Business Studies Unit 1

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Business Studies Unit 1 by Mind Map: Business Studies Unit 1

1. Types of Market Segmentation

1.1. Age

1.2. Gender

1.3. Social Class

1.4. Lifestyle

1.5. Geographic

1.6. Frequency of purchase

2. Sample- Represent the market. Equal proportions. The bigger the better!

2.1. Random Sample- each member of the target population has an equal chance of being chosen.

2.2. Quota sample- a fixed number of serveral different segments each sharing a common feature(e.g age,gender)

2.3. Simple - Random (names from a hat)

2.4. Stratified - Split into groups , random selection from the groups

3. Legal Structure of a Business

3.1. Sole Trader- Unlimited Liability

3.1.1. +Freedom (own boss)

3.1.2. +Keep all profit

3.1.3. +Less Paperwork

3.1.4. +No legal costs

3.1.5. -Risk

3.1.6. -Work long hours

3.1.7. Limited Skills

3.1.8. No cover if ill

3.1.9. Unlimited Liablitiy

3.2. Partnerships e.g Doctors and Solicitors

3.2.1. More start up capital

3.2.2. More ideas

3.2.3. More skills

3.2.4. Can cover when ill

3.2.5. Unlimited Liablility

3.2.6. risk of conflict

3.2.7. liable for decisions made by partners

3.3. Private Ltd ( LTD )

3.3.1. Often Small family businesses

3.3.2. Dont have share prices on stock exchange

3.4. Public Ltd (PLC)

3.4.1. Sell shares to public

3.4.2. shares freely transferable

3.4.3. Need over 50k in share capital to start

4. The supply chain

4.1. Starts with Raw Materials

4.1.1. Moves to manufactoring Distribution to shops Retailers sell to customers

4.2. Value is added at each stage e.g a Bead making factory turns plastic into beads, then the handbag manufacorer uses the beads for decoration

5. Protecting business models

5.1. Patent - Protects the product

5.2. Trademark - Protects the Logo or slogan

5.3. Copyrights- Copy written work and music.

6. Franchises

6.1. Franchisor

6.1.1. Saves wage cost

6.1.2. Get a share of profits

6.1.3. Fast growth

6.1.4. Reduced risk

6.1.5. Share Rewards

6.1.6. Can damage reputation

6.2. Franchisee

6.2.1. Reputation Name/Idea

6.2.2. Marketing/Advertising done nationally

6.2.3. Training provided

6.2.4. Leese machinery/equipment

6.2.5. Banks more willing to lend

6.2.6. Pay to use name

6.2.7. Share Profits

6.2.8. Bad reputation spreads

6.2.9. Follow rules of franchisor

7. Market Research

7.1. Why?

7.1.1. Spot Oportunities

7.1.2. Set targets

7.1.3. Check progress

7.2. Qualitive - Closed - Statistics

7.3. Quantative - Open- Personal Opinions

7.4. Primary Research (interview, questionaire, focus groups.)

7.4.1. Specific

7.4.2. Exclusive

7.4.3. Up to date

7.4.4. Expensive

7.4.5. Hard work

7.4.6. Slow

7.5. Secondary Research (second hand)

7.5.1. Fast

7.5.2. Cheap

7.5.3. Not exclusive

7.5.4. Out of date

7.5.5. errors

7.6. Not enough research can increase the risk of failing. A business must know what the market want

8. Location

8.1. Cost Benefti Analysis - Weighing up the costs of a business against potential benefits.

8.1.1. Break even to measure this Contribution per unit = Selling price per unit - variable costs per unit Break even = Fixed costs divided by contribution per unit

8.2. Manufactoring businesses providing bulky finished products need to be located near to customers.

8.3. Manufactoring businesses starting with heavy raw materials producing lightweight end products need to be located near raw materials.

8.4. Good location needs a good infrastrucute (motorways, rail links, ports and airports)

8.4.1. required for import of raw materials, transport of finish products and getting staff to work

8.5. Must be located near support services (banking, IT assistance, engineering assistance)

8.6. Must be near College/Universities, Affordable housing, schools, medical, leisure, room for expansion.

8.7. Government provide grants, loans , equity investment and financial guidance as incentives for some areas.

8.8. Located near owners house

8.9. Some areas have better image e.g London/Paris for fashion.

8.10. Competition

8.11. However internet made locations more flexible.

9. Part time stff

9.1. Cheaper

9.2. More flexible to demand

9.3. Better work/life balance

9.4. Wider range of skills

9.5. Hard to find

9.6. Less loyal

9.7. Less dedicated

9.8. Less exp

10. Staff

10.1. Important to have a balance of full/part time.

10.2. New starting businesses should have part time staff until demand is stable

10.3. Permanent Staff have an ongoing contractn and garunteed salary. Severence pay

10.4. Tempory- Fixed period of time (e.g 6months) Contracts can be renewed

10.5. Business recruitment agencies used to advertise and find suitable candidates. Charge fee for service

10.6. Contractors used when businesses require specific specialist skill (short term basis) e.g cleaning, accountancy and building.

10.7. Some businesses find it difficult to attract the right candidates as they cannot offer the salaries larger companies offer.

10.8. Can be sued if candidates declined for race,sex or disabilities

11. Business Plans

11.1. To get financial backing

11.2. Banks/Financers ask for one before investing.

11.3. Helps entrepeneur asses businesses strengths and weaknesses

11.4. Comparable to real performance

11.5. Areas of a Business Plan

11.5.1. Executive Summary - General overview (key points)

11.5.2. Business Summary - Type of business/products/serive provided. Future/ Legal.

11.5.3. Production Plan - How many products produced.

11.5.4. Marketing Plan - Defines the market, market research , promotions (USP)

11.5.5. Human Resources - Qualifications and exp of entrepeneur.

11.5.6. Operations plan - Location, own property/ machinery?

11.5.7. Financial Plan - Financial forecasts, break even/cash flow forcast.

11.6. Advice on creating a business plan

11.6.1. Business link, banks, websites, sample business plans, consultants and accountants.

12. Break even Analysis

12.1. Easy

12.2. Quick

12.3. forcast variations

12.4. persuade banks

12.5. if data is wrong results will be wrong

12.6. Assumes all products will be sold

12.7. Assumes variable costs rise steadily

13. Cash Flow (Not the same as profit)

13.1. Selling something on credit counts as profit now but it wont count as cash flow until it enters the account

13.2. Improve cash flow by:

13.2.1. Hold less stock

13.2.2. Give customers shorter credit periods

13.2.3. Get suppliers to give you longer credit periods

13.2.4. Sell equipment and lease/rent it.

13.3. Can lead to false assumptions

13.4. Machinery can break down

14. budgets

14.1. Income

14.2. Expenditure

14.3. Profit

14.4. Help control income/expenditure

14.5. Help deligate authority

14.6. Help control/ motivate staff

14.7. If budget is wrong actual results will follow

14.8. Lead to false confidence

14.9. Doesnt account for machinery break down etc