business gsce theme 1 and 2

• Reasons why a new business may come about

  • Changes in technology
  • Changes in what consumers want
  • Products becoming obsolete
• 1. commerce


  Businesses selling products/services through the internet
• It's expected that within the next 10 years one in two sales will happen via the internet
• New businesses due to changes in technology

  • E-commerce businesses
  • Businesses selling tickets to eSports events
• Changes in what consumers want

  Changing demographics, fashions, trends, concerns for being ethical and environmental
• Products becoming obsolete


  Products become out-of-date, e.g. typewriters replaced by keyboards
• How business ideas come about

  • From a new idea or an existing idea
  • Entrepreneurs spotting a gap in the market
  • Adapting an existing concept
• The key is to provide added value
• Market mapping


  A tool to analyze competition in a specific market
• Market map


  • Has two variables, commonly price and quality
  • Plots competitors in the market on the map
• Market map for airline industry

  • Price on one axis, quality on the other
  • Competitors plotted as high price high quality
• Gaps in the market


  Areas on the market map with no or little competition
• Gaps in the airline market map

  • High quality low price
  • High price low quality
  • Low quality low price
• Gaps in the market do not guarantee success
• Market mapping only uses two variables, may not capture complex market factors
• Accuracy of market map depends on who created it and the data used
• Poor accuracy of market maps can lead to poor business decisions
• Pros of market mapping

  • Identifies potential gaps in the market
  • Identifies overcrowded/saturated areas of the market
  • Simple tool to analyze competition and market
• Cons of market mapping

  • Gaps in market don't guarantee success
  • Only uses two variables, may miss complex factors
  • Accuracy depends on creator and data used
• Sole trader


  Profits are 100% yours, but less tax flexibility compared to a private limited company
• Partnership

  Profits will be shared according to the partnership deeds, not necessarily based on individual performance
• Private limited company

  Shareholders receive dividends related to annual profits, but the decision on dividends is at the discretion of the board of directors
• Public limited company

  Shareholders receive dividends related to annual profits, but the decision on dividends is at the discretion of the board of directors
• Liability


  • Sole traders and partnerships have unlimited liability, private and public limited companies have limited liability
• Management and control


  • Sole traders have full control, partnerships have control based on partnership deeds, private limited companies often have founders as managers and owners, public limited companies may have a divorce between ownership and control
• Sources of finance


  • Sole traders can only access debt finance, partnerships can access partners' finance but not share capital, private limited companies can access share capital from known investors, public limited companies can access share capital through the stock exchange
• Business


  An organization that produces goods or services to sell for a profit
• Factors of production


  • Land
  • Labor
  • Capital
  • Enterprise
• Factors of production


  • Land - farm, cocoa trees
  • Labor - employees, robots
  • Capital - factory
  • Enterprise - entrepreneur with ideas and willing to take risks
• Business divisions


  • Operations
  • Human Resources (HR)
  • Marketing
  • Finance
• Internal factors


  Factors within the business's control
• External factors affecting businesses

  • Economy
  • Inflation
  • Exchange rates
  • Unemployment
  • Laws and regulations
  • Minimum wage
  • Consumer protection
  • Ethics
• Inputs


  Resources put into a business
• Outputs


  Goods and services produced by a business
• Goods


  Tangible, physical products that satisfy consumer needs and wants
• Services


  Intangible processes that satisfy consumer needs and wants
• Needs


  Essential items like food and water
• Wants


  Non-essential items like iPhones and toys
• 1% of coffee cups are currently recycled, meaning 99% are not recycled
• Costa is trying to increase the amount of coffee cups it recycles, which is a form of marketing