BusinessQ&A by dot point

Risk and reward: the impact of risk (business failure, financial loss, lack of security) and reward (business success, profit, independence) on business activity and on the decisions an entrepreneur makes.

The dynamic nature of business: why new business ideas come about (changes in technology, changes in what consumers want, products becoming obsolete) and how they come about (original ideas, and adapting existing products, services or ideas).

The role of business enterprise and the purpose of business activity (to produce goods or services, to meet customer needs, to add value through convenience, branding, quality, design and unique selling points), and the role of the entrepreneur (organising resources, making decisions, taking risks).

Methods of business growth and their impact: internal (organic) growth and external (inorganic) growth (merger, takeover); the public limited company (plc) as a type of ownership for growing businesses; and sources of finance for growing and established businesses (internal: retained profit, selling assets; external: loan capital, share capital including stock market flotation).

Why business aims and objectives change as businesses evolve (in response to market conditions, technology, performance, legislation and internal reasons) and how they change (focus on survival or growth, entering or exiting markets, growing or reducing the workforce, increasing or decreasing the product range).

The impact of ethical and environmental considerations on businesses: how ethical considerations influence business activity (possible trade-offs between ethics and profit), how environmental considerations influence activity (trade-offs between the environment, sustainability and profit), and the potential impact of pressure group activity on the marketing mix.

The impact of globalisation on businesses (imports, exports, changing business locations, multinationals); barriers to international trade (tariffs and trade blocs); and how businesses compete internationally (using the internet and e-commerce, and changing the marketing mix).

The concept and calculation of gross profit and net profit; the calculation and interpretation of the gross profit margin, the net profit margin, and the average rate of return.

The use and interpretation of quantitative business data (from graphs and charts, financial data, marketing data and market data) to support, inform and justify business decisions, and the use and limitations of financial information in understanding performance and making decisions.

The importance of motivation in the workplace (attracting and retaining employees and raising productivity); and how businesses motivate employees through financial methods (remuneration, bonus, commission, promotion, fringe benefits) and non-financial methods (job rotation, job enrichment, autonomy).

Different organisational structures and when each is appropriate (hierarchical and flat, centralised and decentralised); the importance of effective communication (the impact of insufficient or excessive communication, and barriers to communication); and different ways of working (part-time, full-time, flexible, permanent, temporary, freelance, and the impact of technology).

Different job roles and responsibilities (directors, senior managers, supervisors/team leaders, operational and support staff); and how businesses recruit people, including documents (person specification, job description, application form, CV) and recruitment methods (internal and external).

How businesses train and develop employees (formal and informal training, self-learning, ongoing training, target setting and performance reviews) and why they do so (the link between training, motivation and retention, and retraining to use new technology).

Place: methods of distribution (retailers and e-tailers using e-commerce); and how the marketing mix is used together, with each element influencing the others, to build an integrated mix and competitive advantage.

Pricing strategies and the influences on pricing strategies (technology, competition, market segments and the product life cycle).

The design mix (function, aesthetics, cost); the product life cycle (its phases and extension strategies); and the importance to a business of differentiating a product or service.

Appropriate promotion strategies for different market segments (advertising, sponsorship, product trials, special offers, branding) and the use of technology in promotion (targeted advertising online, viral advertising via social media, e-newsletters).

The concept of quality and its importance in producing goods and providing services (quality control and quality assurance), and how quality allows a business to control costs and gain a competitive advantage.

The purpose of business operations (to produce goods and provide services); production processes (job, batch and flow production) and their impact on productivity, costs and competitive prices; and the impact of technology on production, balancing cost, productivity, quality and flexibility.

The sales process (product knowledge, speed and efficiency of service, customer engagement, responses to customer feedback, post-sales service) and the importance to businesses of providing good customer service.

Managing stock (interpreting bar gate stock graphs and using just-in-time stock control); the role of procurement (relationships with suppliers based on quality, delivery, availability, cost and trust); and the impact of logistics and supply decisions on costs, reputation and customer satisfaction.

Factors influencing business location: proximity to market, labour, materials and competitors; the nature of the business activity; and the impact of the internet on location decisions (e-commerce and/or fixed premises).

The concept of limited and unlimited liability and the implications for the owner; the types of business ownership for start-ups (sole trader, partnership, private limited company) with their advantages and disadvantages; and the option of running a franchise.

The role and importance of a business plan (identifying the business idea, aims and objectives, target market, forecast revenue, costs and profit, cash-flow forecast, sources of finance, location and marketing mix) and the purpose of planning in minimising risk and obtaining finance.

What the marketing mix is and the importance of each element (price, product, promotion, place); how the elements work together, including balancing the mix for the competitive environment, the impact of changing consumer needs, and the impact of technology (e-commerce, digital communication).

What business aims and objectives are; financial aims and objectives (survival, profit, sales, market share, financial security) and non-financial aims and objectives (social objectives, personal satisfaction, challenge, independence and control) when starting up; and why aims and objectives differ between businesses.

The concept and calculation of revenue, fixed and variable costs, total costs, profit and loss, interest, the break-even level of output and the margin of safety; and the interpretation of break-even diagrams, including the impact of changes in revenue and costs.

The importance of cash to a business (to pay suppliers, overheads and employees, and to prevent insolvency), the difference between cash and profit, and the calculation and interpretation of cash-flow forecasts (cash inflows, cash outflows, net cash flow, opening and closing balances).

Sources of finance for a start-up or established small business: short-term sources (overdraft and trade credit) and long-term sources (personal savings, venture capital, share capital, loans, retained profit and crowd funding), and their suitability.

Identifying and understanding customer needs (price, quality, choice, convenience) and the importance of identifying and understanding customers for generating sales and ensuring business survival.

The purpose of market research (to identify customer needs, find gaps in the market, reduce risk, inform decisions), methods of research (primary: survey, questionnaire, focus group, observation; secondary: internet, market and government reports), and the use of data (qualitative and quantitative, social media, reliability).

How businesses use market segmentation to target customers: identifying market segments by location, demographics, lifestyle, income and age, and using market mapping to identify a gap in the market and the competition.

Understanding the competitive environment: the strengths and weaknesses of competitors based on price, quality, location, product range and customer service, and the impact of competition on business decision making.

Who business stakeholders are (shareholders, employees, customers, managers, suppliers, local community, pressure groups, government) and their different objectives; how stakeholders are affected by and impact business activity; and possible conflicts between stakeholder groups.

The purpose of legislation: the principles of consumer law (quality and consumer rights) and employment law (recruitment, pay, discrimination, health and safety); and the impact of legislation on businesses in terms of cost and the consequences of meeting and not meeting these obligations.

Different types of technology used by business (e-commerce, social media, digital communication, payment systems) and how technology influences business activity in terms of sales, costs and the marketing mix; and how businesses respond to changes in technology.

The impact of the economic climate on businesses: unemployment, changing levels of consumer income, inflation, changes in interest rates, government taxation, and changes in exchange rates; and how businesses respond to these changes.