Review A-J

Business activity
Business activities are the actions companies take to earn profits through sales, investments,
manufacturing and distribution.
There are three main business activities: operating, investing and financing.

Companies record business activities on their cash flow statements.

Operating
- Receiving money for selling goods
- Receiving interest on loans
- Receiving investment dividends
- Purchasing merchandise or supplies
- Purchasing raw materials
- Paying wages
- Paying interest
- Paying income taxes
 Investing

- Receiving cash from the sale of bonds or stocks

- Receiving cash from the sale of property or equipment
- Receiving cash on the principance for issued loans
- Purchasing stocks, bonds or other long-term investments
- Purchasing equipment or property
- Offering loan amounts to other people or companies

Financing
- Receiving money from loan or bond issuances
- Receiving money from selling shares
- Repurchasing shares
- Paying money for dividends
- Paying towards principal loan balances
Business size and structure
Business size:
Number of employees
- Revenue (total sales)
- Capital employed
- Market share (% of the market)
- Market capitalisation (total value stocks)
-> Can be decrease by liabilities, responsibility which require regulation, admin
work and rules.
Business structure:
Sole trader, partnership
- Unlimited liability
- Low costs
- Can’t sell/ transfer shares
Private limited company
- Limited liability
- Different entity
- Regulations
- Can sell/ transfer share
Public limited company
- Limited liability
- Different entity
- Regulations
- Sell/ transfer share in the stock market.
Cooperative
- Industry like farmers, agriculture
- Economy of scale
- Slow/ everyone votes
- No management
- No liability advantage
Franchise
- Fast start
- No skills required
- Investment
- No freedom
TOPIC C : The nature of marketing

Definition of marketing : the management process responsible for identifying, anticipating and
satisfying customer requirements profitably.

4ps of marketing :
- Promotion : Sale promotion, advertising, Public relations, Direct marketing
- Product: Features, quality,branding,packaging,Services,Warranties
- Place: Channels, market coverage,Assortment,Location,Inventory,Transport
- Price: Price Strategy,Pricing,Allowance,Discounts,Payment Terms

Market orientation : the business prioritizes identifying the needs and desire customers by creating products or
services that satisfy them

Product orientation: The business develop products based on what it is good at marking or doing, rather that
what the customer want
 TOPIC E: MARKET SEGMENTATION
Marketing term that refers to aggregating prospective buyers into groups with
common needs and who respond similarly to a marketing action
 BENEFITS OF MARKET SEGMENTATION

- Use resources more efficiently: promoting specifically to the market segment

can be more effective and costs less than promoting to the entire market.
- Stronger brand image: promote directly at a target audience, a company's
branding and messaging is more likely to be very intentional. This may also
have an indirect effect of causing better customer experiences with the
company.
- Potential customer’s loyalty: direct marketing can make the customers feel
included and the chances of reaching the targeted audience is higher
therefore can increase the number of loyal customers.
Topic D - Market analysis
Market analysis is to provide information about the target market, customers, other
competitors and also different market.

This include information about the market size,

market share and market growth, mass market

and niche market.

Market analysis
Reasons for conducting market analysis:
+ Backup business ideas, provide better market planning
+ Recognize market potential at early stage, avoid making wrong decisions
+ Identify existing knowledge gaps and fill them in
+ Competing products on the market
+ Substitutes and complementary products
+ Estimate, identify market entry barriers and market attractiveness
Market analysis
- Market size: The total amount of profit or sales a market made during a fixed period of time.

- Market share: The sales percentages that a business earned in the total market sales.

- Market growth: The size and sales increase by a business over a given period of time.
Market analysis
Mass vs Niche market

=> Business can target their market either to attract as many customers as
possible (mass) or a specific group of customers (niche).
- Mass market means targeting people across many demographics such as
gender, age, income, preference,...
- Niche market focus on a specific group of customer and precisely create
product out of their needs.
How to do a business analysis
+ Research your industry
+ Investigate your competitors, differentiate your brand
+ Market gaps, find unsolved problems
+ Define your target market by understand your target customers characteristic
+ Know what stand in your way
+ Creates a sales forecast
Market research

Market research is the process of identify, gather and analyse information to support
business decision

To identify problem:
+ Identify market needs and market potential.
+ Size the market share for specific products or services.
+ Monitor brand image issues of our brand and competitors.
+ Profile market segments.
+ Analyze sales trends.
+ Forecast future trends.
+ Identify business trends
Market research
To solve problem:

+ Develop new products

+ Establish a pricing strategy and identify optimal price points.
+ Determine effective ways to advertise products and services and optimize
marketing channels.
+ Identify distribution issues and barriers to the path to purchase.
+ Improve customer experience to support customer acquisition and retention
strategies.
Market research
Primary Research
Primary or field research is research that is done first hand e.g. questionnaires, surveys
Methods
● Postal surveys – these have a high sample size but low response rate, relatively cheap
● Telephone surveys – more expensive, higher response rate, can explain questions
● Interviews – smaller sample size, higher response rate, may be interviewer bias
● Focus groups – provide in-depth analysis, small sample size
Advantages
● Fitness for purpose
● Allows to target right segments
● Can explain difficult problems / concepts
Disadvantages
● Can be time consuming
● Expensive
● Some forms have low response rates
Market research
Secondary research
Secondary or desk research uses existing sources of information e.g. books, journals
Methods
● Internet – can provide a wealth of information however need to check validity of data
● Government statistics
● Books and journals
● Company reports
Advantages
● Quick and easy
● Relatively cheap
Disadvantages
● May be out of date
● May not be relevant
Market research
Type of data: Qualitative & Quantitative
TOPIC G - Marketing Mix: Product
● Product is the output of the business (services or goods) presented to the
customers.
● Product in the marketing mix includes
- Quality
- Design
- Packaging
- Brand
- Services
TOPIC G - Marketing Mix: Price
● Price is the price that the customers are willing to pay for the product of that
business
● Price in the Marketing mix include
- Retail
- Payment plans
- Discounts
- Allowances
- etc.
 Topic G: Marketing mix - Promotion
➔ Promotion: how the customer is found and persuaded to buy the product
➔ Factors can be considered:
● Sales promotion
● Advertising
● Public relation
● Direct marketing
 Promotion
The promotion inside marketing will determine which type of customer you want to
approach.

For example, when selling luxury items, they will have to promote them across
fancy places so rich people can see the advertisement rather than put it in every
location.

-> This will not only specify a suitable type of customer but also reduce the
expenses for the advertisement process, making it more efficient
 Topic G: Marketing mix - Place
➔ Place: how the product is distributed to the customer
➔ Factors inside the place marketing mix
● Channels
● Market coverage
● Assortment
● Location
● Inventory
● Transport
 Place
Why do we need a specific place for various types of customer

E.g: Selling burgers for a general kind of customer

-> The target market for businesses will be locations that are easy to approach,
like parks, train stations, etc.…

-> This way, we not only determine each different group of customers but also
make a wide range of prices for each customer in different places.
 TOPIC H: MARKETING STRATEGY
CHANGES IN PRICE OF SUBSTITUTES
- Easily switch to & buy from competitors of the business
- Increases in the price of competitors => increases in the price of
the company

CHANGES IN PRICE OF COMPLEMENTARIES

- Price of any products increase => likely to have a negative effect
on the demand of both products itself and the one in complements

CHANGES IN CUSTOMERS’ INCOME

- The amount consumer earns wil influence how much they purchase
- Consumer income increases => more disposable income and
TOPIC H: MARKETING STRATEGY
FASHION, TASTES & PREFERENCES
- Demand increases -> a product is deemed fashionable & trendy by consumers
the market
- Ofeten change very quickly amongst consumers due to societal pressures
- BS invests heavily in R&D to improve their products and keep them relevant

ADVERTISING & BRANDING

- Drives sales
- Strengthens a brand image
- A brand image influences:
+ Consumers’ perception
+ Behavior
+ Trust
 TOPIC H: MARKETING STRATEGY
DEMOGRAPHICS
- Age
- Gender
- Sexual orientation
- Race
- Religion
- Consumer aligns with demographics of business’ target market => demand increases
- BS differentiate their product portfolio to target specific demographics

EXTERNAL STOCKS
- Random & unpredictable events occur outside the domestic economy& have a
widespread impact on the economy & demand
- Causes:
+ Economic instability
+ Reduce consumers’ confidence & disposable income
TOPIC H: MARKETING STRATEGY

SEASONALITY
- Impact products’ demand depending on the season
- Ice cream, gardening tool, etc.
- Understand the impact to ensure:
+ Have abundant availability & resource to meet customer demand during
peak season
+ Don’t overspend and have excess stock and wastage in low season
Topic I - Operations Management
Definition: The administration of business practice to keep the highest level of
efficiency possible within a organizations

The key factors:

Labour productivity: Measure output per unit of input to understand the efficiency of
production.

This is important because:

- it create motivation for employees at workplace
-higher productivity helps reduce cost + larger production
Topic I - Operations Management

Inventories management (stock): Operations managers are responsible for

managing inventory levels to strike a balance between meeting customer demand
and avoiding excessive holding costs. This involves decisions related to ordering,
stocking, and tracking inventory.

Quality management: Ensure that the products or services meet the customer
expectations by implementing quality control measures to identify and correct
defects in production process. The real life example is the Toyota’s Kanban
system.
TOPIC J: Business Finance
Bank overdrafts
- common external and short-term source of finance for a business.

Bank loan
- popular external sources of medium and long-term finance for businesses.

Business angle
- wealthy, entrepreneurial individuals who provide capital in return for a proportion of the company equity.

Sources of Finance for a Startup or Small Business

- Internal and external sources

Retained Profits
- the most important and significant source of finance for an established profitable business.