1.1 the Dynamic Nature of Business

• What are the two main topics discussed in the material?

  Reasons for new businesses and how ideas emerge
• What is one reason new businesses may emerge according to the material?

  Changes in technology
• How are products increasingly being sold today?

  Through the internet
• What is expected to happen within the next 10 years regarding e-commerce?

  One in two sales will happen online
• What has allowed many businesses to emerge according to the material?

  Improvements in technology
• What is an example of a business that has emerged due to technological changes?

  eSports businesses
• What are some factors that influence changes in consumer wants?

  Demographics, fashions, trends, ethics
• What happens to products when they become obsolete?

  They become out-of-date
• What is an example of a product that became obsolete?

  The typewriter replaced by the keyboard
• What opportunity arises when a product becomes obsolete?

  Opportunity to profit from new products
• How can business ideas come about?

  From new or existing ideas
• What does an entrepreneur do when spotting a gap in the market?

  They create an original idea
• What is usually true about existing ideas in business?

  They are adaptations of existing concepts
• What is essential when developing a business idea?

  Providing added value
• What are the main reasons why new businesses may come about?

  • Changes in technology
  • Changes in consumer wants
  • Products becoming obsolete
• How do business ideas typically emerge?

  • From new ideas
  • From existing ideas (adaptations)
  • Identifying gaps in the market
• What is market mapping used for?

  To analyze competition in a specific market
• What does a market map output?

  A visual representation of market competition
• What are common variables used in market mapping?

  Price and quality
• How would you plot price and quality on a market map for airlines?

  Price on one axis, quality on another
• What does a saturated quadrant in a market map indicate?

  High competition in that market area
• What can be inferred from a gap in the market for high quality low price?

  It may not be financially viable for businesses
• What is a potential benefit of entering a gap in the market?

  Lower competition and higher sales
• What is the relationship between market mapping and risk reduction?

  Market research reduces risk in decisions
• How does market mapping help startups?

  It helps identify initial sales opportunities
• What are the main business ownership structures discussed?

  Sole traders, partnerships, private companies, public companies
• What does PLUMS stand for in business ownership analysis?

  Profit distribution, liability, management, control, sources of finance
• How does profit distribution differ for sole traders compared to private limited companies?

  Sole traders keep 100% profits; private companies pay dividends
• What tax flexibility does a sole trader have compared to a private limited company?

  Sole traders have less tax flexibility
• What could cause disputes in profit distribution among partners?

  Performance differences not reflected in profit sharing
• How are profits shared in a partnership?

  According to the partnership deed
• Who decides the dividends for private and public limited companies?

  The board of directors
• What type of liability do sole traders and partnerships have?

  Unlimited liability
• What is a risk associated with partnerships regarding liability?

  Partners are liable for each other's misconduct
• What type of liability do private and public limited companies have?

  Limited liability
• What does full management and control mean for a sole trader?

  They make all business decisions alone
• How does management control differ between private and public limited companies?

  Public companies often have a separation of ownership and control
• What sources of finance are available to sole traders?

  Personal debt against assets
• What type of finance can partnerships access?

  Finance from partners' contributions
• What financial advantage do private limited companies have?

  Access to share capital from known investors