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50 Cards in this Set
- Front
- Back
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What’s the difference between a good and service? |
A good is a physical tangible product and a service is an experience that is intangible |
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What is the difference between a customer and consumer |
A customer purchases the product and a consumer uses the product three reaosns |
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Three reasons business ideas come about? |
- changes in technology - changes in consumer needs - a product becomes obsolete |
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What is meant by obsolete products? |
Outdated and no longer in use |
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What are payment platforms? |
Enables businesses to take online payments from customer . They are usually free for customer to use, but take small amount of commission from the seller and provide consumer with peace of mind. |
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What is dynamic nature of business? |
The idea that business is ever changing, because of external factored, like technology is always changing. |
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What is venture capital? |
The risk capital provided by and investor wiling to take risk in return for share in later profits. Will share stake in business |
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What is an entrepreneur? |
Business people who create a business and takes financial risks with the aim of making a profit. |
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What is added value? |
The difference between the cost of materials and selling price |
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How is added value achieved? |
- Quality = high quality so charge higher price. - Design = Unique and different from others. - Branding = create a strong brand name to stand out from competitors. - USP = unique selling point, something that makes product different from competitors. |
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How to reach customer needs |
• Range of well designed products. • Quick service • Clearly laid out |
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In what two ways do new business ideas come about? |
- Original ideas - Adapting existing concepts |
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What are three risks that start-ups face? |
-Business failure - Lack of (financial) security - Financial loss |
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What is the difference between variable and fixed cost? |
- Variable costs are costs that depend on the amount of products you manufacture (e.g. Raw materials) - Fixed costs (overheads) are costs that remain no matter your production rate (e.g. Rent) |
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How do you work out variable cost? |
Cost per unit x sales volume |
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What are financial rewards for a start-up? |
- Survival - Profit - Wealth - Income - Financial Security |
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What are non-financial rewards for a start-up? |
- Personal Satisfaction - Challenge - Independence - Control |
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What is a stakeholder? |
Any person with interest in the business |
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What are the thee purposes of business enterprise? |
- To meet customer needs - To add value - To provide goods and services |
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What are the roles of an entrepreneur? |
- Organise resources - Make business decisions - Take risks |
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What are the four main customer needs? |
- Choice: When buying products, customers like to have a choice because different customers have different tastes and needs. - Quality: Customers assess quality as a product’s suitability and their opinion will depend on expectations. - Price: Customers will be influenced by price, especially by low prices. - Convenience: Convenience refers to how easy it is for customers to purchase desired products. |
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Why is it crucial for businesses to meet customer needs? |
-Generate sales: - Customers will continue to buy products- Repeat custom ensures that the business generates cash flow. - Business survival: - As the reputation of the business grows, more and more consumers are likely to buy its products. - This should lead to increased profits making it likely that the business will continue to operate |
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What is marketing? |
Providing customers with a persuasive case for preferring your predict to your competitors. |
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What are the reasons for market research? |
- To identify and understand customer needs - To identify gaps in the market - To reduce risk - To inform business decisions. |
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What is primary research and how may businesses do this? |
Market research carried out for the first time: - Survey/ Questionnaire - Observation - Interviews - Focus Group |
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What is secondary research and how may businesses carry this out? |
Market research which is information that has already been gathered: - Internet - Government Statistics - Company Reports - Newspapers - Trade Associations - Books |
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What is the difference between quantitative and qualitative data? |
QuaLitavtive - Data is non-measurable opinions and judgments QuaNtitavtive - Data is measurable numbers and statistics |
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Why is social media crucial to market research? |
Social media is a cheap way of understanding customers. It allows a business to: - Deepen their understanding of the market - Identify popular trends - Improve their products and marketing - Save time conducting market research |
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Why is validity and reliability of research data important? |
All your business decisions are based off it and so invalid and unreliable information will lead to a business making harmful mistakes that will limit their chance of profit and growth. |
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What are market segments? |
- Part of a market that groups buyers with similar buying habits, such as: - Location - Demographic - Age - Income - Lifestyle |
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What is a market map and what is it used for? |
A market map is a four quadrant map based on two features of a product (e.g. high/low price and high/low quality) to allow a business to identify a gap in the market. |
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What features of competitors products may businesses monitor? |
- Price (Are their prices in a similar competitive range) - Product range - Quality (Are they delivering quality similar/ better) - Customer service - Location (Are they closer to their target market) |
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What may a business conduct to analyse its competitors and how they should effect their decisions? |
A SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) |
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What is a gap in the market? |
An area on the market map where few or no existing brands operate, implying a business opportunity to fill customer needs. |
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What is the competitive environment? |
The strength of competitors between companies in the same market. |
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What is the formula for gross profit? |
Total Revenue – Total Cost |
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What is the formula for revenue? |
Price X Quantity |
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What is the formula for total costs? |
Fixed Cost + Variable Cost |
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What is the formula for variable cost? |
Cost per Unit x Sales Volume |
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What is the formula for net profit? |
Gross Profit - total expenses |
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How do you calculate interest? |
Total Repayment – Borrowed Amount Interest = _______________________________ Borrowed Amount x 100 |
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What is the break-even point and how do you calculate it? |
The level of output where total revenues are equal to total costs; this is where neither a profit or loss is being made: Fixed costs __________________________ Selling price - Variable cost per unit |
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What is a margin of safety? |
The amount of output between the actual level of output where profit is being made and the break even level of output. |
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What happens to the break even point if: a) Costs go up b) Your sale price goes up |
a) It becomes larger (further along on a chart) b) It becomes smaller (Closer on a chart) |
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What is cash flow? |
The movement of money into and out of the business. Cash is used to pay the day-to-day expenses of a business. |
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How is net cash flow calculated? |
Total cash flow in - Total cash flow out |
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What is the difference between long and short - term sources of finance? |
LT: Sources of money for businesses that are borrowed or invested typically for more than a year. ST: Sources of money for businesses that may have to be repaid either immediately or fairly quickly, such as an overdraft, usually within a year. |
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Examples of short term sources of finance are: - Bank Overdraft - Trade Credit What are they? |
- Bank Overdraft = Borrowing money from a bank by drawing more money than is actually in your account. Interest is charged on the amount overdrawn. - Trade Credit = Negotiating with suppliers a period of time before goods and services that have been purchased have to be paid for. This is usually 30 days credit. |
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Examples of long term sources of finance are: - Personal Savings - Venture Capital - Share Capital - Loans - Retained profit - Crowdfunding. What are some of them? |
Venture Capital = Money lent by a large or successful business which there is an element of risk. Share Capital = Money Invested by shareholders from buying shares into the business Retained Profit = Profit reinvested into the business. Can be used for expansion. |
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What is the difference between limited and unlimited liability? |
- In unlimited liability, there is no distinction between the business and the owner and so any debts that the business owes have to be payed off by the owner's personal assets. - In limited liability, the business and the shareholders that own it are distinct and so any debts can only only be taken form the business. |
