Showing posts with label AS Level. Show all posts

Wednesday, 29 February 2012

Business Notes: Identifying a product or market niche

A niche is something that is specialise or unique.

For most entrepreneurs, identifying a broad business idea is relatively easy. But it is more difficult to identify the exact product to be made and the market niche to be occupied.

For example, someone setting up a Bed and Breakfast business has to decide whether to go upmarket or downmarket, and whether to aim at holiday or business people.

Business Link, the government organisation set up to help small businesses, suggests that a new business idea should be checked against the following criteria:

What can the entrepreneur bring to the business in terms of relevant experience and expertise?
Is there a market for the product? Does it serve a need and will customers pay for it?
How big is the market and how can it be reached?
Who will the main competitors in the market be?
Is there something special about the idea? Or will it be a similar product to what is already in the market place?
How will the business be funded?
What are the risks involved and what can go wrong?

- Esjae x

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Business Notes: What is opportunity cost?

Opportunity cost is giving up something else to buy something at the cost of the alternative forgone.

EXAMPLE:
An entrepreneur's social life and career may need to be given up when starting a business.

- Esjae x

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Business Notes: What are some of the other potential risks and rewards of starting a business?

Risks:

Failure
Potential of personal debt
Not gaining/ having support
Gaining a bad reputation
Not haing enough skills
Having too high hopes
Gambling everything
Loss of personal life
Personal credit rating
Health/ Stress

Rewards:

Profit/money
Success
Good reputation
Satisfaction
Qualifications
Skills
Being the best in a specific field
Being able to afford luxuries
Enjoying your job
Gaining a status
Gaining experience

Obviously this isn't a complete list of the risks and rewards associated with starting a business and is only a limited list.

- Esjae x

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Business Notes: The importance of risks and rewards such as profit

In the UK, people tend to be risk averse and afraid of failure. As the majority of new businesses fail, such fears are well-placed. Business failure can occur because of:

Lack of skills
Poor infrastucture
Finance shortages
Complexity of regulations, or red tape (paperwork)

If a business fails, it may leave debts to be paid off. The entrepreneur may have borrowed money to finance the buiness. However, most entrepreneurs are happy to take risks if the potential rewards are great enough. Of course, this depends on them doing their research to ensure that all reasonable steps are take to minimise the possibility of failure. The outcome of successful risk-taking will be a profitable venture. One business writer has described this balance of risk and potential reward as 'smart luck', or taking a gamble when you know the odds.

- Esjae x

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Business Notes: What is the difference between an inventor and an entrepreneur?

An inventor introduces a new product/ idea but lack business skills where as an entrepneur is a person who puts the idea into practice.

- Esjae x

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Business Notes: What are the qualities and characteristics of an entrepreneur?

What are the qualities and characteristics of an entrepreneur?

Confident
Open to advice
Creative
Good at public speaking
Risk taker
Able to learn from their mistakes
Opportunistic
Able to work to deadlines
Smart
Has belief in themselves and their idea
Ambitious
Determined
Able to work in a team and individually
Organised
Responsible
Hard working
Patient
Has leadership skills
Good with numbers
Passionate
Has some specialist knowledge

This list is by no means a complete list and it doesn't mean an entrepreneur should possess all of the qualities and characteristics. This list only contains some of the common qualities and characteristics that entrepreneurs possess.

- Esjae x

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Business Notes: Key Term - Primary Sector

The primary sector is the extraction of raw materials.

- Esjae x

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Business Notes: Key Term - Output

Output is the finished products that result from the production process.

- Esjae x

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Business Notes: Key Term - Production

Production is the process of transforming resources into the products and services that meet the customers wants and needs.

- Esjae x

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Business Notes: Key Term - Factors of Production

Factors of production includes land, labour, capital and enterprise/ entrepreneurship.

- Esjae x

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Business Notes: Key Term- Resources (or inputs)

Resources (or inputs) are what is needed to start production.

- Esjae x

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Business Notes: Video - In-Depth Look - No Kraft-Cadbury Combo...For Now - Bloomberg

Analysing who might counter bid and how much Kraft should pay (from the perspective of Kraft shareholders)

Interview and discussion with David Leibovitz of the Horizon Asset Management. He talks about Kraft offers to buy Cadbury. (Bloomberg News)

A great video if you're studying take overs and merges.

Source: http://www.tutor2u.net/blog/index.php/business-studies/comments/takeover-insights-kraft-cadbury-the-story-in-video-clips
Source: http://www.youtube.com/watch?v=LrAzgmsHOKc&feature=player_embedded

- Esjae x

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Business Notes: What is enterprise?

Enterprise is the process of turning an idea into a working business.

An entrepreneur is an individual that turns an idea into a real working business.

What is enterprise?

The word usually refers to the process by which new businesses are started and new products or services brought to market. Enterprises are usually led by an entrepreneur. The individual who takes the risk and turns a business idea into a viable business.

- Esjae x

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Business Notes: Entrepreneurs

An entrepreneur is someone who is willing to take a risk to start a new project or a new business. ‘Enterprise’ refers to the skills needed to do this. An entrepreneur has an idea and then tries to make it work. Entrepreneurs see the resources that are available and the possibilities of combining them in a particular way to provide a product or service. Entrepreneurs create new businesses and in so doing provide new products and services. Some entrepreneurs, such as Richard Branson of Virgin and Stelios Haji – Ioannou of easyGroup, continually have ideas for new businesses and set up many different ones during their careers. Such people are called ‘serial entrepreneurs’.

Entrepreneurs create change and challenge the way things are done. They find and create new markets, generate income and employment and bring about innovation. They are extremely important to the growth of an economy and to improving the quality and range of goods and services on offer.
Enterprise (or entrepreneurship) involves discovering, evaluating and exploiting business opportunities.

- Esjae x

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Business Notes: Risk and Reward

Entrepreneurs are prepared to take risks. They are investing time, money and effort into a new project that may or may not work. The danger is that it will not work and all their investment will be lost. Many new businesses fail. Look at the high street in your nearest village or town. How long have the shops been there? Have some opened up recently? Have some closed down in the last year? The landscape of the centre of most villages and towns is changing all the time as some business ideas fail and others rise to take their place. The real risk to entrepreneurs is that they will lose much or even everything they have put into a project because the business idea ends up failing.

Some of the causes of a risk are external. For examples, there could be a change in the economy, meaning people have less money to spend than entrepreneurs expected (and so demand for their products is lower than they hoped), or competitors may have changed their behaviour, making it more difficult for similar businesses to survive.

Alternatively the causes of risk could be internal. It may be that an entrepreneur’s understanding of the market is not as good as he/ she had thought and they make some bad pricing decisions. It may be that their judgement of people is poor and they hire the wrong people, with the result that the quality of service is not as good as the entrepreneur had hoped.

Entrepreneurs may sometimes undertake a project ‘because it is there to be done’. They may be driven by a desire to do something new. This in itself may be a reward in terms of self satisfaction: they can hopefully look back on their careers and be proud of what they have achieved. However, they may also be interested in other rewards from setting up, such as the financial gain from owning their own business. These rewards can be extremely high! For example, YouTube was set up in February 2005 by Chad Hurley, Steve Chen and Jawed Karim. The website includes music videos and movie and TV clips, as well as material posted by the general public. In 2006 the founders of YouTube sold their business for $1.65 billion! Not a bad return in less than 2 years.

To go ahead with any venture, the expected rewards must justify the risk involved. In an ideal world a project would have a high reward and low risk, but typically new ventures are very risky because there are so many things that could go wrong. In fact, many ideas do not even end up being launched. Entrepreneurs hit so many set backs or face so many difficulties that the project does not go ahead.

- Esjae x

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Business Notes: Case Study - Beautiful Vending

Neil Mackay and Richard Starrett met while studying at Glasgow’s Strathclyde University. One day in 2004, they were talking about the problems that young women have with ‘frizzy hair’ when out clubbing. They came up with a great product idea – a vending machine that helps women to straighten their hair quickly on arrival at their destination. They took over a year to develop the idea, and over £100,000 was invested to manufacture, design, marketing and legal costs. The product – originally called the ‘Straight Up’ styler (now called Beautiful Vending Style) – was first released in Scotland in 2005 and the machines are now available nationally in 900 nightclubs, four gym chains and two shopping centres as well as being available in 500 locations internationally. This is the third successful business that Neil and Richard have established together. Their company, Beautiful Vending, is based in Hamilton and is the only company in the world to make and distribute the styling machines.
You can find out more about Beautiful Vending by following the link below:

http://www.beautifulvending.com/

Business Notes: Key Term - Enterprise

Enterprise is the skill needed to make a new business idea work.

- Esjae x

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Business Notes: Why become an entrepreneur?

More than three million people or 12 per cent of the UK population, have already set up in business on their own. Research by Vodafone indicates that a further 6 per cent of UK adults are in the process of setting up their own business and nearly a third of all people are considering doing so. So what drives people to set up their own business?

Wanting to be your own boss
For satisfaction
You get to keep the rewards
You have more control

Business Notes: Opportunity Costs

The opportunity cost of starting a business venture refers to the benefits that could have been gained from an alternative project. If an entrepreneur invests their money and time into setting up a fashion business rather than a cafe, the opportunity cost is the rewards that could have been gained from the cafe.

Any decision to set up a business will involve an opportunity cost.
When choosing to set up a business you should be careful to consider what you are sacrificing. You need to be sure that you think it is really worth it.

- Esjae x

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Stacey J Hubbard

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