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Business Revision 3
Business Revision 3
Business Revision 3
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.
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
To meet customer demands therefore they will want to buy the product and this will increase
revenue.
6) What is an Entrepreneur?
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.
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.
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?
Questionnaires
Observation
Surveys
Focus groups
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?
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.
Age
Income
Location
Lifestyle
25) Give 2 pieces of information that a business might find out from a market gap.
Aims are the overall goals that the business strives to achieve, they are nor specific
Survival
Maximize Profit
Increase market share
Maximize sales
Achieve financial security
Personal Satisfaction
Independence and control
Be ethically correct and do what is right for the society
Do what is right for the environment
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.
Price x Quantity
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.
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
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.
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.
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
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