THEME 1 BUSINESS

• Adapting existing ideas


  Improving current business ideas to meet market needs
• Adapting existing ideas


  • Advantages: reduces cost and development time
  • Disadvantages: Ideas lack unique selling point
• Added Value


  The difference between the cost of the materials taken to make a product and the price that is charged for the product
• Added Value


  • Advantage: Charge Premium Price
  • Disadvantage: Production Costly
• Aims and Objectives


  The goals of a business. These may be financial or non-financial
• Aims and Objectives


  • Advantage: Motivation
  • Disadvantage: Potential Inflexibility
• Breakeven


  The number of products a business must sell so that its total revenue is the same as its total costs. At this point the business will make no profit or loss
• Breakeven


  • Advantage: Cost Coverage
  • Disadvantage: No Profit Yet
• Business Plan


  A plan for the development of a business, giving details such as the products to be made, resources needed, and financial forecasts
• Business Plan

  • Advantage: Identifies strengths and weaknesses
  • Disadvantage: Time Consuming
• Cash Flow

  The flow of money into and out of a business over a period of time
• Cash Flow


  • Advantage: Positive cashflow allows for sufficient funds to pay workers and suppliers
  • Disadvantage: Unpredictable
• Cash Inflow (Receipts)


  Money coming into the business. E.g. Revenue, a loan or another source of finance
• Cash Inflow (Receipts)


  • Advantage: Revenue Increase
  • Disadvantage: May not be regular
• Cash Outflow (Payments)


  Money leaving the business. E.g. Wages, suppliers, loan repayments or advertising
• Cash Outflow (Payments)


  • Advantage: Analysing outflow helps with Expense Management
  • Disadvantage: Increase risk of debt
• Choice


  A range of products aimed at differing needs and segments
• Choice


  • Advantage: Meets customer needs
  • Disadvantage: Expensive to provide to customers
• Closing Balance


  The amount of money left at the end of the current time period
• Closing Balance


  • Advantage: Financial Snapshot
  • Disadvantage: Single Moment Representation
• Competition


  When companies produce comparable products or services within the same market
• Competition


  • Advantage: Innovation Stimulus
  • Disadvantage: Pricing Pressure
• Competitive Advantage


  The advantage one company has over another, or several others
• Competitive Advantage


  • Advantage: Innovation Stimulus
  • Disadvantage: Sustainability Challenge
• Competitive Environment


  A market which has many competitors
• Competitive Environment


  • Advantage: Innovation Drive
  • Disadvantage: Intense Pressure
• Consumer


  The person who uses the product
• Consumer


  • Advantage: Buy products with disposable incomes
  • Disadvantage: Different needs/want
• Consumer Income


  The amount a person or household has to spend, after paying tax
• Consumer Income


  • Advantage: Buy products with disposable incomes
  • Disadvantage: May reduce e.g during a reccession
• Consumer Laws


  Legal regulations designed to protect consumers rights
• Consumer Laws


  • Advantage: Protection from fines if you comply
  • Disadvantage: Need to employ expensive lawyers to comply
• Crowdfunding


  Where a large number of individuals invest into a business project on internet sites such as Kickstarter
• Crowdfunding


  • Advantage: Access to Finance
  • Disadvantage: Dependence on Investor Interest
• Customer


  The person who buys the product
• Customer


  • Advantage: Revenue Source
  • Disadvantage: Expectation Management
• Customer Needs


  What the customer wants, these can change over time. E.g. Price, quality, choice or convenience
• Customer Needs


  • Advantage: Repeat business if met
  • Disadvantage: Constantly Changing and Evolving
• Dynamic nature of business

  The constantly changing conditions and environment in the business world e.g fashion and trends
• Dynamic nature of business

  • Advantages: Promotes innovation and adaptability
  • Disadvantages: Requires continuous adjustment and market research