101-108

• Enterprise


  An enterprise can just be another name for a business. It can also mean the having the skill and taking the initiative and the risk to make a business happen.
• SME


  A small to medium sized enterprise. Small is less than 50 employees. Medium less than 250. Usually sole trader, partnership or private limited company. Turnover less than £50m
• Needs


  What people need to survive-food, shelter, warmth. Needs are limited.
• Wants

  What people desire but they are not necessary for survival. Wants are unlimited.
• Entrepreneur


  A person who uses an idea and starts a business taking on the (financial) risks in the hope of making a profit (reward)
• Primary Sector


  This involves acquiring raw materials. This is sometimes known as extractive production for example coal mining
• Secondary Sector


  This is the manufacturing and assembly process. It involves converting raw materials into components. It also involves assembling the product. For example, house building or manufacturing
• Tertiary Sector


  This refers to the commercial services that support the production and distribution process. It involves providing a service. For example, insurance, retailing
• Business Plan


  The business plan makes clear the objectives of the business and how the business intends to achieve these objectives. It acts as a guide to help to make decisions. A business plan can help a business to secure finance. The owners of a business can use a business plan to check progress against their objectives.
• Executive Summary


  This provides an overview of the business's aims, objectives and strategy and is evidence that the proposal is viable. It sets out how the business is going to be run.
• The Marketing Plan


  Market research carried out to establish the size of the market, the needs of the customers and the level of competition. The marketing strategy includes the price, product promotion and place (marketing mix).
• The Operations Plan


  Include details of where the business will be located, production methods and any equipment needed. Plus, information on the costs of production and where the business will buy supplies may be included.
• The Human Resources Plan


  The number of employees and the skills, experience and qualifications they require will be outlined. Any management team will also be identified.
• The Financial Plan


  a sales forecast indicating potential revenues, a cash flow forecast for the first 12 months, a profit and loss and balance forecast for the end of the first year, a break-even analysis, and available start-up capital as well as any potential borrowing.
• Market


  Any place where buyers and sellers meet to exchange goods/services
• Competition/competitive market


  Competition refers to the number of businesses in a market. A competitive market is one where there are numerous producers that compete with one another to provide goods and services consumers want and need. A number of marketing strategies can be used to gain customers/market share eg. competitive pricing
• Mass Market


  Mass marketing is where a business sells to the whole market and markets the product to all consumers in the same way
• Niche Market


  Market segment of a larger market where customers have specific needs and wants, and there is less competition
• Market Share


  The sales of a business relative to the total sales in the market
• Market Segmentation


  A process of subdividing a market into identifiable subgroups that have similar needs, wants or characteristics and providing them with goods or services that meet their needs and wants
• Monopoly


  • A single dominant business within a market with high barriers to entry, price makers, and high economies of scale
• Oligopoly


  • A few large companies dominate the market in terms of sales revenue/market share, engage in non-price competition such as branding and advertising, have high barriers to entry, are price makers, and have high economies of scale
• Monopolistic Competition


  • Many relatively small businesses, no dominant businesses, few barriers to entry, similar products with some differentiation, and a little control over prices but essentially might be price takers
• Perfect Competition


  • Many small firms produce virtually identical products at similar prices, with the ability to enter and leave the market freely, no low barriers to entry, the goods sold are homogenous, and no one business is large enough to influence the activities of others
• Consumer Protection


  Laws that prevent harm such as goods not being fit for purpose or not of merchantable quality, examples include the Sale and Supply of Goods Act 1994, Consumer Credit Act 1974, Trade Descriptions Act 1968 and 1972, and Distance Selling Regulations
• Demand


  The quantity of goods/services that consumers are willing and able to buy at a given price, at a given time
• Supply


  The quantity of goods/services that producers are willing and able to supply to the market at a given price, at a given time
• Market Equilibrium


  The price where quantity demanded is equal to quantity supplied
• Price Elastic


  Price elasticity is greater than one, where the quantity demand rises or falls by a larger percentage than the price change
• Price Inelastic


  Price elasticity value is between 0 and 1, where a change in price results in a smaller % change in quantity demanded
• Income Elastic


  Income elasticity is greater than one, where the quantity demand rises or falls by a larger percentage than the income change
• Income Inelastic


  Income elasticity is between 0 and 1, where the quantity demand rises or falls by a smaller percentage than the income change
• Inferior Goods


  A product that has negative income elasticity, where as incomes decrease, demand increases and vice versa
• Normal Goods


  A product that has positive income elasticity, where as incomes increase, demand increases and vice versa
• Luxury Goods


  Goods for which demand increases significantly when incomes increase, and vice versa, with positive income elasticity greater than one
• Market Research


  The process of gathering primary and secondary data on the buying habits, lifestyles, usage and attitudes of actual and potential customers
• Primary Research


  Gathers first hand information. The data gathered is new and directly relevant to the needs of the business
• Primary Research Methods

  • Questionnaires
  • Interviews
  • Focus groups
  • Consumer panels
  • Experiments
  • Observations
  • Test marketing
• Secondary Research


  Involves the use of previously collected information. The information used has not been gathered specifically for the business but instead adapted for its use
• Secondary Research Methods


  • Official publications
  • Industry magazines
  • Internal information
  • Online desk research