Pearson Edexcel GCSE Business Latest Update
1 limitation of personal savings - ANSWER-The owner will not be able to spend it on something else like a car or holiday - this is opportunity cost
2 advantages of retained profit - ANSWER-1. There is no interest to pay on a loan, so this is the cheapes...
1 limitation of personal savings - ✔✔✔ANSWER-The owner will not be able to
spend it on something else like a car or holiday - this is opportunity cost
2 advantages of retained profit - ✔✔✔ANSWER-1. There is no interest to pay on a
loan, so this is the cheapest method of finance
2. Access to the funds can be quick and easy
2 benefits of loans - ✔✔✔ANSWER-1. A medium to long-term business loan can
help with all the costs of setting up a business, from cash flow to expenses and
paying staff
2. The longer the term of the loan, the lower the monthly payments will be, as they
are spreading the cost over a long period of time
,2 benefits of market mapping - ✔✔✔ANSWER-1. Can spot a gap in the market
where there are no competitors
2. Identify competitors so they can try to gain competitive advantage
2 benefits of trade credit - ✔✔✔ANSWER-1. The business will never run out of
products to sell
2. The business can sell the products first THEN pay the supplier so they won't
have to raise finance for the goods
2 disadvantages of retained profit - ✔✔✔ANSWER-1. It is spent then it cannot be
used for any other purpose e.g. to invest in a new machine, this is the cost of using
this money
2. Not applicable in the first year of trading as the business has not made any
profits to retain
2 limitations of loans - ✔✔✔ANSWER-1. The amount of interest you pay on a
business loan will depend on your individual circumstances, including how much
you want to borrow and over what period of time
2. Each month the business will have to pay back some of the loan and some
interest too, they will have to do this even if they have a bad month
2 limitations of trade credit - ✔✔✔ANSWER-1. The supplier may charge a higher
cost for the products because of the credit arrangement
2. If this is the first year that the business has asked for trade credit, the supplier
may say no
2 limitations of venture capital - ✔✔✔ANSWER-1. Owners may lose some of the
control over the business
, 2. Owners may have to give up a large share of the profits to the venture capitalists
2 main secondary research methods - ✔✔✔ANSWER-1. Internally sourced
information
2. Externally sourced information
2 step plan for business survival - ✔✔✔ANSWER-1. Find out what the customers
want and need from a product and service
2. Provide that product or service
2 types of competitors - ✔✔✔ANSWER-1. Businesses that sell the same type of
products (Direct competitors)
2. Businesses that do not sell the same product but are still in competition with
each other (Indirect competitors)
3 advantages of a franchise - ✔✔✔ANSWER-1. lower risk as business model is
already successful
2. support and training provided by the franchisor
3. franchisees benefit from national marketing campaigns
4. market research done at head office level, the business will get the benefit of the
promotional activity and signage all done on a national level
5. less competition as territories are divided up
3 advantages of a partnership - ✔✔✔ANSWER-1. very few procedures to set up
2. partners may have a wider expertise and can share ideas
3. decision making is shared
4. financial information is kept private
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