business theme 1

• why do new business ideas come about?

  
  

  changes in technology

  changes in consumer wants

  goods and services becoming obsolete
• Why new business ideas come about

  • Changes in technology
  • Changes in consumer wants
  • Changes in goods/services
  • Becoming obsolete
• How new business ideas come about

  • Original ideas
  • Adapting existing goods/services
• Entrepreneur


  Someone who takes on the risks of enterprise activity
• To successfully run a new business, an entrepreneur must be able to

  • Organise resources: good organisational skills + Plan for future
  • Take risks: Probably have to give up current job + invest money they could lose
  • Make business decisions: Set business aims + decide who to employ and how to grow
• Risks in running a business

  • Financial loss
  • Stress
  • Effort
  • Giving up current job
  • need money to start
• Entrepreneur's role

  • 
    
  • Produce goods or services
  • Meet customers needs
  • add value
• Customer needs

  The specific wants or needs buyers have when purchasing a product
• Customer needs


  • Price
  • Quality
  • Choice
  • Convenience
  • Service
• A business must understand what a customer wants when they buy their products
• It is important for a business to adapt to customer needs so that: they can target lots of different customers, the same product can satisfy different customer needs, a business does not lose customers to competitors, the business can stay current on trends
• Satisfied customers lead to more sales and revenue. Other rewards are: Profit, good customer reviews, word of mouth, repeat customers/loyalty
• Businesses need to achieve the balance to meet customer needs
• Market research


  The process of collecting data of what consumers want, trends and competitors
• Why businesses do market research

  • Identify a gap in the market
  • Help make informed decisions
  • Reduce risks
• Business decisions should be based on information collected by market research
• Primary research


  Research that involves getting information yourself directly from customers or potential customers, such as questionnaires, surveys and focus groups
• Secondary research


  Using data that already exists or has already been gathered by someone else, such as internet market reports, government reports, reviews
• Advantages of primary research

  • Information received is up-to-date
  • Specific information collected for your business
• Disadvantages of primary research

  • Can be expensive
  • Time-consuming
  • Results may be inaccurate
  • Focus groups may not get full opinions
• Advantages of secondary research

  • Data is easy to find
  • Cheap or free to obtain
  • Can give a good overview of the market
• Disadvantages of secondary research

  • Data may have been collected for a different purpose so could be inaccurate
  • Data may be out of date
  • Not specific to your business
• Qualitative data


  Information about people's feelings towards a product or service, which is difficult to analyse but gives greater depth of information
• Quantitative data


  Information that can be measured or reduced to a number, such as "How many pizzas will you buy each week"
• Social media can be a valuable way for a business to collect market research as trends can be tracked quickly and cheaply, and the data is up-to-date
• A business has to decide if research findings are reliable before using them to inform decisions, as the data can be misleading and may not be enough people (surveys)
• Some businesses have been successful without market research
• Market segmentation


  Breaking down a market into smaller groups called segments, based on factors like location, demographics, age, income, lifestyle
• Market mapping


  Diagrams that help a business understand its location within the market and the market's key features, allowing them to identify gaps in the market
• Secondary research involves looking at other people's work, such as reviews, which are cheap, easy to find and instantly available, but may not be specific to your business and could be out of date
• Primary research is when you do it yourself, such as questionnaires and focus groups, which are up-to-date and specific, but are expensive and time-consuming
• Ways a business can add value and stand out from the competition

  • Price
  • Customer service
  • Quality
  • Product range
  • Location
• Business aims


  Overall goals that a business wants to achieve
• Financial aims and objectives

  • Survival
  • Profit
  • Market share
  • Sales
  • Financial security
• Non-financial aims and objectives

  • Social objectives
  • Personal satisfaction
  • Challenge
  • Independence and control
• Not all businesses have the same aims and objectives, as these are affected by factors like the size of the business, the type of business, and competition
• Non-Financial Aims


  • Personal satisfaction
  • Personal challenge
  • What's right for society
  • Independence + control
• Revenue


  The income that a firm receives from selling its goods or services
• Variable costs


  Costs that change as output varies, e.g. raw materials, wages, electricity, gas
• Profit


  Total sales - Total costs