Business paper 1

• 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
• adv and disadv of private limited companies?

  -more expensive

  -legally obliged to publish its accounts every year

  *limited liability

  *easier to get a loan or mortgage
• what are public limited companies(PLC)?

  public means that shares in the company are traded on a stock market and can be bought and sold by anyone
• adv and disadv of PLC

  -can have many shareholders so people want profit

  *limited liability

  *helps business expand and diversify
• what is franchising?

  When businesses sell products or use trademarks of another firm
• adv and disadv of franchising

  -franchisor might have strict rules on how the business can operate

  -franchisee have to pay a lot to start

  *customers will already recognise the franchisors brand so the small business gains more recognition
• what's the marketing mix?

  price

  product

  promotion

  place
• how does change in technology affect marketing mix?

  may affect different parts of the marketing mix. E.g. improvements in e commerce means more companies are selling products online than in store, changes in digital communication changes how businesses advertise
• how can changing customer needs and wants impact marketing mix?

  e.g. companies may have to lower prices of products for customers that use older technology as these process no longer meet customer needs
• what is the role and importance of a business plan?

  to identify:

  •the business idea

  • business aims and objectives

  • target market (market research)

  • forecast revenue, cost and profit

  • cash-flow forecast

  • sources of finance

  • location

  • marketing mix.
• what is the purpose of planning business activity?

  Reducing risk and helping a business to succeed
• who are business stakeholders?

  anyone that impacts the business in anyway
• examples of stakeholders

  shareholders (owners)

  employees

  customers

  managers

  suppliers

  local community

  pressure groups

  the government
• how are the local community affected by business activity?

  gains chance for good jobs and sponsors for community from the business
• how is the government affected by business activity?

  the government will receive taxes if the firm makes a profit
• how are customers affected by business activity?

  they will want high quality products for low prices
• how are the owners affected by business activity?

  they make the profit and decide what happens with the profit
• how do businesses affect pressure groups?

  businesses may anger pressure groups do to their actions, causing the pressure groups to create bad publicity for the business
• different types of technology used by businesses

  e-commerce

  social media

  digital communication

  payment systems
• how does technology influence sales?

  -access to larger market so increases sales

  -allows business to advertise online so more customers and sales