Business Ownership
What is a business owned and operated by one person?
A sole trader
What is the amount of output produced from a given amount of inputs called
Productivity
Define perceived quality
How customers judge the overall standard of a product or service
What is disposable income.
Money left after paying for essential expenses, which can be used for discretionary spending.
What does SWOT stand for?
strengths, weaknesses, opportunities and threats
What is a business owned by two or more people who share profits and responsibilities
A partnership
How can hiring more staff can improve productivity.
More workers allow tasks to be shared and conducted simultaneously increasing output
How does perceived quality affect customer satisfaction positively and negatively?
If a product meets or exceeds customer expectations, satisfaction increases, as customers feel they are receiving good value and quality. However, if the product does not meet expectations, satisfaction decreases, leading to disappointment and potential loss of future sales.
How does affordability and disposable income affect consumer spending.
When consumers have higher disposable income, they can afford to spend more, increasing demand. However, if affordability is low, consumers reduce spending or prioritise essential goods.
State whether strengths and weaknesses are internal or external factors
Internal
State the type of liability a sole trader and partnership have AND what this means.
Unlimited liability – owners are personally responsible for business debts and may lose personal assets
How can employee specialisation improve productivity.
Workers focus on specific tasks, increasing efficiency and output
How can having a strong brand image like healthy meals for the HelloFresh company influence customer satisfaction and consumer behaviour.
HelloFresh has a brand image of providing healthy and convenient meals. When the meals are fresh and nutritious, this meets customer expectations and increases satisfaction, making customers more likely to repurchase. However, if the meals do not align with this healthy image, satisfaction decreases and customers may choose not to buy again.
How does consumer priorities and demand/need affect spending decisions.
Consumers spend more on products they value or see as important, increasing demand. If a product is not a priority, consumers are less likely to purchase it, reducing spending.
Why could moving to an online store could be a strength for a business.
Can reduce costs such as rent, utilities, and staffing, improving efficiency. It also allows the business to reach a larger customer base and operate 24/7, increasing sales opportunities. As a result, the business can produce and sell more with fewer resources, strengthening overall operations.
How can unlimited liability influence a business owner’s decision to change ownership structure.
Increases personal financial risk, encouraging owners to move to a company with limited liability
How does investing in equipment or technology improve productivity.
Technology increases efficiency by automating processes, reducing mistakes, and improving workflow, which allows businesses to produce more output in less time.
Explain how ethical values and sustainable practices, such as using eco-friendly packaging, can influence customer satisfaction.
If a business demonstrates ethical values through sustainable practices like using eco-friendly packaging, customers who value the environment feel more positive about their purchase, increasing satisfaction. However, if the business does not use sustainable practices or contradicts its ethical values, satisfaction may decrease and trust can be lost.
How can price sensitivity affects consumer spending.
If consumers are price sensitive, a price increase leads to a decrease in demand as they reduce spending or choose cheaper alternatives. If they are less price sensitive, spending is less affected by price changes.
Why could moving to a fully online model could be a weakness for a business.
Customers may not be able to physically experience the product (e.g. try, test, or inspect it), which can reduce satisfaction and increase returns
How can changing from a sole trader/partnership to a company reduce risk AND support business growth.
Reduces personal risk, encouraging investment. A company can raise capital through investors and loans, allowing expansion and growth
How can changing ownership structure lead to increased productivity and business growth.
A company can access more capital, invest in technology and staff, enable specialisation, increase efficiency, and expand output
How can improving product quality AND increasing price affect customer satisfaction and consumer spending.
Higher quality increases satisfaction, but higher price may reduce spending. Some customers will still buy if they value quality, while others may switch to substitutes
How does availability of substitutes affects consumer spending.
If substitutes are available, consumers may switch to alternative products when prices rise or value decreases, reducing spending on the original product. However, if few substitutes exist, consumers may continue purchasing despite higher prices, maintaining spending.
How could moving to an online platform could be both an opportunity and a threat for a business.
It increases access to customers and sales (opportunity), but creates competition, fees, and reliance on platforms (threat)