Starting & Growing a business
Name at least 5 sections of a typical business plan
1. Executive Summary 2. Operations 3.Business Type 4.Team 5. Product or Service 6. Implementation 7. Market research 8.Financial Plan
Explain the difference between CapEx and OpEx and give examples.
CapEx (Capital Expenditure) - money spent to acquire fixed assets that will last for more than a year and may be used over and over again. Examples: machinery, land, buildings, vehicles, and equipment.
OpEx (Operating expenditure) - money spent on the day-to-day running of a business. Examples: rent, wages, raw materials, insurance, and fuel.
This internal factor of promoting a brand refers to the value of the particular brand for the company and the customer.
What is it? Give an example.
Brand equity.
Example: I'd rather buy a Dior dress for the New Year party than a trendy one from a no-name designer.
What's market segmentation?
Dividing a broad market into smaller groups, or segments, based on characteristics like demographic (age, occupation, income, etc.), geographic (location, time zone, language, etc.), psychographic (lifestyle, interests, social status), and behavioural (purchasing habits, customer loyalty, etc.)
What are the minuses of grant funding?
1. there’s often strong competition
2. you may be required to provide matching funds
3. you may also need to prove a wider benefit to the community or social significance
Name 5 typical steps to start your own business
Step 1 Conceptualise Step 2 Assemble your MVP Step 3 Shape your product towards product market fit Step 4 Launch your product Step 5 Expand and Scale up
What's the payback period? What are its prons & cons?
The payback period is an investment appraisal tool that estimates the length of time required for an investment project to pay back its initial cost.
"+" simple and fast to calculate; less prone to the inaccuracies of long-term forecasting; useful in rapidly changing industries such as technology
"-" does not consider the cash earned after it; ignores the overall profitability of a project by focusing only on how fast it will pay back; cash flows could be affected by unexpected external changes in demand
What's the difference between traditional and modern (digital) marketing?
Traditional Marketing: Billboards, TV ads, radio ads; The "Spray and pray" approach; Focusing on building brand awareness rather than immediate sales; Hard to track ROI; Wasting money on an exposure to irrelevant audience
Modern Marketing: SEO, SEM, SMM, Affiliate marketing; Identifying specific customer needs; Evolved with the rise of the Internet and social media; Highly trackable - ROI can be measured precisely; Targeting relevant audiences with tailored ads
What's the difference between primary and secondary market research? What are their pros & cons?
Primary (or field research) collects new, first-hand data directly from the target audience through methods like surveys, focus groups, or in-depth interviews. "+" Tailored and Up-to-Date Information; Competitive Advantage; Deep Customer Insights. "-" High Cost; Time-Consuming; Potential for Bias
Secondary (or desk research) involves analysing data that already exists, which can come from government or industry reports, academic publications, company websites, etc. "+" Cost-effective; Easy to Access; Broad scope. "-" Data Irrelevance; Limited Competitive Advantage
Explain mix dynamics and provide an example of success and failure.
Mix dynamics refers to the flexibility and adaptability of the marketing mix elements in response to changes in the external environment, such as market trends, consumer behaviour, competition, or technological advancements.
Example: When customer demand shifted to online shopping, the garden tools seller quickly adjusted by promoting through digital ads and offering home delivery. Our cafe didn't boost sales as we failed to adapt after a rival coffee chain launched cheaper, faster home-delivery options.
What’s the difference between internal (organic) and external (inorganic) growth? Give examples
Internal (organic) - the expansion of a business through its own operations and resources. Examples: opening new branches, expanding product lines, improving operational efficiency to boost output.
External (inorganic) - involves collaborating or acquiring external entities. Examples: merging with a competitor, acquiring another company to enter a new market, forming a strategic alliance with another business.
What's the ARR? What are its prons & cons?
The average rate of return (ARR) is the investment appraisal tool that measures the annual net return on an investment as a percentage of its capital cost.
"+" shows the probability of a project over a given period of time; allows for easy comparisons with other competing projects.
"-" considers a longer time period and long-term forecasts decrease the accuracy of results; makes use of all the cash flows in a business; does not consider the timing of cash inflows. Two projects might have the same ARR but one could pay back more quickly.
What's the marketing mix? What are its company- and customer-focused elements?
The Marketing Mix is the set of controllable, tactical tools that a company uses to influence demand for its products or services and meet customer needs. The 4Ps (company-focused):Product, Price, Place, Promotion. The 4Cs (customer-focused): Customer, Cost, Convenience, Communication
What's the difference between qualitative and quantitative market research?
Qualitative: This involves the collection of data about opinions, attitudes or beliefs; Information is open to a high degree of interpretation; Key research questions would include “Why?”; The researcher is part of the process. It is subjective.; It provides multiple realities, i.e. the focus is complex and broad.
Quantitative: involves the collection of numerical data or data that can be measured; Information is open to less interpretation; Key research questions would include “How many?”; The researcher is separate. It is objective.; It provides one reality, i.e. the focus is concise and narrow.
What are the pluses of leasing?
1. you can spread the cost of acquiring assets
2. you don’t own the assets until the end of the agreement, which is why you don't cover repairs and maintenance.
Explain the difference between 1) a strategic alliance, 2) a merger, and 3) an acquisition.
1. an agreement between two companies to share resources and work towards a particular goal while remaining independent
2. the process where two equal similar-sized companies join together and form a new entity
3. the process where one company takes over another company by buying its assets or shares
Name 2 sources of internal funding for an established business. What are their pluses and minuses?
Sale of assets - raising capital tied up in assets. "+" assets may not be used, eg obsolete machinery or redundant buildings. "-" might be time-consuming to find a buyer
Retained profit - money reinvested in business. "+" a flexible source of funding that does not incur interest charges. "-" some shareholders may object to it.
Explain mix coherency and provide an example of success and failure.
Mix coherency focuses on internal consistency and refers to how well the different elements of the marketing mix are aligned and work together. Example: A Michelin-starred restaurant opens in a luxury hotel (the 4 Ps are aligned). The same restaurant opens a ready-meal take-away section. (the 4Ps are incoherent).
What are surveys and focus groups? Categorise them as primary / secondary and qualitative / quantitative research methods.
Survey is an examination of people’s opinions, attitudes, and behaviour made, for example, by asking them questions. Primary, quantitative
Focus group a small diverse group of people brought together to discuss what they think about a particular product or service as part of a company’s market research. Primary, qualitative
What are the roles of the participant and researcher in a focus group discussion?
6-10 participants are recruited by companies according to their research objectives to openly discuss their views on a product / service. They follow a researcher's prompts, but are free to ask each other questions as well as express opinions, agree or disagree.
A researcher facilitates the discussion, uses prompts, but doesn't prime participants. Could pretend to be a participant in the focus group or hide behind a mirror to avoid 'observer interference'.
Explain what the SWOT and STEEPLE analyses mean and why companies use them.
A SWOT analysis is a standard way to analyse the market position of a company / product before expansion. It includes Strengths / Weaknesses (internal factors) & Opportunities / Threats (external factors).
A STEEPLE analysis is used to identify the external forces affecting how individual companies compete within their industry sector. These include Socio-Cultural, Technological, Political / Legal, Environmental, Economic, Ethical.
Explain what debt & equity funding mean. What are their pluses and minuses?
Debt funding - money a business borrows. Examples: a bank loan or overdraft. "+" payments for loans are regular and easy to plan. Overdrafts are flexible and don't require collateral. "-" you have to pay back the principal sum + interest; collateral is needed for most bank loans.
Equity funding - money a business receives from venture capitalist or business angel. "+" a business may receive expertise and support beyond money. "-" hard to raise; need to give a stake (equity) in exchange for money.
What's the difference between brand stretching and brand extension? Provide examples.
Brand extension is using an existing brand to introduce new or modified products or services.
Brand stretching is the introduction of seemingly unrelated products from your company which sell because of the brand name.
Examples: Coca Cola extends the brand into a sugar-free version of the original drink Coke Zero.
A bottled water brand Evian stretched into skincare cosmetics creating Evian Face Mist Spray.
Explain acquiescence bias and a forced-choice question in the context of survey design. Provide examples
Acquiescence bias is the tendency of respondents to agree with statements regardless of their true opinions, often to be polite or cooperative. Ex: "Do you agree that this product is priced above the market?"
A forced-choice question requires respondents to choose between two or more options, even if they might prefer to select both or neither, thus promoting more objectivity. Ex: “If you had to choose, would you prefer lower prices or higher quality?”
What are potential limitations of the focus group approach?
1 the “observer interference” might affect the findings; 2 social pressure from the rest of the group can affect participants' answers; 3 participants’ awareness that they’re part of the focus group can affect their answers; 4 the small sample size makes it difficult to generalise the findings