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1.1 - Coggle Diagram
1.1
1.1.3- Business Enterprise
What a business produces
Products- tangible good which a business can sell e.g computer
Services- in-tangible goods which benefit the customer e.g Taxi
What a entrepreneur own's
Land
The natural resources which as business owns (e.g land or water) or requires to operate
Labour
The workforce which the business needs to run (for a shop and business needs to employ staff who are skilled and experienced)
Capital
The money or equipment which a business owns, e.g technology or finances which as business needs to operate (a start-up business needs initial funds to buy equipment and pay overheads if the business did not have this then it wood fail.
Enterprise
The business credentials which an entrepreneur must "own" (have) for the business to succeed e.g ambition and risk taking.
Customer needs- each are adapted depending on the market
Price
Choice
Convince
Quality
People's wants vs needs
Wants- luxury items which are not crucial for survive but are nice to have
Car
Holidays
Videogames
Generally affected by the economy e.g in a recession, consumer spending is low so a business selling wants would sell less products since they are not necessary
Needs- crucial for human survival
Water
Food
Basic shelters
Generally not affected by a changing economy- it is likely that consumer will spend the same amount of money on needs no matter the fluctuations in income.
Methods of adding value
Branding
A business with a recognised logo are likely to make more sales, more easily than a start-up business
Quality
If a business is made of better quality materials then it might appeal to more people and more can be changed (adding value)
Convenience
If a product is easier to use then it will be more likely to sell since customers value time
Design
If a design of product is unique, easier to use or eye catching then it will be likely to sell faster and in a greater quantity
USP
Changing the USP allows for the product to stand out above the market e.g a hotdog made of mushrooms would stand out and appeal to vegetarian market rather than meat-eating market
1.1.2- Risk and Reward
Risks of setting up a business
Management strategies :
Business plan (1.4.4)
Market research (1.2.2)
Making sure sufficient funds are available (sources of finance- 1.3.4)
Financial loss- when a business starts up the business doesn't make much profit and revenue is slow, therefore the business is likely to lose money in the short-term
Lack of financial security
Entrepreneur's main source of income is lost
Large amounts of money are likely to be invested into the business when starting up therefore the entrepreneur does not have much contingency money if the business fails ( negative cash flow)
Rewards for setting up a new business
Financial
Profit- able to support yourself and family / growing the business
Business success- the business is growing and becoming more established in the market
Social
Independence- running a business could be attractive an entrepreneur who has worked as a team as a job
Emotional satisfaction- meeting people and running a successful business could provide many emotional benefits and life skills
1.1.1- New business ideas
How ideas come about
Changes in technology- enable new products to be made e.g iphone/smartphone would not have been viable 20 years ago
E-commerce, the selling of products online (B2B/C)- more convenient for customers
M-commerce- online payments e.g paypal
Marketing- using social media to advertise to a business (marketing mix)- easier for customers and a business to communicate
Easier to communicate
Easier to gain market research and appeal to target audiences (if applicable
Influencers can as grow brand awareness and thus increase sales (e.g Molly mae and pretty little thing)
Changes in consumer wants making products obsolete- they are who will by the product so have a lot of power as a stakeholder
Trends- consumers wants change with different trends so these will need to be exploited to gain more sales e.g veganism uprise
Demographics- Depending on the target market a business might be affected more by changing needs e.g a business selling to younger markets are likely to be constantly effected by trends on social media and clothing
Age, Gender, ethnicity, income level ect.
Original ideas
Invention- Creating a new (never before seen product) or service e.g Self-tying shoelaces
Innovation- New products are created from adapting old products, updating them e.g the light bulb has been updated from filament to LED as needs for better efficiency rise.
Changing a name/brand of a product e.g marathon-snickers
Re-purposing a product/changing the format e.g cereal - cereal bar
Adapting marketing strategies
Changing to support customer wants e.g a vegan sausage roll
Adaptations on existing products (products become obsolete)- generally due to better technology
Technology- A product will become obsolete when new tech is able to upgrade it e.g a PS5 makes the PS4 obsolete
E-commerce- High street stores are becoming obsolete from the rise of online shopping e.g groceries