Business

• What is one reason why new businesses may come about?

  Changes in technology
• How is e-commerce expected to change sales in the next 10 years?

  One in two sales will happen via the internet
• What impact has technology had on the emergence of new businesses?

  It has allowed many businesses to exist, such as e-commerce and eSports
• What is an example of a product that became obsolete?


  The typewriter was replaced by the keyboard
• What are some factors that lead to changes in consumer demand?

  Changing demographics, fashions, trends, and ethical concerns
• How do new business ideas typically come about?

  From a new idea or an adaptation of an existing idea
• What is essential for an entrepreneur when developing a business idea?

  Providing added value
• What are the main reasons for the emergence of new businesses?

  • Changes in technology
  • Changes in consumer preferences
  • Products becoming obsolete
• What is market mapping used for?

  To analyze competition in a specific market
• What are the common variables used in market mapping?

  Price and quality
• In the airline market, how would you plot price and quality on a market map?

  Price on one axis and quality on the other axis
• What does a market map reveal about competition in the airline market?

  It shows that there are many companies providing high quality for high prices
• What does a saturated market indicate when using a market map?

  There is a lot of competition in that area
• Why might a business choose not to enter a saturated market quadrant?

  Because there is a lot of competition which may lead to lower sales
• What are the three gaps in the market identified in the study material?

  High quality low price, high price low quality, and low quality low price
• Why might the gap of high quality low price not be a viable option for a business?

  Because high quality suggests high costs, which may lead to low revenue
• What should businesses do to validate gaps in the market identified through market mapping?

  Conduct market research
• What might market research reveal about the high price low quality gap?

  That customers are not willing to pay a high price for low quality
• What did Ryanair do in response to the identified gap in the market?

  They entered the low price budget end of the airline industry
• What are the potential benefits of entering a gap in the market?

  Lower competition, higher sales, and potentially more revenue and profit
• How can existing businesses use market mapping?

  To determine if they should move to a different quadrant or target a new segment
• What are the main business ownership structures discussed?

  Sole traders, partnerships, private entity companies, and public limited companies
• What are the pros of using market mapping?

  • Identifies potential gaps in the market
  • Helps startups get initial sales
  • Allows existing businesses to reposition their brand
  • Identifies overcrowded areas to avoid poor decisions
  • Simple tool for analyzing competition
  • Encourages the use of market research to reduce risk
• What does the acronym PLUMS stand for in analyzing business ownership structures?


  Profit distribution, liability, management and control, and sources of finance
• What are the cons of using market mapping?

  • Gaps in the market do not guarantee success
  • Limited to two variables, which may oversimplify complex markets
  • Results may be biased based on who created the map
  • Poor accuracy can lead to poor decisions and wasted investments
• How does profit distribution differ between sole traders and private limited companies?

  Sole traders keep 100% of profits, while private limited companies distribute dividends based on board decisions
• What is a tax advantage of setting up a private limited company instead of being a sole trader?

  A private limited company allows for paying a salary up to the personal tax allowance and then dividends
• How are profits shared in a partnership?

  Profits are shared according to the partnership deed
• What could cause conflict in a partnership regarding profit distribution?

  If one partner is performing significantly better but profits are split according to the deed
• Who decides the amount of dividends paid to shareholders in private and public limited companies?

  The board of directors
• What type of liability do sole traders and partnerships have?

  Unlimited liability
• What is a significant risk associated with unlimited liability in partnerships?

  Partners are responsible for each other's negligence or misconduct
• What type of liability do private limited companies and public limited companies have?

  Limited liability
• What does limited liability mean for shareholders in a company?

  Shareholders' personal possessions are not at risk, only their investment in the company
• Who has full management and control in a sole trader business structure?

  The sole trader
• What is a potential drawback of being a sole trader in terms of decision-making?

  The sole trader has no support in decision-making
• How does management and control differ between private limited companies and public limited companies?

  Private limited companies often have owners who are also managers, while public limited companies may have a separation between ownership and management
• What sources of finance are available to sole traders?

  Sole traders can secure debt against personal possessions but cannot access share capital
• What are the inputs that go into a business?

  Inputs include land, labor, capital, and enterprise.
• What is a limitation of partnerships regarding sources of finance?

  Partnerships cannot access share capital as they are unincorporated businesses