Business Paper 1

• What is the role of an entrepreneur?

  Organise resources

  Make business decisions

  Take risks
• How can you add value to a product/service?

  convenience

  branding

  quality

  design

  USP
• What is the role of business enterprise and the purpose of business activity?

  to produce goods or services

  to meet customer needs

  to add value
• What are the rewards of business activity?


  Business success, profit, independence
• What are the risks of business activity?

  Business failure, financial loss (can't repay loans), lack of security
• How do new business ideas come about?

  Original ideas

  Adapting existing products/services/ideas
• Why do new business ideas come about?

  changes in technology

  changes in what consumers want

  products and services becoming obsolete
• What are the customer needs?

  price, quality, choice, convenience
• What is the impact of competition on business decision making?

  - Will have to offer good quality products and services at the right price

  - Businesses must update and release new products through innovation

  - If competition is sets prices that are too low and the business can't compete, the business may close down

  - Will have to do the same as competitors eg discounts
• What areas may businesses look at to find the strengths and weaknesses of their competitors?

  price, quality, location, product range, customer service, USP, convenience
• What are the three definitions of market?

  1) A place where goods are sold

  2) Trade in a particular type of product

  3) Potential customers of a product
• What may be included on a market map?

  quality, price, duration, taste, level of luxury, gender, age, budget
• What do market maps allow businesses to identify?

  competitor behaviour, gaps in the market
• What is market mapping?

  the process of using a graph to plot competitors and their products to understand competitor behaviour and spot a gap in the market
• How can we identify market segments?

  location, demographics (people's characteristics), lifestyle, income, age
• What is market segmentation?

  the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups
• What are the consequences of having unreliable market research data?

  - business may make unwise decisions

  - could cost the business money

  - could bring out products that don't sell

  - business could fail
• What are the benefits of having reliable market research data?

  - business can make properly informed decisions

  - reduces risk

  - less money wasted

  - gives a higher chance of business success
• What is the role of social media in collecting market research data?

  - can see latest tastes and trends (what is popular)

  - cheaper

  - saves time

  - can monitor competitor behaviour
• What is qualitative data?

  descriptive data - people's opinions and feelings
• What is quantitative data?

  numerical data - data you can measure or reduce to a number
• What are the methods of primary research and their advantages and disadvantages?

  Survey- adv: higher rate of response, dis: expensiveQuestionnaire- adv: cheap, covers a larger area, dis: some won't respondFocus group- adv: faster, dis: quieter people's opinions aren't heardObservation- adv: cheap, accurate, dis: can't give opinions
• What are the methods of secondary research?


  internet, market reports, government reports
• What are the advantages and disadvantages of primary research?

  Advantages: up-to-date, relevant, specific to business needs and the target market

  Disadvantages: expensive, time-consuming
• What are the advantages and disadvantages of secondary research?

  Advantages: cheaper, easily found, instantly available

  Disadvantages: not always relevant, not specific to business needs and target market, out of date
• What are the two methods of market research?


  primary and secondary
• What is the purpose of market research?

  To identify and understand customer needs

  To identify gaps in the market

  To reduce risk

  To inform business decisions
• Why is it important to identify and understand customer needs?

  to generate sales

  business survival
• What do do business aims and objectives do?

  give a business direction and provide a purpose
• What is a business aim?

  the overall long-term target or goal of the business
• What is a business objective?

  measurable steps a business needs to take to meet its overall aims
• How are business objectives often created?

  using the SMART acronym

  Specific

  Measurable

  Agreed

  Realistic

  Time-bound
• What are the two categories of business aims and objectives?

  financial and non-financial
• What are financial aims and objectives?

  survival

  maximise profit

  maximise sales

  increase market share

  achieve financial security
• What are non-financial aims and objectives?

  Social objectives (being ethical/eco-friendly), personal satisfaction, accomplishing a challenge, independence and control
• Why do aims and objectives differ between businesses?

  - the level of competition the business faces

  - who owns the business

  - different sectors

  - the size and scale of the business
• What is revenue?


  money obtained from goods or services
• How do you calculate revenue?


  price x quantity sold
• What are fixed costs?

  costs that do not vary with output (e.g. rent)
• How do you calculate fixed costs?

  total costs - variable costs