Business studies exam notes PDF

Exam notes Chapter 1. Business Sizes. ​ 1-4 employees → Micro-enterprise ​ 5-100 employees → Small business ​ 101-499 employees → Medium-sized business 🔹 ​ 500+ employees → Large business​ Businesses with $1 million in sales & 20+ employees have a h...

Exam notes Chapter 1. Business Sizes. ​ 1-4 employees → Micro-enterprise ​ 5-100 employees → Small business ​ 101-499 employees → Medium-sized business 🔹 ​ 500+ employees → Large business​ Businesses with $1 million in sales & 20+ employees have a higher chance of survival. The Entrepreneurial Profile ✅ An entrepreneur is someone who:​ ✅ Creates a product or service​ ✅ Starts and runs a business​ Manages a business venture 🔹 Entrepreneurs contribute by:. ​ Boosting local economies ​ Creating jobs ​ Paying taxes ​ Earning a living Types of Entrepreneurs 1️⃣ Classic Entrepreneur – Sees a business opportunity and builds a company around it.​ 2️⃣ Change Agent – Improves or revitalizes an existing business.​ 3️⃣ Serial Entrepreneur – Starts and manages multiple businesses.​ 4️⃣ Intrapreneur – Innovates within a large company. Business Plan ✅ A strong business plan helps by:​ Defining the company​ ✅ Setting clear goals​ ✅ Outlining steps to achieve success 🔹 Funders look for: ​ Industry experience ​ A clear market niche ​ Ability to make a profit ​ Strong systems for managing operations Business Concept Statement To be successful, a business idea must have: 1.​ Customers willing to buy the product/service. 2.​ A big enough market to make a profit. 3.​ A way to stand out from competitors. 4.​ Enough funding to operate. Key Business Terms ​ Concept Statement – A document presenting a business idea. ​ Business Plan – A flexible document that guides business growth. ​ Virtual Companies – Online businesses that expand market reach globally. ​ Mission Statement – Explains the purpose of the business. ​ Vision Statement – Outlines the entrepreneur’s values and beliefs. ​ Sales Tax Bond – A deposit held by the state to cover unpaid sales tax. Chap 2 Structure of a Business Plan 📌 No single correct way to write a business plan—logical flow is key.​ 📌 Standard Order:​ 1️⃣ Cover Letter​ 2️⃣ Cover Page​ 3️⃣ Table of Contents​ 4️⃣ Executive Summary​ 5️⃣ Management Plan​ 6️⃣ Merchandising Plan​ 7️⃣ Brick-and-Mortar Plan​ 8️⃣ Web Plan Summary​ 🔟 9️⃣ Marketing Plan​ Financial Plan​ 1️⃣1️⃣ Retail Operations Plan​ 1️⃣2️⃣ Appendices Key Sections & Their Functions 📌 Cover Letter ✅ Introduces the business concept.​ ✅ States the purpose of the business plan.​ ✅ Lists documents included in the plan.​ ✅ Concise & direct. 📌 Cover Page ✅ Identifies the document & business.​ ✅ Includes: ​ Company name ​ Address & contact info ​ Date ✅ ​ Contact person​ Confidentiality statement recommended. 📌 Executive Summary ✅ Defines the business opportunity & provides an overview.​ ✅ Should grab attention quickly.​ ✅ No more than two pages.​ ✅ Can be written first or last. 📌 Management Plan ✅ Organizational structure of the business.​ ✅ Identifies management team & their roles.​ ✅ Compensation plans & ownership details.​ ✅ Advisory board members (if any).​ ✅ Outlines key duties & responsibilities. 📌 Marketing Plan ✅ Explains why the entrepreneur is starting the business.​ ✅ Profiles the industry & market conditions.​ ✅ Identifies customer demographics & needs.​ ✅ Evaluates competition & pricing strategies.​ ✅ Defines the market penetration strategy. 📌 Merchandising/Product Plan ✅ Describes the product & its uniqueness.​ ✅ Details proposed product lines.​ ✅ Addresses proprietary aspects (patents, trademarks).​ ✅ Outlines merchandise assortment & market trips.​ ✅ Covers markup & markdown policies. 📌 Brick-and-Mortar Location Plan ✅ Physical location details & its features.​ ✅ Evaluates market factors influencing the location.​ ✅ Addresses leasehold improvements & signage needs. 📌 Web Plan Summary ✅ Explores online business opportunities.​ ✅ Defines internet & e-commerce strategies.​ ✅ Details website development, hosting, & costs.​ ✅ Covers buying & shipping methods.​ ✅ Plans for future online features. 📌 Financial Plan ✅ Presents key financial statements: ​ Cash Flow Statement ​ Balance Sheet ​ Profit & Loss Statement (Income Statement) 📌 Retail Operations Plan ✅ Defines administrative policies, procedures, & controls. 📌 Appendices ✅ Supplemental information to support the business plan. 📌 Elevator Pitch ✅ A quick, clear introduction to the business concept. Chapter 5 1. Entry Strategies An entrepreneur can start a business using one of three methods: ​ Opening a new business – Building from scratch ​ Purchasing a franchise – Buying the rights to operate under an established brand ​ Acquiring an existing business – Taking over a business that is already operating 2. Purchasing a Franchise Definition: Buying the rights to use a franchisor’s name and system for a set time by paying a franchise fee. Benefits of a Franchise:​ ✔ Experience & Knowledge – Guidance from the franchisor​ ✔ Turnkey Operation – Business is ready to run​ ✔ Pre-Made Customer Base – Existing brand recognition 3. Acquiring an Existing Business Definition: Buying an established business rather than starting from scratch. Key Terms: ​ Blue Sky – The intangible value (reputation, brand image) of a business ​ Turnaround Buy – Buying a struggling business with plans to fix it Important Documents: 📌 Letter of Intent – Shows buyer’s serious interest & sets negotiation terms​ 📌 Purchase Agreement – Outlines price, payment terms, and included assets​ 📌 Contract for Sale – Final agreement leading to the official transfer 4. Additional Key Terms ​ Exit Strategy – Plan for selling or leaving the business ​ Franchisee – The person buying the rights to a franchise ​ Goodwill – The value of a business’s reputation & customer relationships ​ Magalog – A marketing tool combining a magazine & catalog ​ Salvage Agreement – Deal to purchase and restore a failing business ​ Start-up Cost – Expenses required to launch a new business ​ Turnaround – Process of reviving a struggling business ​ Turnkey Operation – A business that is fully set up and ready to run Chapter 3: Analyzing the Industry & Finding Customers Marketing Plan ✅ A marketing plan helps a business by:​ ✅ Identifying opportunities & limitations in the industry​ ✅ Defining the target market​ ✅ Analyzing the competition​ Creating a strategy to reach customers Market Research 📌 Definition: A structured way to gather information about an industry, the market, and its customers. Steps to Market Research:​ 1️⃣ Decide what to research: ​ Market trends ​ Who the customers are ​ Where they shop ​ What price they’re willing to pay ​ How they receive marketing messages  ​ Who the competitors are ​ How products reach customers 2️⃣ Collect information: ​ Primary Data (new data collected firsthand) ○​ Mystery shopping ○​ Observation ○​ Surveys ○​ Interviews ○​ Focus groups ​ Secondary Data (existing data from other sources) ○​ Magazines ○​ Newspapers ○​ Market reports 3️⃣ Analyze the industry: ​ Study trends & growth potential ​ Check for risks & opportunities Fashion Industry Model A model that categorizes different types of businesses within the fashion industry. Understanding the Market 📌 Important Factors:​ ✅ Economic conditions & trends​ ✅ Markets where the business will succeed Understanding the Customer (Target Market) 👥 A target market is the specific group of customers a business aims to serve.​ Identified through: ​ Demographics (age, gender, income, location, etc.) ​ Psychographics (lifestyle, interests, values) Analyzing the Competition ✅ Competitors:​ ✅ Direct Competitors → Sell the same product/service​ Indirect Competitors → Sell different products but meet the same need 📌 Tools to compare businesses: ​ Competitive Matrix → Compares key business factors with competitors ​ SWOT Analysis → Identifies strengths, weaknesses, opportunities, and threats Supply & Distribution Channels 📌 Supply Channels → Companies that provide materials & equipment needed to make products​ 📌 Distribution Channels → The routes used to move the product to the consumer Choosing a Business Location 🔹 Key factors to consider:​ ✅ Foot traffic (number of potential customers passing by)​ ✅ Nearby competitors​ ✅ Cost of the location​ ✅ Signage restrictions Market Analysis 📌 Definition: A review of market conditions, including history & future potential. Fashion Industry Patterns 👗 Seasonal Patterns → Regular changes in sales based on seasons, holidays, or climate.​ 📉 Cyclical Patterns → Ups and downs in business over time. Impact of Technology in Fashion ⚡ Technology influences: ​ How fashion products are made  ​ Speed of production & delivery ​ How businesses manage information ​ Consumer shopping behavior Financial Patterns 📌 Standards used to:​ ✅ Set product pricing​ ✅ Track sales performance​ ✅ Determine billing terms Key Terms for Studying 📌 Niche Market → A small, specific group of customers a product is designed for.​ 📌 Qualitative Data → Info based on attitudes, beliefs, and emotions.​ 📌 Quantitative Data → Info based on numbers (sales, customer stats, etc.).​ 📌 Industry → All businesses that offer similar or related products.​ 📌 Primary Data → Data collected firsthand (focus groups, surveys, interviews).​ 📌 Secondary Data → Pre-existing data (news articles, reports, market studies).​ 📌 Focus Group → A group of people giving opinions on a product/service.​ 📌 Mystery Shoppers → People posing as customers to evaluate a business.​ 📌 Demographics → Market segmentation based on characteristics (age, gender, income).​ 📌 Psychographics → Market segmentation based on personality & lifestyle.​ 📌 SWOT Analysis → Strengths, Weaknesses, Opportunities, Threats.​ 📌 Supply Channels → Companies that provide raw materials.​ 📌 Distribution Channels → The process of getting the product to the customer.​ 📌 Seasonal Patterns → Predictable sales changes throughout the year.​ 📌 Cyclical Patterns → Business activity swings (ups & downs). Chapter 6: Finding the Right Location for the Business Store Layouts & Design 📌 Boutique Layout → Divides the store into small, themed shopping areas.​ 📌 Free-Form Layout → Uses varied displays for a more informal look.​ 📌 Grid Layout → A structured, rectangular layout with parallel aisles (efficient & controls traffic).​ 📌 Racetrack Layout → Aisles & signage guide customers in a loop around the store.​ 📌 Retail Layout → How products are arranged & displayed in a store. Business Location 📌 Definition: The physical place where a business operates or the destination for mailed catalogs. 🔹 Types of Locations:​ ✅ Central Business District – The historical downtown of a city with early-established businesses.​ ✅ First-Ring Suburbs – The earliest suburban communities developed from city expansion.​ ✅ Power Center – A mix of big stores (like malls) with the convenience of neighborhood shopping centers. Customer Traffic & Shopping Behavior 📌 Customer Traffic Patterns → Store design & placement influence shopping behavior & sales.​ 📌 Prime Selling Space → Areas with the most foot traffic in a store.​ 📌 Tracking Plan → A map of customer movement based on observation.​ 📌 Entertailing → Adding entertainment to a store to attract customers. Measuring Market Potential 📌 Index of Retail Saturation (IRS) → Measures: ​ Number of customers in an area ​ Buying power of customers ​ Level of competition 📌 National Retail Traffic Index (NRTI) → Tracks: ​ Shopper traffic trends ​ Conversion rates (how many visitors make a purchase) 📌 Population Density → Number of people per square mile in an area.​ 📌 Space Value → Measures sales per square foot in a store. Chapter 4: Identifying the Product & Business Concept Defining a Product 📌 A product is anything offered for attention, purchase, or use.​ 🔹 Types of Products:​ ✅ Tangible Goods → Physical items (clothing, appliances).​ ✅ Intangible Goods → Non-physical (services, experiences).​ ✅ Durable Goods → Long-lasting items (apparel, furniture).​ ✅ Non-Durable Goods → Used quickly (shampoo, food).​ ✅ Service Products → Activities or benefits sold to customers. The Product Life Cycle 📌 Introductory Stage → New product, bought by early adopters.​ 📌 Growth Stage → Gaining popularity, more consumers buy it.​ 📌 Maturity Stage → Peak sales, mass production, wide marketing.​ 📌 Decline Stage → Demand drops, sold at discounts or outlets. Branding & Intellectual Property 📌 Branding → Creating a name, image, & reputation for a product or business.​ 📌 Brand → A name, sign, or design that identifies a seller & differentiates from competitors. 🔹 Brand Elements:​ ✅ Brand Name → Can be spoken (e.g., Nike).​ ✅ Brand Mark → Visual symbol (e.g., Apple logo).​ ✅ Trademark → Legal protection for a word, logo, or symbol.​ ✅ Trade Dress → The visual look & packaging of a brand. 📌 Copyright → Protects creative works (books, music, artwork).​ 📌 Intellectual Property → Any creatively developed business asset with value. Brand Sponsorship 📌 Manufacturer’s Brand → Also called national brand (Nike, Levi’s).​ 📌 Private Brand → Retailers create their own brand (Target’s "Good & Gather").​ 📌 Private Label → Store-exclusive brands (Kirkland by Costco).​ 📌 Proprietary Brand → Another term for private label products. 📌 Brand Value → A brand’s worth in terms of recognition, reputation, & sales.​ 📌 Licensing → Selling or buying the right to use a brand name.​ 📌 Royalties → Payments (usually 3-10% of wholesale sales) to use a brand. Types of Goods & Merchandise 🔹 General Product Classifications:​ ✅ Staple (Basic) Goods → Always in demand, little fashion influence (white T-shirts).​ ✅ Fashion Goods → Trend-based, popular for a time.​ ✅ Exclusive Goods → Limited distribution, harder to find.​ ✅ High-End Goods → Expensive, luxury products.​ ✅ Low-End Goods → Budget-friendly items.​ ✅ Convenience Goods → Frequently bought, minimal effort (gum, soap).​ ✅ Shopping Goods → Compared based on quality & price (clothing, furniture).​ ✅ Specialty Goods → Customers make extra effort to buy (designer bags).​ ✅ Unsought Goods → Customers don’t think about buying until needed (funeral services). 🔹 Product Categories:​ ✅ Soft Goods → Apparel, textiles, accessories.​ ✅ Hard Goods → Electronics, home goods, appliances.​ ✅ Inventory → The selection of products carried by a retailer. 🔹 Merchandise Assortment:​ ✅ General Line → Wide variety of products.​ ✅ Limited Line → Focus on one product category with many options. Product & Market Analysis 📌 Merch Assortment → Selection of inventory based on amount, type, size, & color.​ 📌 Inventory Management → Mix of fashion, basic, soft, and hard goods.