Business

• Income elasticity of demand (YED) Formula 


  % change in quantity demanded / % change in income
• Percentage change Formula


  New value - original value / original value *100
• Price elasticity of demand (PED) Formula


  % change in quantity demanded / % change in price
• Added value Formula


  Price - raw materials
• Entrepreneur 


  Someone who takes the risk to start up a new business idea in the hope of profit
• Enterprise skills


  The skills required by a businessperson which involves risk taking and creativity
• Role of an entrepreneur

  ~ Creating and setting up a business

  ~ Running, expanding and developing the business

  ~Innovation

  ~Anticipating risk and uncertainty
• Entrepreneurial motives 


  ~ profit maximisation

  ~ profit satisficing

  ~ independance

  ~ ethical
• Barriers to becoming an entrepreneur

  ~ lack of finance

  ~ lack of experience

  ~ lack of enterprise skills
• Entrepreneurial skills 


  ~ creative

  ~ hard working

  ~ risk taking

  ~ confidence
• Difficulties from moving from and entrepreneur to a leader

  ~ delegating and trusting others

  ~ having an open mind and learning to listen

  ~ develop emotional intelligence
• Profit maximisation


  Achieved when the profit is at its greatest
• Profit satisficing

  The aim to achieve a satisfactory level of profit for the owners
• Business aims and objectives

  ~ Profit Maximisation

  ~ Profit satisficing

  ~ growth and expansion

  ~ Increase market share

  ~ Survival

  ~ Reduce costs

  ~ Improve brand image
• Advantages of social enterprises

  ~ Good reputation

  ~ Customers willing to pay more as its ethical
• Sole trader advantages 


  ~ Easy and cheap to set up

  ~ Take all profit

  ~ Full control
• Sole trader disadvantages


  ~ Unlimited liability

  ~ Continuity
• Partnership pros and cons

  ~ Wider range of skills

  ~ More capital raised

  ~ Reduced pressure

  ~ Unlimited liability

  ~ control and profits shared
• Franchise


  Business that had bought the right to use an idea, product or brand belonging to another business
• Franchisor


  A person or company who allows another business to use their name in exchange for royalty and fee
• Lifestyle business 


  Aims to make enough money and provide the flexibility needed to sustain a particular lifestyle for the owners
• Stock market flotation 


  When a company launches on the stock market when it first becomes a PLC by the offer of shares to the public
• Pros and cons of stock market flotation

  ~Business can raise capital

  ~May not be good investment if low profits

  ~Regular updates need to be given to large investors about future strateglies
• Objectives 


  A specific and measurable target for the future
• Market growth formula 


  Increase in sales / original sales *100
• Market share formula 


  The product or firms sales / total market sales *100
• Cost plus pricing formula

  Unit cost + % mark up
• Strategy

  Medium to long term plan to achieve business objectives
• Aim 


  A general goal for the long term future
• Entrepreneurial skills 


  ~ Problem solving

  ~ Teamwork

  ~ Communication

  ~ Numeracy
• Trade offs

  Occurs when two options cannot be fully achieved so having more of one is having less of the other
• Social enterprise

  A business that has objectives which benefit society and is not for profit
• Franchise pros and cons

  ~ Less risk due to business support

  ~ instant recognisable brand

  ~High set up costs

  ~ franchisee Must pay percentage of revenue
• Flexible workforce 


  Moving away from fixed tasks, working hours and locations
• Dismissal


  The termination of employment by an employer against the will of the employee
• Redundancy 


  When a business needs to reduce the size of the workforce or even close
• Flexible working pros and cons

  ~ Reduces costs

  ~ motivate staff

  ~ Not all methods suitable for all jobs

  ~ Make temporary and zero hour contract workers insecure
• Flexible workforce methods 


  ~ Outsourcing

  ~ Multiskilling

  ~ Home working

  ~ Part time

  ~ Temporary workers
• Trade unions 


  Act to protect and improve the economic and working conditions for their members
• Outsourcing 


  When a business pays another business to do their tasks such as IT support , catering and manufacturing processes