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Business:PAPER 1 (Topic 1.1 (New business Ideas (Will either be: (Original…
Business:PAPER 1
Topic 1.1
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New business Ideas
Changes in technology, e.g invention of tablets mean apps can be used
Changes in what customers want, e.g people are becoming more environmentally aware so a business may use environmentally friendly products
Good or service becomes obsolete (no longer used) so it may be replaced by new ideas so the business survives, e.g. video tapes = obsolete, so video rental stores are stocking DVDs instead
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Entrepreneurs
Someone who takes risks, without them there would be no new businesses.
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Risks
Will need money to buy equipment and pay workers, they can use their own or riase funds through banks or investors. However if they can't pay it back they may struggle to survive.
Don't have much security when starting a new business as they probably have just given up their job to focus on their company. If things go wrong they could lose money and be wothout a job which could have a big impact on quality of life.
Always the risk that the business will fail, so entreprenuer risks time, money and effort they put in to try to make the business work
Rewards
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If the business makes lots of profit they can earn alot of money which gives them a better quality of life
Gives the entreprenuer independence to choose what they day-to-day, and what direction the business goes
Topic 2.2
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Market research
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Used to identify who customers are, then can give the business an understanding of customers needs and how to satisfy them. Needs include:
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Primary research
Getting your own information from customers/potential customers. Usually involve asking customers for opinions. Useful for finding out new information and getting customer's views.
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A business can't ask everyone so it takes a sample instead. The larger the sample the more accurate but also the most expensive, so small businesses may have to compromise and use a smaller amount
Provides up to date, relevant, specific information that is tailored to a target market.
However does have downsides. It is both expensive and possibly time consuming. Furthermore different types of primary research has different pros and cons
PRO: observations are cheap to use and will provide accurate information CON: doesnt allow the customer to give their opinion, and therefore wont know why they are doing certain things
PRO: Questionnaires are cheap and can be used to sample a wide area CON: unlikely that people will respond
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Secondary research
Looking at other people's work. it allows access to a wide range of date, and is useful for looking at the whole market and past trends
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Often used by small businesses as it is cheaper than primary research, data is more easily found, and are instantly available.
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Quantitative
Information that you can measure or reduce to a number, easier to compare quantitative data
Qualitative
Information about people's feelings and opinions. It is tricky to analyse because it's hard to compare two opinions, but allowing customers to express their views gives a greater depth of information
Good market research will use both primary and secondary info. It needs to be reliable, meaning they can be repeated. The more reliable, the more useful it is to a business
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Market Mapping
Help a business to understand its location within the market, and see its key features
Will show any two variables, for example it will compare price with quantity
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Markets
A market can be a place, product or group of people
Will want to market size (number of individuals who are buying/selling a prodcut) and market share (proportion of sales that market by the business