Paper 1

• why do new business ideas come about?

  -changes in technology

  -changes in consumer wants

  -products and services becoming obsolete
• risks of business activity

  -Business failure

  -financial loss

  -lack of security
• rewards of business activity

  -Business success

  -profit

  -independence
• what's the purpose of business activity?

  -to produce good and services

  -to meet customer needs

  -to add value
• how can we add value?

  -convenience

  -branding

  -quality

  -design

  -Unique selling points
• what is the role on an entrepeneur

  to:

  organise resources

  make business decisions

  take risks
• what are customer needs

  price, quality, choice, convenience
• what's the importance of identifying and understanding customer needs


  it allows the business to survive and generate sales
• what is the purpose of market research

  -to identify and understand customer needs

  -identify gaps in the market

  -reduce risk

  -inform business decisions
• primary methods of market research

  survey

  questionnaire

  focus group

  observation
• secondary methods of market research

  internet

  market reports

  government reports
• disadvantages and advantages of primary methods of market research

  -it's expensive

  -time consuming

  -inefficient

  *easy to plan and carry out

  *relevant and up to date info
• disadvantages and advantages of secondary methods of market research

  -lots of competition

  -looks unappealing

  -only targets small population

  *cheaper/affordable

  *easy to use

  *some are interactive

  *some have access to a global market
• what's qualitative data?


  information that can be measured. like statistics or figures
• what's quantitative data?


  all about people's feelings and opinions
• adv and disadv of qualitative data


  - difficult to compare

  *reliable
• adv and disadv of quantitative data


  *can easy compare

  -less reliable
• What is market segmentation?

  the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups
• examples of market segments


  location

  lifestyle

  income

  age
• how can we identify strengths and weaknesses of competitors?

  basing them off:

  price

  quality of product

  location

  product range

  customer service
• what are financial business aims and objectives?

  survival

  profit

  sales

  market share

  financial security
• non financial aims and objectives

  Social objectives

  personal satisfaction

  challenge

  independence

  control
• short term sources of finance


  overdraft

  trade credit
• long term source of finance


  personal savings

  venture capital

  share capital

  loans

  retained profit

  crowd funding
• what is overdraft?


  when firms take more money out of its bank account than it has paid into it
• advantage and disadvantage of overdrafts


  -has a high interest rate

  -can be paid by bank any time

  *flexible

  *easy to organise or set up
• what is trade credit? name advantages and disadvantages

  when businesses give firms a period of time to pay for certain purchases

  *useful for small businesses to earn the money needed to pay

  -if payments late they could pay a larger fee

  -paying the debt increases business costs
• what are loans? name advantages and disadvantages

  loans are given sum of money given by banks which have to be paid back with interest after a while.

  *easy to take out

  -has to be paid back with interest so business gives back more than they took
• what is personal savings? name advantages and disadvantages

  a business owner could use their own savings as a source of finance

  -could end up losing all their money if it fails

  *doesn't have to pay it back to anyone
• what is share capital? name advantages and disadvantages


  individuals can buy shares of the business

  -business owner wont have full ownership, as the individuals will have part ownership of business

  *fairly easy method
• what is venture capital? name advantages and disadvantages

  money raised through selling shares to businesses/individuals who specialises in giving finance to firms

  -may expect returns quicker than any other shareholders
• what is retained profit? name advantages and disadvantages

  profits the owners have kept aside

  *doesn't have to pay anyone back

  -they lose their own money if it fails
• crowd funding


  when a large group of people contribute money to businesses

  *creative method and fairly quick
• what is location influenced by?


  -location of raw materials

  -labour supply

  -competition

  -location of the market

  -using the internet
• what are sole traders?

  businesses with only one owner
• adv and disadv of sole traders

  -may have to work long hours

  -unlimited liability so you're responsible for paying back all the debt of your business if it fails

  *easy to set up

  *you get to decide what to do with all the profits
• what is unlimited liability?


  The owner is personally and fully responsible for all losses and debts of the business
• what is partnerships?


  businesses with 2 or more sole traders
• adv and disadv of partnerships

  -each partner is legally responsible for what all the other partners do

  -have unlimited liability

  *more ideas and skills, can develop business further quickly

  *share the work equally
• What is private limited companies?


  -private means shares can only be sold if all the shareholders agree

  -they have Ltd. after their business name