience stores in the UK grocery market?

  The need for convenience in local neighborhoods
• Why are customers often willing to pay more for convenience items?

  Because they save time and effort compared to a main supermarket trip