Business Paper 1 PDF

# Paper 1 (Business) ## Social Benefits - Designed to improve human well-being - In the public sector, most businesses aim to provide a public service. - Objectives are linked to quality of service and reducing costs. ## Franchises **Franchise Structure:** A franchisor allows another operator (th...

# Paper 1 (Business) ## Social Benefits - Designed to improve human well-being - In the public sector, most businesses aim to provide a public service. - Objectives are linked to quality of service and reducing costs. ## Franchises **Franchise Structure:** A franchisor allows another operator (the franchisee) to trade under their name. ### Advantages to the Franchisee - Less risk - Back-up support is given. - Set-up costs are predictable ### Disadvantages - Profit is shared - Lack of independence - Can be expensive ### Advantages to the Franchisor - Fast method of growth - Cheaper method of growth - Franchisees take some of the risk. ### Disadvantages - Potential profit is shared with the franchisee. - Cost of support for franchisees may be high. ## Globalisation - Growing integration of the world's economies. - Goods and services are traded freely across international borders. - People are free to live and work in any country they choose. ## Reasons for Globalisation - Monetary system - System of money in a particular country or the world as a whole, and the way that it is controlled by governments and central banks. - Saturated market - To offer so much of a product for sale, that there is more than people want to buy. ## Opportunities of Globalisation for Businesses - Access to larger markets. - Lower costs - Access to labour ## Venture Capital - Specialists in the provision of funds for small and medium sized businesses. - May invest in businesses after the initial start-up. - Often prefer technology companies with a high growth potential. **Reasons for venture capital:** 1. Capital needed for small and medium sized businesses 2. Capital for initial startup 3. Prefer to invest in technology companies (have high growth potential) 4. Become owners - Get dividends 5. Venture capitalists look for fund raisers. ## Market Segmentation - Part of a whole market where a particular customer group has similar characteristics. ### Methods of Market Segmentation - Location (Geographical segmentation): Different customer groups are likely to have different needs depending on where they live. (There may also be differences between groups living in cooler climates.) - Demographic Segmentation: - Age - Gender - Income - Social classes - Ethnic origin - Religion - Lifestyle (Psychographic segmentation): Young women aged between 18 and 30 living in Berlin share the same gender, age, and location. Their spending patterns could be quite different. ## Benefits of Market Segmentation: - Businesses that produce different products for different market segments can increase revenue, because businesses can charge higher prices to different customer groups. ## E-tailing (E-commerce) - Use of electronic systems to sell goods and services. ### Business to Consumers - Selling of goods and services by businesses to consumers. (Most e-tailing involves ordering goods online and taking delivery at home.) ### Business to Business - Involves businesses selling to other countries/businesses online. ### Benefits to Consumers - Cheaper - Shop 24/7 - Huge amount of choice ### Benefits to Businesses - Lower startup costs - Less paper is needed - Serve customers 24/7 ## Promotion - Above the line promotion: Placing adverts using the media - Below the line promotion: Any promotion that does not involve using the media. ### Sales Promotion - Free gifts - Coupons - BOGOF offers - Money off deal - Loyalty cards - Competitions