business legal identities

sole trader: 1 owner
partnership: 2 peopple or more
private limited companys: often a family run business with the protection of limited liability
public limited companys: large organisation whose shares are on the stock exchange
Franchises: small business trading with agreement of a large firm
Co-operatives: collectivly owned by workers/ customers

what is an entrepreneur and the qualities to be a good one ...

someone who makes a business idea happen either through their own effort or by organising others to do their work.


qualities of a good entrepreneur..
understanding of the market
determination
passion
persuasive abilities
able to build relsionships with the network and customers
ability to cope with risks.

stages of the business cycle

1. Contraction - When the economy starts slowing down.
2. Trough - When the economy hits bottom, usually in a recession.
3. Expansion - When the economy starts growing again.
4. Peak - When the economy is in a state of "irrational exuberance."

what is the business cycle and what is meant by GDP ?

The recurring and fluctuating levels of economic activity that an economy experiences over a long period of time. The five stages of the business cycle are growth (expansion), peak, recession (contraction), trough and recovery. At one time, business cycles were thought to be extremely regular, with predictable durations, but today they are widely believed to be irregular, varying in frequency, magnitude and duration.      
The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period - you can think of it as the size of the economy.

what are uncrontrolable variables?

Things that change
Uncontrollable factors are often called as "Environmental Factors"
it includes:
Political factors,
Economical Factors,
Social Factors,
Technological Factors,
Competitive forces factors
Regulatory forces factor

cashflow, and what is the difference between cash inflows and outflows?

Cash flow is the movement of money into or out of a business, project, or financial product

cash inflow means the cash comesin to the company i.e,cash 
which has to come towards the company that amount is called 
cash inflow it includes revenue
the cash out flow means the amount or cash that which has 
to pay by the company i.e,the actual amount of cash which 
has to be go out from teh company that amount is called 
cash outflow it includes expenditure.

how is adveradge cost calculated

total production cost divided by number of items manufactured

how is total cost calculated

Total cost are calculated by adding variable cost and fixed cost

oppurtunity cost

The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.

The opportunity cost of going to college is the money you would have earned if you worked instead. On the one hand, you lose four years of salary while getting your degree; on the other hand, you hope to earn more during your career, thanks to your education, to offset the lost wages.

direct and indirect costs

Direct Cost:

Definition and explanation of direct cost:

A direct cost is a cost that can be easily and conveniently traced to the particular cost object under consideration. A cost object is any thing for which cost data is required including products, customers jobs and organizational subunits. For example, if a company is assigning costs to its various regional and national sales offices, then the salary of the sales manager in its Tokyo office would be a direct cost of that office.

Indirect Cost:

Definition and explanation of indirect cost:

An indirect cost is a cost that cannot be easily and conveniently traced to the particular cost object under consideration. For example a soup factory may produce dozens of verities of canned soups. The factory manager's salary would be an indirect cost of a particular verity such as chicken noodle soup. The reason is that the factory manager's salary is not caused by any one variety of soup. To be traced to a cost object such as a particular product, the cost must be caused by the cost object. This salary of manger is called common cost of producing the various products of the factory. A common cost is a cost that is incurred to support a number of costing objects but cannot be traced to them individually. A common cost is a particular type of indirect cost.

Semi Variable costs

Semi-variable cost is an expense which contains both a fixed-cost component and a variable-cost component

variable and fixed costs

Fixed costs are costs that are independent of output. These remain constant throughout the relevant range and are usually considered sunk for the relevant range (not relevant to output decisions). Fixed costs often include rent, buildings, machinery, etc.
Variable costs are costs that vary with output. Generally variable costs increase at a constant rate relative to labor and capital. Variable costs may include wages, utilities, materials used in production, etc.

how are start up and running costs different?

Start up costs only occur once to begin the business however running costs are reoccuring and are used to keep the business running eg on stock employees etc

start up costs

non reoccuring costs accociated with starting up a business
 accountant's fees, legal fees, registration charges, as well as advertising, promotional activities, and employee training.

why do not all business' trial their products

could be a wate of time
expensive
miss out on oppurtunitys ( oppurtunity costs)
high demand brand image
competitionn
speed
afraid other businessl will find out
globalisation

benefits to trialing a product

cost efficiant
safety/reliability
prevents damage to brand name
links to supply demand
creates customer loyalties
ontrol over product
less visile
real customer feedback
less stock
pricing strategy awareness

how does a product testing certificate help a business differenciate its products?

why is it good for the product to be consumed eg what are the benefits for the consumer?

safety reliablitity
wuality
cost efficiant

why is launching a new product risky?

hard to afford
economy state
may be rejected
2/3 of products will fail
mot enough advirstisment brand name not known

whats the difference between product testing and trialling?

trialling= done in a different way, limited number of products, trial with reaction

testing= can be done within business or market consumers

what is a market leader?

a market leader is someone who dominates the most of the company, and who hold highest percentage of total sales revenue (highest market share)  within the firm .

Barriers of entry and exit

For many businesses there are also barriers to exit which increase the intensity of competition in an industry because existing firms have little choice but to “stay and fight” when market conditions have deteriorated. There are several costs associated with exiting an industry

Barriers to entry are designed to block potential entrants from entering a market profitably. They seek to protect the monopoly power of existing (incumbent) firms in an industry and therefore maintain supernormal (monopoly) profits in the long run. Barriers to entry have the effect of making a market less contestable

eg. barriers of exit

contracts suppliers customers

unwanted stock

redundancy payments

debts

legal obligations

eg. barriers of entry:

legal transactions

licences

lack of funds/ investments

competition

copyright

lack of ideas

advertising too expensive

what are the advantags og monopoly stake holders along with the disadvantages?

what is meant by monopony power?

Monopony power:
In economic theory, market situation in which there is only one buyer. An example of pure monopsony is a firm that is the only buyer of labour in an isolated town; such a firm would be able to pay lower wages to its employees than it would if other firms were present. Though cases of pure monopsony are rare, monopsonistic elements are found wherever there are many sellers and few purchasers

what do you understand by game theory, brand proliferation, contestability and limit pricing?

Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others.

Brand poliferation: A brand is a name and symbol and with this symbol, ideas associated with a product:
For examples:
Sony -- television set, walkman, beta failure
Mercedes-Benz -- expensive German cars.
Heinz -- ketchup
Apple -- expensive, classy very design computers

brand proliferation is when a company puts on the market a product and variants of a product under different names.

Example:
Heinz would produce the standard ketchup, the 57 brand and then a cheaper ketchup called "the Red one" and an other one called the "H ketchup", very expensive with a special bottle and so on.
Contestable markets:
William Baumol defined contestable markets as existing where “an entrant has access to all production techniques available to the incumbents, is not prohibited from wooing the incumbent’s customers, and entry decisions can be reversed without cost.”
For a contestable market to exist there must be low barriers to entry and exit so that there is always the potential for new suppliers to come into a market to provide fresh competition to existing suppliers. For a perfectly contestable market, entry into and exit out of the market must be costless

Limit pricing: In limit pricing models a dominant firm maximizes its profits by chosing a price that is low enough to discourage some but perhaps not all entrants into the market.

what is meant by an oligopoly, a monopoly and a cartel?

Oligopoly: few firmd ehivh exsist in the market and firce comititions
Monopoly: one leader who is responsible for vast majority of market sales
A cartel: group of producers collide to see set prices and sometimes to share out the market (illegal)

what is perfect and inperfect competition?

perfect competition : no market leader, products simular, simular costs

. All firms sell an identical product.
2. All firms are price takers.
3. All firms have a relatively small market share.
4. Buyers know the nature of the product being sold and the prices
charged by each firm.
5. The industry is characterized by freedom of entry and exit.

Inperfect : No compition comparison, clear market leader.

A type of market that does not operate under the rigid rules of perfect competition. Perfect competition implies an industry or market in which no one supplier can influence prices, barriers to entry and exit are small, all suppliers offer the same goods, there are a large number of  suppliers and buyers, and information on pricing and process is readily available. Forms of imperfect competition include monopoly, oligopoly, monopolistic competition, monopsony and oligopsony.



the benefits of the consumer buying from a perfect competitor is that they can get good deals, they are aware of what they are buying, they have the same quality, Consumers have perfect information about the prices all sellers in the market charge – so if some firms decide to charge a price higher than the ruling market price, there will be a large substitution effect away from this firm

price wars, competition through the use of loyalty schemes , take overs and mergers, special offers

price wars: Price war is a term used in economic sector to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reduction

competition through the use of loyalty schemes: BENEFITS FOR THE CUSTOMER

• discount
• promotional offers
• larger awareness of products/ services
• basis for information exchange of what customer wants.
• customers often feel more positively about the rewarding, thanking/ treating aspects of the schemes rather than the discounts. some enjoy the 'game' of collecting points through offers to get the reward they want.
• benefit from buying power of scheme organiser to get 3rd party offers which they otherwise could not afford.

Benefits

• better knowledge of actual and potential customer value, behaviour and needs, providing a quantified, measurable basis for determining and implementing efficient policies.
• customer knowledge for use of other parts of marketing and the company
• creating focus
• the ability to get quick learning from launches, other trial activities and marketing activity in general
• improving pricing management and its balance with promotional activity
• allowing brand-strength to be extended and deepened through use of more target communication.

take-overs and mergers: merger- when a company combines itsel with another, can cot costs and increase profits

take over- A takeover, or acquisition, on the other hand, is characterized by the purchase of a smaller company by a much larger one.

Strategys of product expansion

Strategy One: Penetrate New Domestic Markets

When the folks at Avon discovered their Skin So Soft lotion had become a wildly popular insect repellent, they embraced the news. In addition to keeping it in their beauty product line, they opened new markets by advertising the brand to campers, vacationers and people spending time outdoors. Adopt this type of strategy to open new avenues for your product if you've discovered new use for it. Consider rolling out a second package design with copy, art and colors targeting the new audience, because you're re-purposing, not re-formulating, your product.

Strategy Two: Export Your Product

A saturated domestic market calls for an assessment of overseas expansions. This isn't a strategy for the timid, as tariffs, export duties and bureaucratic paperwork make exportation a tricky business. Find distributors for your goods in cyberspace, and contact the best prospects to negotiate contracts. A trusted agent overseeing both ends of the export process -- from bills of lading to container transport -- is worth the fee you'll pay to penetrate overseas markets. Be sure to check out credentials before hiring one.

Strategy Three: Diversifying Your Product

Though the Skin So Soft case study shows the benefits of identifying and contouring a product so it's acceptable to a new buying segment, diversifying is a more complex task. Assume you own the rights to a t-shirt that's selling like crazy, and sales show no signs of letting up. Your copy or art holds the universal appeal that drives sales, so you'd be foolish not to capitalize on this by making, for example, mugs, aprons, golf caps, towels and other demographic-appropriate products for which a ready-made market already exists.

Strategy Four: License Your Product

If you walk into an Aldi supermarket, you will find very few name brands on shelves. The store prides itself on low prices thanks to carrying mostly house brands. Meanwhile, your pasta sauce is not just delicious, but it's healthy -- a perfect fit for the Aldi Lite & Fit line. If you find yourself in a situation like this, pitch your recipe to the larger store. By splitting the manufacturing operation so your sauces are poured into your brand's labeled jars and that of your licensor, you get placement within a national chain that won't impact your brand's sales.

Strategy Five: Expand Your Demographic

This additional strategy is a logical way to increase sales if you start out with a product appealing to a narrowly defined audience. For example, assume you sell blemish medication to teens and your brand is selling nicely when you overhear a senior complain that she's battling outbreaks amid wrinkles. You do some research and realize there's no product available to mature women capable of dealing with both skin complaints. If your hunch is right, a second market for your product opens on the spot

The four ps of the marketing mix

price- focus on cost to the customer, choosing to buy your offering as oppsosed to someone elses
product- would need to do alot of research features and benefits of the offering
place- how easy it is to ibtain the product
promotion- is esetially the means used to reach intended customers

what is meant by economies and dis-economies of scale?

Production & operations - Dis-economies of scale
Increasing the size of a business does not always result in lower costs per unit. Sometimes a business can get too big!
Diseconomies of scale occur when a business grows so large that the costs per unit increase.
Diseconomies of scale occur for several reasons, but all as a result of the difficulties of managing a larger workforce.
Poor communication
As the business expands communicating between different departments and along the chain of command becomes more difficult. There are more layers in the hierarchy that can distort a message and wider spans of control for managers. This may result in workers having less clear instructions from management about what they are supposed to do when.
In addition, there may be more written forms of communication (e.g. newsletters, notice boards, e-mails) and less face-to-face meetings, which can result in less feedback and therefore less effective communication.
Lack of motivation
Workers can often feel more isolated and less appreciated in a larger business and so their loyalty and motivation may diminish. It is harder for managers to stay in day-to-day contact with workers and build up a good team environment and sense of belonging. This can lead to lower employee motivation with damaging consequences for output and quality. The main result of poor employee motivation is falling productivity levels and an increase in average labour costs per unit.
What can a business do about this? Possible solutions include:
Delegation of decision-making (empowerment)
Making jobs more interesting (job enrichment)
Splitting employees into teams (teamworking)
There is also a close link between communication and motivation (which the motivational theorist Elton Mayo recognized) and so as communication becomes harder, motivation will decline. This is particularly true as managers are less able to take a personal interest in the workers.
Loss of direction and co-ordination
It is harder to ensure that all workers are working for the same overall goal as the business grows. It is more difficult for managers to supervise their subordinates and check that everyone is working together effectively, as the spans of control have widened. A manager may be forced to delegate more tasks, which while often motivating for his subordinates, leaves the manager less in control.


When more units of a good or a service can be produced on a larger scale, yet with (on average) less input costs, economies of scale (ES) are said to be achieved. Alternatively, this means that as a company grows and production units increase, a company will have a better chance to decrease its costs. According to theory, economic growth may be achieved when economies of scale are realized.


Read more: http://www.investopedia.com/articles/03/012703.asp#ixzz1iaSN1D6k

Why are the distribution of profits always a tricky decision? how can they be shared?

because the profits can be shared in different ways for example.
expansion costs
increase wages of staff
promotion and marketing
pay back debts loans
financial motivation for employees
money to clarify publicity
save money
peoduct diverstaion
expand abroad

How do you calculate profit?

Gross Profit ÷ Total Revenue

What is a revenue and how isit calculated?

revenue is the total income for products you sell


calcualted by quantity sold x adverage selling price

what is a profit and why are they importent?

Money made from sales minus overheads


These are importent as they can be used externally or internally within the business, they could be used to buy to assets to expalnd the business or used to widen the range of products within the business.

Why do business' only pay careful attention to their shareholders rather than their stakeholders?

- improving tge quality of life for employees is not the firms responsibility and is likely to involve unsessesary training and better conditions
-depends what managers believe are importent
- A firm should not worry about the enviroment or the community unless the law says it has to, any changes in its production oricess are less likely to be importent.
- Shareholders are in their best interest as they are the ones providing and keeping the company running

What are dividends?

Share of companys profit paid to shareholders twice a year

What is a shareholder?

Some form of ownership in public and limited company, some contribution to decision businesses will make and profits you gain, more money= more shares.

For each stakeholder group how can they impact upon a business?

Customers- sales, customer servicwm effect market share and growth of a particular market, effect cometitors, effect the repuation of the business according to their attitude to the customers.

Goverment- Licensisng, grants and also tax

Investors- keep the business going start up

suppliers- If there is more demand there is going to be more supply therefore if there was no suppliers the business would go into decline

What are stakeholders? How do internal and external stakeholders differ?

People who have possible interest on the sucess or failure in a business.

eg. customers , goverment, competitors, investors, employees, pressure groups (influence businesses to change policys) suppliers, media, banks and lending organisiations, shareholders.

Internal stakeholders are people who work directly within the business.
These includes:
- employees
- management

External stakeholders are people who are not directly working within the business but are affected in some way from the decisions of the business.
These includes:
- customers
- suppliers
- local communities
- future generations

Whats the difference between long and short objectives?

Short term objective: objectives to be for a short amount of time (1 month- 1 year)

Long term objective: Objectives that are aimes to be achieved in a longer amount of time (1 year onwards)

How do firms determain what their aims should be?

- Size of the company
- Start up
- Prices of products
- When it needs to be achieved
- Potential growth
- Merdges/ takeovers in the market
- depending on weather the market is in decline/growth

what is a mission statement?

When a business start up, it will devise a mission statement, which will set out what they want to achieve

What do you understand by the Ansoffs matrix, define the seperate strategies that can be used

Four strategies that businesses in relation to marketing a business will use each are used at a particular moment

Market penetration- Introduction to the market encourage sales development
Market development- Attempts to further increasements in market share
New-product development- Offers more variety, meets customers needs more products with less risk
Diverstation- Entering a new market, business establishes themselves

what are marketing objectives, tactics and strategies?

Marketing objective: several statements of purpose or aims to make a profit within the firm.
Marketing Strategic: Plam detailing how the marketing objective will be fufilled
Marketing tactic: Strategy is implented through the use of marketing tactics- these include decisions that need to be made to ensure the strategy is sucessful

SMART targets how theyre importent and how they impact upon objectives

Specific

Specific objectives are clear and well-defined. This helps both the performer and the manager, as the performer knows what is expected of them and the manager is able to monitor and assess actual performance against the specific objectives.

Specific objectives may well include a scope description, which includes details of what is not included.

Measurable

Progress towards objectives often need to be to be monitored whilst work is under way. It is also very useful to know when that work has been done and the objectives are completed. A measurable objective achieves this end.

Achievable

When giving objectives, the person may not be able to achieve it for various reasons, including a lack of skill, not having enough resources (computers, tools, etc.), not having access to key people and not having management support. Achievable objectives ensure that everything is in place and that if the person does not reach the goals they cannot reasonably point the finger elsewhere.

Relevant

Objectives should also add useful value within the context where they are being set, being aligned with strategies and higher goals.

Timely

Descriptions of objectives should also include timescales of what is required by when. This may also include details of delivery, stating (if relevant) where objectives are to be completed.

Giving a time scale adds appropriate sense of urgency and ensures that the objectives do not dribble out over an unreasonably long timescale.



They can impact the objective by setting a specific goal for a specific time, so they would have to change the time and evaluate weather theyre achievable or not, which impacts the overall objective.

what factors have made markets more competitive

- reccesion

a sample and a confidence level

sample= chosen selection of population used for an investigation
confidence level= Statistics a measure of the reliability of a result

Qualative and quantative data

Quantative: stats insight

Qualative: gives an insight to the opinions of people and what people are concerned with, with the wuality of the options

why do business' conduct market research

- aware of demands of target research
- able to research competitor to gain a sturdy place in the market

Primary and secondary research advantadges and disadvantages

primary= new resarch first hand, could be collected from firm or collected by specialisy companys.
advantadges
first hand
more specific
reactions
cheap
reliable

disadvantage
if another company helps they will be aware of the information and have acess


secondary= information thats already been collected within firm or outside firm.

advantages
reliable
cheap
accurate

dis

not up to date
everyone uses the same information
not unique no research

Niche and mass markets

Niche
In niche marketing the company concentrates on small target market. The reason to do this is the company has low capital, low costs, have highly specialization, and the characteristics of target market needs customize and specialize products or services. The advantages of niche market is become specialize and has strong brand image.

Mass
Mass marketing strategy trying to reach market in greater areas by using single marketing strategy. The Advantages of this strategy is in terms of low cost in production costs and tends to masters market monopolistic ally. Another advantage of this strategy is producer can close all markets from competitor.

What is a market segment, and how do these impact on business'?

A market segment is an identifiable group with simular needs and wants within a market. Examples of how to define a segment:
age- products aimed at certain age groups
Gender- Differ for different genders
Income- produce goods for different levels of income eg pricing
Socio Economic groupings- segmenting people on income
Usage rate- Firms distinguish between heavy users nd not eg. smoking
Ourchse occasions- Producers have tried to increase the numberof purchase occasions to buy cards etc.

These impact business as it helps disiguish and identify the target audience and match to the demands needs and wants of the consumer

Why would a business want to enter a growing market?

- gain sales
-more chance of sucess
- Higher demand
- Less competition
- Profits made
-Less chance of failure
- Benefit from economies of sales
-Room for expanison

Market Orientation, Product Orientation, Asset-led Marketing and Adding value

Market Orientation=A marketing orientated approach means a business reacts to what customers want. The decisions taken are based around information about customers’ needs and wants, rather than what the business thinks is right for the customer. Most successful businesses take a market-orientated approach
Product Orientation= A product orientated approach means the business develops products based on what it is good at making or doing, rather than what a customer wants. This approach is usually criticised because it often leads to unsuccessful products - particularly in well-established markets.
Asset-led Marketing=  uses product strengths such as the name and brand image to market both new and exist-ing products. With asset led marketing, Marketing de-cisions are based on the needs of the consumer and the assets of the product
Adding Value= The concept of 'Added Value' is that the customer gains some additional advantage without having to pay for it - or pay very little, compared with its value to the customer.
Adding  value to your products or services is a way of enhancing what you are offering, without necessarily adding to your costs. It can also help to differentiate your products from those of your competitors. This makes direct price comparisons more difficult for prospective customers, and can increase your profit margins.
Here are some popular 'Added Value' ideas:

• Guarantees: The cost is usually very small, but they can go a long way towards gaining customer confidence. This can reduce a buyer's resistance.
• Delivery: Most customers put reliability first, speed second. This does not always have to be free.
• Service: Very important to customers, and a major way to retain customer loyalty. Difficult to establish credibility for new customers, since 'service' has to be experienced to be truly believed.
• Credit: Can add value to some customers. But make sure that your own finances will not be damaged. Finance companies could be used - and some of them will pay you a commission.
• Packaging & presentation: The more professional and attractive the packaging, the more the perceived value of the product will be.
• Quality assurance: International standards, such as ISO 9000 accreditation can be of value, but reputation is equally important.

what impact does a large market share have on a business and their competitors