09 January Business Studies Unit 1
1a) Opportunity cost is the value of the next best alternative that must be forgone in order to undertake an activity.
b) Primary Market research is the gathering of data first hand and focuses on what a firm wants. For example, observation.
c) Adding value is the process of increasing the worth of resources by modifying them. A business will make a product stand out from other products, such as having a unique selling point.
d) Echo Accessories plc’s market share = sale of product/total market sales x 100 = £28000/£80000 = 35% market share
e) Break-even quantity for accessories = total fixed cost/ cpu = 30000/6 = 5,000
f) One benefit of Youssef targeting this market segment is that young female consumers are an easy target market as there are so many products they are likely to buy and therefore the products he sells are likely to be bought and with their rising incomes there disposable income will increase and they will be willing to spend more money on fashion accessories.
Second benefit is that it is a large consumer market; therefore it is more likely for Youssef to sell his accessories and make a profit from the business and if he did support fair trade, women would be a more likely consumer to spend the extra cash to support fair trade.
2a) There are many benefits or arranging an overdraft of up to £15000.
One benefit is that the interest Youssef would have to pay is only on the amount he has overdrawn. Therefore if he does not use his overdraft, he will not have to pay any interest, meaning he will not be spending any unnecessary money.
Second benefit is that having an overdraft is very flexible and Youssef can use it in the short term. This will mean he can use his overdraft if there is a need to increase the cash flow, but once the business has started to make a profit then Youssef can stop his overdraft.
Ultimately, the benefits depend on whether Youssef doesn’t use the overdraft all in a...