nat5 Business

• Sole trader


  - owned and controlled by one person

  Advantages:

  Easy to set up

  Decisions fast

  All profit kept by the owner

  Disadvantages

  No one to consult

  Unlimited liability

  Difficult to take time off
• Partneships


  -2-20 partners with a partnership agreement

  Advantages:

  Different skills

  Workload can be shared

  Larger amount of finance can be raised

  Disadvantages:

  Disagreement

  Profits have to be shared

  Unlimited liability
• Private limited companies


  -ownership in shares, must be formally invited and controlled by a board of directors, profits divided through dividends

  Advantages:

  Selling shares raises capital

  Control cannot be lost

  Limited liability

  Disadvantages:

  Complicated to set up

  Annual accounts must be produced

  Profits must be shared
• Finance (Internal factor)


  Lack of finance causes:

  Unable to pay bills

  Purchase materials

  Take on staff

  Carry out marketing

  Surplus causes:

  Make improvements
• Current technology (Internal factor)

  Out of date:

  Slow productivity

  Money tied up in fixing it

  Staff get frustrated

  Up to date:

  Produce quality products

  Gives competitive edge
• Human Resources (Internal)


  -can take industrial action which stops production

  -motivated staff causes higher quality service

  Decisions made can influence the organisation
• Stakeholder interest


  Owner-business succeeding to receive profit

  Mangers-doing well to get promoted

  Employees- have job security and higher pay

  Customer- receiving best value for money

  Banks- loans paid back on time
• Uses of market segmentation

  -establish target market

  -promotion is targeted to reduce cost

  -location will be appropriate

  -products developed to suit target market
• Field research


  Methods:

  Personal interview

  Phone survey

  Postal survey

  Online survey

  Hall test

  Focus groups
• Desk research


  Sources:

  Government reports

  Reports from market research companies

  Competitor websites

  Reputable newspapers
• Stages of research and development

  1. Conduct market research

  2. Generate an idea based on collected data

  3. Create a prototype of the product

  4. Test the market and gain feedback

  5. Make changes to the product based on feedback

  6. Put final product into production
• Product life cycle


  Introduction:

  Sales are low, heavy advertising and products make a loss

  Growth:

  Sales rise quickly, heavy advertising and products become profitable

  Maturity:

  Established customer base, less advertising and profits peak

  Decline:

  Sales and profit fall fast, product withdrawn from market before it is unprofitable
• Ways to extend product life cycle

  Changing the product

  Altering price

  Changing packaging
• Factors when setting price

  -cost of producing products

  -amount of profit to be made

  -price charged by competitors

  -quality of products

  -price target market will pay

  -Government restrictions
• Pricing Strategies


  Long term:

  -premium pricing (higher than competitors)

  -low (lower than competitors)

  -competitive (same as competitors)

  Short term:

  -price skimming( high then gradually lowered)

  -penetration (low then gradually higher)

  -promotional (short term reduction)
• Location


  Factors:

  Type of business

  Location of competitors

  Cost of premises

  Availability of Labour

  Benefits:

  Easy access

  Low rent minimises costs

  Sales increase with no competition near
• E-commerce


  Advantages:

  Worldwide market

  24/7 availability which is convenient

  No rent or staff costs

  Websites display unlimited amount of products

  Can collect consumer data

  Disadvantages:

  Customers can't see or handle products

  High initial costs
• Methods of distribution


  Road:

  A-quick and cheap

  D-traffic jams and bad weather cause delays

  Rail:

  A-large quantities and environmentally friendly

  D-goods have to be transported from station

  Sea:

  A-larger quantity and cheaper than air

  D-very slow and still have to be transported from port

  Air:

  A-quickest methods

  D-very expensive and high carbon footprint
• Promotion


  Purposes:

  -informs customers on the product

  -provide information

  -persuade customers to buy it
• Methods os sales promotion

  Special offered

  BOGOF

  Free samples

  Loyalty schemes

  Competitions with winning prizes
• Methods of advertising


  TV:

  Potential to reach large audiences

  Relatively expensive

  Billboards:

  Lots of people will see

  Can be vandalised or damaged

  SMS:

  Cost effective and received instantly

  Customers can be annoyed

  Internet ads:

  Global audience

  Difficult to stand out
• Technology in marketing


  Social media management:

  Monitor presence

  Spreadsheets:

  Calculate break even and pricing decisions

  Databases:

  Store info on customers

  Customer feedback tools:

  Gather feedback and identify areas for improvement
• Factors when choosing a supplier

  -quality of the supplies

  -price charged

  -if they deliver on time

  -discounts being offered

  -the distance from business (carbon footprint)
• Understocking


  -production slowing down

  -orders not fulfilled on time

  -making frequent orders

  -not being able to take unexpected orders
• Overstocking


  -money tied up in inventory than elsewhere

  -inventory deteriorating before use

  -increased storage costs

  -easier for staff to steal
• Advantages of computerised stock control

  Will avoid under/overstocking

  Reduces need for stock taking

  Can be linked to the supplier to order goods

  Up to date levels as it updates automatically
• Factors when choosing method of production

  -nature of the product

  -availability of Labour

  -availability of machinery

  -finance available

  -size of premises
• Job production


  One off products with one complete before another is started

  Advantages:

  -fully customised to customer wants

  -higher prices charged

  Disadvantages:

  -staff need to be paid more

  Lead time is slow
• Batch production


  Products made in small groups

  Advantages:

  -large amount can be made

  -less skilled workers

  Disadvantages:

  -equipment needs to be cleaned between every batch

  -1 mistake can ruin a group
• Flow production


  Mass producing identical products on and assembly line

  Advantages:

  -High levels of consistency

  -very large quantities

  Disadvantages:

  -not customisable

  -high initial cost
• Ensuring quality


  Quality inputs:

  Ensure final product is good quality by trained employees, high raw materials and latest machinery

  Quality control:

  Checked before and after production

  A-reduces faults

  D-high wastage

  Quality assurance:

  Inspected at every stage of production

  A-little waste

  D-takes longer
• Ethical


  Ways:

  -pay living wage

  -good working conditions

  -no animal testing

  -renewable energy sources

  -fair trade suppliers

  A:

  Improved reputation, higher prices can be charged

  D:

  More costly and less profit from increased production
• Environmentally friendly


  Ways:

  -reduce packaging

  -reduce carbon footprint

  -recycling

  -renewable energy

  A:

  Improves image, good advertising tool, can reduce production costs

  D:

  Time consuming and quality can be viewed as inferior
• Recruitment


  1.identify a job vacancy

  2. Carry out a job analysis (roles etc)

  3. Prepare a job description (tasks,pay contract etc)

  4. Prepare a person specification(skills,qualities etc)

  5.advertise the job (internal and external)

  6. Distribute application forms
• Selection


  7. Collect CVS/ application forms

  8. Create a shortlist

  9. Hold interviews/ testing:

  I-identify candidate personality and ask specific questions about cv etc

  T- see how they cope under pressure

  10. Inform successful candidate
• Role of technology when recruiting and selecting

  Online application forms

  Word processing for application forms

  Databases to record details of candidates

  Internet job websites
• Training


  Benefits:

  Increased flexibility

  More productive staff

  Less accidents

  Improved customer service

  Staff can improve skills and knowledge

  Shows commitment to employee growth

  Costs:

  Expensive

  Loss of production

  Staff may leave for better jobs
• Methods of training


  Induction:

  -company policies

  -health and safety

  -tour and introduction of business

  On the job:

  A- employees can continue work and is cheaper

  D- not qualified instructor, can be interrupted and may pick up bad habits

  Off the job:

  A-given by qualified, can achieve qualifications

  D- more expensive and time consuming
• Ways to offer good customer service

  Staff training

  Loyalty card

  Bonus offers

  Offering guarantees
• Ways to improve employees motivation

  -increase rate of pay

  -allow workers good working practices

  -empower employees

  -regular meetings for communication