1) What is enterprise? Business enterprise is the process of indentifying new business opportunities , and then taking advantage of them. It can involve starting up a new business, or helping an existing one to expand by coming up with new ideas. 2) Give three purposes of business activity. To provide people with a good service/ product. Meet customer needs - providing a service/ product that people want to buy Add value to an existing product: Make product more convenient for customers to get or use Build a good brand image for the product Improve product design/ quality Give the product a USP 3) Explain why a firm might try to make a product more convenient for the customer So that the product can be purchased regularly and be chosen over competitors 4) What does USP stand for? Unique selling point 5) Explain 3 reasons why new business ideas come about? To meet customer demands therefore they will want to buy the product and this will increase revenue. 6) What is an Entrepreneur? An entrepreneur is someone who takes on the risks of enterprise activity 7) List 3 things that an entrepreneur must be able to do in order to run a successful business Organize resources - plant for the future, make sure that business has the right resources at the right time Take risks Make business decisions - needs to be able to make decisions quickly and effectively. Decide of business aims, objectives, structure, who to employ, how to grow and what to do when things go wrong. 9) Describe 3 meanings of the term 'Market' Can be a place, Product or a group of People A place where goods are traded between customers and suppliers. Trade in a particular type of product The potential customers for a product 10) list 5 areas where a business may compare itself to its competitor Price Customer service Quality - better quality means that customers are more satisfied. More competitive and more expensive as product is better than their competitors. May use promotional material to emphasize on quality, however, this is costly. Product range - a large product range can be seen as more attractive to customers therefore there is more variation and selection. The business will also try to fill a gap in the market by developing a new product. There will be no competitions and will be seen as more innovative and attractive. Location - more convenient , therefore customers buy more. 12) Why is it important for a business to understand a customer's needs? Businesses need customers to buy their products, otherwise they will not survive. By understanding customers needs they can make products that will meet the demands of the customers which will increase sales and help ensure a business's survival. 15) Explain how market research can help reduce risk in a business. Can avoid making products that customers do not want and therefore save money. Ensures that the product price is not too high or in the wrong location. Reduces the risk of costly mistakes. 16) what is the main difference between Primary and Secondary market research? Primary research involves getting information from customers or potential customers. It is done by the business itself. Secondary research involves looking at data that was collected by others. It involves looking at things like market research repots, Government reports, articles in newspapers, magazines and the internet. 17) Give 4 methods of Primary market research. Questionnaires Observation Surveys Focus groups 18) Give 4 Methods of Secondary market research. Market research reports Government reports Newspaper articles Magazines Internet 19) Would a small firm be likely to use primary or secondary market research? Explain why. A smaller firm would likely use secondary research as it is more accessible, cheaper and more time efficient. This is more preferred as a smaller firm will not have a great amount of money to invest in market research. 21) What is the difference between quantitative and qualitative market research? Quantitative data is measureable and is expressed in numbers. It is statistical data such as sales figures and market share. Therefore is easier to gather, process and present. Qualitative data considers feelings opinions and intentions of customers. It is written down in words or is recorded. Such as focus groups, interviews and social media surveys. 22) what is meant by reliable market research? Results needs to be repeated by another researcher. It shows accuracy and is more useful for a business. 23) Why might a Business want to segment a market when conducting market research? Can help a business figure out who exactly they more interested in selling to. Can use market research data to identify a gap in the market and find out what they need to do to increase sales. 24) Give 4 different ways to segmenting a market. Age Income Location Lifestyle 25) Give 2 pieces of information that a business might find out from a market gap. Competitors selling similar products - how customers perceive them Any gaps in the market 1) What is meant by the aim of a business? Aims are the overall goals that the business strives to achieve, they are nor specific 2) State 5 financial aims a business might have Survival Maximize Profit Increase market share Maximize sales Achieve financial security 3) State 4 non-financial aims a business might have Personal Satisfaction Independence and control Be ethically correct and do what is right for the society Do what is right for the environment 4) What is meant by business objective? A business objective is a specific aim that has to be achieved at a set date. Setting SMART objectives can help: o o o o o o o Decision making and prioritizing Pushes the company to get better as the achieve goals Makes staff motivated and active >> empowers employees Shows future plans to investors Gives clear purpose Give results to compare improvements Organized and coordinated within objectives 5) Suggest how the aims and objectives of a business in non-competitive and competitive markets might differ In a highly competitive market, the business might focus on survival or maximizing sales. In a less competitive market the objectives are mainly focused on increasing market share and maximizing profits. 6) State the equation for calculating a business's revenue Price x Quantity 7) Describe the difference between fixed and variable costs Fixed cost do not change with the level of output, variable costs do change with the level of output. 8) Find the total variable costs for a firm if it sells 450 units with a variable cost per unit of $3 450 x 3 = $1350 9) Write the equation for calculating the percentage interest a firm has paid on a loan. 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 (𝑜𝑛 𝑙𝑜𝑎𝑛𝑠) = 𝑡𝑜𝑡𝑎𝑙 𝑟𝑒𝑝𝑎𝑦𝑚𝑒𝑛𝑡 − 𝑏𝑜𝑟𝑟𝑜𝑤𝑒𝑑 𝑎𝑚𝑜𝑢𝑛𝑡 × 100 𝑏𝑜𝑟𝑟𝑜𝑤𝑒𝑑 𝑎𝑚𝑜𝑢𝑛𝑡 10) A firms total revenue is $250,000 and its total costs are $100,000. State weather the firm has made a profit of loss. Profit of $150,000 11) What is the break-even level of output? It is the level of sales a firm needs in order to just cover its costs 12)Write the equation for calculating the break-even point for a firm's revenue. Break-even point in units x sales price 14) How do you calculate the margin of safety? Actual sales (budgeted sales) - Break-even sales 15) The break-even point will be lower 16) What is meant by cash? Cash is money that a company can spend immediately. It is a liquid asset. A business needs cash in order to pay its employees, its suppliers and overheads. 17) What is meant by net cash flow? Cash inflow less cash outflow 18) How do you calculate the closing balance for a period on a cash flow forecast? Opening balance + net cash flow 19) Describe how credit can affect cash flow for a business Having a negative cash flow is less likely 20) Give 1 disadvantage of using an overdraft compared to other forms of borrowing An overdraft has very high interest rates 21) Describe what is meant by share capital Individuals can buy shares in the business. They take part in the ownership of the company and the business can use the money gained through issuing shares 22) Describe what is meant by retained profit Money that has been generated as profit and ploughed back into the business.
