Topic 1.1Business Revision Poster

What is a Business?

An organization  or economic  system where goods  and services are exchanged for one another or for money. Every  business requires some form of investment  and enough customers  to whom its output can  be sold on a consistent  basis in order to make  a profit.  Businesses can be privately owned, not-for-profit or state-owned. An example of  a corporate business is Pepsi Co, while a mom-and-pop catering business is a private  enterprise.

Businesses buy their goods and supplies from their suppliers they then sell these to their customers.

A customer is a Person or organization which buys or is supplied with a product by a business.
A consumer is a person who uses the product or consumes.

Why people start a business?
Survive as a business or expand
Be very competitive
Make a profit/maximum sales
Be successful

Understanding Customer needs

Understanding customers is really important in a business and it is the key in a business to giving them a good service. To give good customer care you must deliver on what you have promised to do. Excellent customer needs is when you get to know your customers and anticipate what they may be looking for. You should empathize with customers and put yourself in their shoes, they should also be able to give feedback on your services whether it is a positive or negative feedback you should accept it and improve your services. You should also provide customers with a free product demonstrations when you start a business.

To find out what customers need or like, business owners need to do research. There are two ways of doing this. They are  Primary and Secondary research.

Primary research- This is research that you do yourself e.g. ask customers, hand out surveys etc...

Secondary research- This is other peoples research that you take e.g. through a book or on the computer.

Primary and secondary research are not the only things you need to do. There are different ways of collecting data. They are Quantitative and Qualitative data.

Quantitative data- This is to do with numbers e.g. handing out surveys and questionnaires. Also they are closed questions e.g. Do you like sweets? [Yes] or No.

Qualitative data- This is data which does not include numbers but peoples opinion or feelings. This is done by asking customers what they think and getting in a focus group to discuss on the project.

Market Mapping

Using a market map has many advantages such as being able to spot a gap in the market, however just because there is a gap it does not necessarily mean that there is a demand. It also encourages market research although the research may not always be reliable. Even though the market map is useful for analyzing the competition it does not always guarantee a success.

Competition

Having a Business can be very competitive because there are so many  business competitors all around you and all of them want your and even more customers. This is a reason why creating a business might be a big risk because you don't know if your products will sell.  These are the main reasons why businesses compete...

  • Product Range (for different groups of people)
  • Quality and Design
  • Selling experience
  • After sales service (guarantee)
  • Price
  • Brand Image

Added Value

This is the price that is added at each stage of making the good. Many product prices are raised because of the procedures taken to make them as the customers (people) themselves are not bothered to do the stages. E.g. Why buy a box of chips from a fish and chips shop when you can go buy a bag of potatoes for 1 pound and cut them up yourself and put it into the oven to cook this is because people may not have time and might not want to go through this procedure and buy it ready made from a chips shop. This is called added value.

Franchise

A franchise is when a business/company allows a person who wants to start up a business to use their company name. The franchisee is provided by full training and it is an advantage for the franchisee because the company is well known customers will believe it is trust-worthy and may shop there more. However, this also could be a disadvantage because the franchisee has to pay around 25% of the profit to the franchisor every month, if the business doesn't go well it is shut down by the franchisor.

Examples of a Franchise:
McDonald's
Pizza Hut
KFC
Subway
Franchisee- Is the person who wants to buy the company name.
Franchisor- Is the person who provides training to the Franchisee and lets them use their company name.

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