Business Studies Unit 1 (need to learn)

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Specific Measurable Attainable Time Realistic

SMART objectives

Focus groups, questionnaires, interviews

Three types of primary research

Governmental statistics, internet, specialist magazines

Three types of secondary research

Temporary

A type of employee-can work for the business for a fixed period of time, and their contract can be renewed if extra staff are needed for longer than this.

Permanent

A type of employee that works for the business permanently-the business can only stop employing them by either dismissing them or making them redundant.

Part-time

A type of employee-advantages include saving the business money, giving the business more flexibility to manage workloads, allowing the staff a better work/life balance and an increase in productivity. Disadvantages are that this type of employee can sometimes be less dedicated and loyal than full-time workers, they might not have as much experience of how the business works and the expense of the recruitment and training processes.

Full-time

A type of employee-advantages include the increased dedication and loyalty compared to part-time workers, better experience of how the business works and a better ability to make good relationships with staff and customers. Disadvantages include the loss of money to the business (higher wages) and denying the staff of a better work/life balance, which could dampen enthusiasm

Financial planning

Covers all of the financial forecasts for the business, e.g. how much capital they need to start the business, how they are going to finance the business, and their break-even calculations. Also includes a cash flow corecast and an estimated profit and loss account and balance sheet for the first year.

Factors that affect location

Transport costs, infrastructure (access to motorways, fast rail links, sea ports and airports), good supply of labour resources, local training facilities, correct land resources and the cost of land and property

Overdrafts

A source of finance-can be used for short-term finance. Advantages: Quick and eay to set up, and flexible as the business only has to pay interest on the amount that it actually borrows. Disadvantages: Interest rate is usually very high, so can be expensive if used over long periods of time, and the bank can remove the ovedraft facility at any time and demand the money back.

Loans

A source of finance suitable for medium term finance (between 1 and 5 year). Advantages: Guaranteed the money for the duration of the loan, only have to pay back the loan and interest and the interest charges are usually lower than for an overdraft. Disadvantages: They can be diffficult to arrange because the bank will only lend the business money if they think they're going to get it back, and keeping up with the repayments can be difficult if the business is not getting any money.

Grants

A source of finance-money from central and local government and some business charities that don't have to be repaid

Venture capitalists

A source of finance-provides capital by giving loans and buying shares. Particularly suitable for business start-ups or expansion

Not-for-Profit business

A type of business not set up to make profit, usually with other aims such as helping people or benefitting the community-e.g. public sector organisations such as NHS and the fire service.

Sole Trader

An individual trading in his or her own name, or under a suitable trading name. Advantages: freedom, profit, simplicity and saving on fees (no legal costs). Disadvantages: Risk, time, expertise, vulnerability and unlimited liability.

Partnerships

Between two and twenty people, trading in the names of the partners or under a suitable trading name. Advantages: More owners bring more capital to invest at the start, partners bring more ideas and expertise, and partners can cover for each other's holidays and illness. Disadvantages: Partners still have unlimited liability, each partner is liable for decisions made by other partners, and there's a risk of conflict between partners.

Private Limited Companies

A type of limited liability company-can't sell shares to the public, so people in the company own all the shares. Don't have shared prices quoted on stock exchanges, shareholders may not be able to sell their shares without the agreement of the other shareholders, there's no minimum share capital requirement and they end their name with LTD.

Public Limited Companies

A type of limited liability-company can sell shares to the public, but must inform people about the company before they buiy. Their share prices can be quoted on the stock exchange, shares are freely transferable, usually start as private and go public later, need over £50000 of share capital and always end their name with the initials PLC

Oligopoly

A small number of large firms dominating the market, and keeping their prices at a similar level-e.g. the UK supermarket trade (sainsbury's, morrison's, asda and tesco's)

Monopoly

One business has complete control over its market-no competition, e.g. Network Rail

Monopolistic competition

Businesses in the same market have a strong enough brand for competition in these circumstances to not be based just on price-consumers choose products based on brand image, so businesses don't have to keep their prices low if they've got a popular market-e.g. BMW

Local market

Market aimed at people who live locally

National market

Market aimed at people all across the country

Physical market

Market where customers have to visit a shop or physical location to buy the product

Electronic market

Market where customers have to go online to buy a product

Random sample

Choosing names at random from a list of the whole population

Quota sample

Choosing people with certain characteristics

Stratified sample

If the population contains identifiable groups with very different characteristics, combining small samples from each group will give you this kind of sample

Focus groups, questionnaires and interviews

Three types of primary research

Governmental statistics, internet and special magazines

Three types of secondary research

Business plan

A document typically drawn up to get financial backing for a business, showing the financial risk involved in setting up the business, the business' strengths and weaknesses, legal structure etc

Adding value

The process of making a product or service more valuable to consumers

Primary

Obtaining raw materials

Secondary

Manufacturing the materials

Tertiary

Providing a service

Copyright

Gives protection to written work and music, making it illegal to reproduce other people's work without their permission

Patent

A way of registering and protecting a new invention-the inventor needs to apply to the Patent Office to get one. If they have a patent, nobody else can copy the product unless they give them a licence.

Trademark

Registering a business' name, logo or slogan to protect it so that nobody else can use it, e.g. the McDonald's golden arches logo.

Franchise

An agreement which allows one business to use the business idea, name and reputation of another business. Advantages: Franchisee gets a well-known name, a successful and proven business idea, training and financial support, marketing, advertising and promotion.

Franchisor

The business who is willing to sell, or license, the use of its idea, name and reputation.

Franchisee

The business who wants to use the original business' name

Niche

A product or market that caters exclusively for a certain group or profession of people

Sources of business ideas

Brain storming, personal ideas, hobbies+interests and business experience are all examples of what?

Motives for becoming an entrepreneur

Being your own boss, filling a gap in the market, putting skills to good use, wanting an exciting career and recognition are all examples of what?

Opportunity cost

The loss of something due to starting a particular business, e.g. free time, other business ideas, money

Entrepreneur

A person who tries to create a business and fill a gap in the market by using their skills and business/product/service ideas

Enterprise

Entrepreneurs starting their own businesses, which benefits the economy by increasing productivity and creating new jobs.

Risks of starting a business

Lack of experience, false expectations, running out of money, inaccurate or unrealistic business plans, poor stock control, insufficient market research and incorrect locations are all examples of what?

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