Unit 1 Principles of Business

This document covers the principles of business in Unit 1, including the characteristics of different business markets, nature of interactions between businesses, organization's goals shaped by the market, legal obligations of a business, and more.

Unit 1 Principles of business

Table of Contents
TASK 1............................................................................................................................................3
AC1.1: Explain the characteristics of different business markets...............................................3
AC1.2: Explain the nature of interactions between businesses within a market.........................3
AC1.3: Explain how an organisation’s goals may be shaped by the market in which it operates
.....................................................................................................................................................3
AC1.4: Describe the legal obligations of a business...................................................................3
TASK 2............................................................................................................................................3
AC2.1: Define business innovation.............................................................................................3
AC2.2: Explain the uses of models of business innovation.........................................................4
AC2.3: Identify sources of support and guidance for business innovation.................................4
AC2.4: Explain the process of product or service development.................................................4
AC2.5: Explain the benefits, risks and implications associated with innovation........................4
TASK 3............................................................................................................................................5
AC3.1: Explain the importance of financial viability for an organisation..................................5
AC3.2: Explain the consequences of poor financial management..............................................5
AC3.3: Explain different financial terminology..........................................................................5
TASK 4............................................................................................................................................5
AC4.1: Explain the uses of a budget...........................................................................................5
AC4.2: Explain how to manage a budget....................................................................................6
TASK 5............................................................................................................................................6
AC5.1: Explain the principles of marketing................................................................................6
AC5.2: Explain a sales process....................................................................................................6
AC5.3: Explain the features and uses of market research...........................................................6
AC5.4: Explain the value of a brand to an organisation..............................................................7
AC5.5: Explain the relationship between sales and marketing...................................................7
REFERENCES................................................................................................................................7

TASK 1
AC1.1: Explain the characteristics of different business markets
There are basically two types of market can be seen i.e., Perfect Competition and
Imperfect Competition. Talking about Perfect Competition, its characteristics shows that there is
no barrier for any of the buyer and seller and monopoly cannot be created. When it comes to
Imperfect Competition, it does have the characteristics where company tries to create the
situation of monopoly with the market because of the single seller or concept of oligopoly can be
done in where sellers are in limited number.
AC1.2: Explain the nature of interactions between businesses within a market
Different form of business has different types of interaction with customer. In context of
perfect competition market, customer and business does business on their mutual understanding.
On the other side, imperfect market do not allows the customer to do discussion as they are
needed to satisfy themselves with the decision of seller.
AC1.3: Explain how an organisation’s goals may be shaped by the market in which it operates
In any of the entity there are certain types of goals which they want to accomplish which
operating within the market. It is said that in first stage, organisation goal is always to attain
maximum profit by increasing their overall sales volume. Second goal is to influence customer
for purchasing the product at their choice where service must be of their choice.
AC1.4: Describe the legal obligations of a business
Any of the organisation need to understand that they must be able to follow rules and
regulation for performing any of the business activity. The first thing which is needed to be
focused is that statutory law for incorporation must be followed. Organisation should pay proper
tax and other laws and regulation must be followed related to employment law.
TASK 2
AC2.1: Define business innovation
It is one of the process through where organisation tries to bring innovative idea and
concept for performing business activity. The main motive of introducing the idea to take
competitive advantage within the market.

AC2.2: Explain the uses of models of business innovation
In present, there are number of types of types of model which can be used by business
entity for the purpose of bring innovation. Talking about industrial model, this model simply
speaks about entering into new form of industry. On the other side, revenue models are for
generating higher level of revenue by bringing upgrading in the products. Finally, enterprise
model which emphasis on suppliers, network with the worker of a company for expanding its
business.
AC2.3: Identify sources of support and guidance for business innovation
Basically, there are two types of support i.e., internal support and external support.
Talking about internal support, it includes market research, decision taken by BOD as well as
other internal stakeholders connected with the company. Similarly, in external support, help can
be taken from networking groups, different websites and other stakeholders who are externally
connected with the organisation.
AC2.4: Explain the process of product or service development
Whenever any of the product or services is developed there is the detail process which is
necessary to be followed. Below, those steps have been mentioned in chronological order.
 Generating the idea in primary stage
 The idea which has been generated must be screened for eliminating the unnecessary one.
 Those concept and development must be done with its proper testing.
 Analysis should be done that how those products are needed to be sold and at what price.
 Beta Testing as well as marketing testing is also required where product is checked in
detail.
 Then, it is necessary to identify about the resources required which includes proper
planning.
 It is necessary to commercialise the product with the help of proper promotion.
 Finally, review must be done with the market that what is the demand of products within
the market.
AC2.5: Explain the benefits, risks and implications associated with innovation
In current scenario, innovation is very much important but the main thing is that there are
certain benefits and risk which are included in it. When it comes to benefit, its simply allow to

improvise the quality of product and even reputation within the market can be enhanced. But
certain risks are also there such as some time expectation of customers might not be fulfilled,
failure in collecting the investment. In addition, certain types of implication are included in it
which says that how different people such as customers, employee or other stakeholder can
contribute for attaining the goals.
TASK 3
AC3.1: Explain the importance of financial viability for an organisation
It is necessary for organisation to identify about financial viability because it simply
allows to determine about the profitability of the company. Also, find that way to perform any of
the operations activity and many more
AC3.2: Explain the consequences of poor financial management
In any of the organisation company must be able to manage their financial position and if
they fail in this respective department then there are huge problem form which they might have
to suffer. Consequences of poor financial management may create problem related to insolvency,
theft and resources might not be utilised properly in it. This are the common problem which can
be seen because of poor financial management.
AC3.3: Explain different financial terminology
Fixed Costs: It is the expenses which always remain constant at the time of
manufacturing any of the product.
Breakeven point: This is point of contact where organisation do not earn profit neither they
have to suffer from any sort of losses.
Stock: It is terms as the quantity of product which any of the organisation wants to retain or
purchase for performing any of the business activity.
TASK 4
AC4.1: Explain the uses of a budget
There are number of uses of budget which has been mentioned below:
 It allows to determine that where fund is required to be utilised for attaining the targets.

 Unnecessary expenses can be reduced easily.
AC4.2: Explain how to manage a budget
It is necessary for any of the organisation to manage their budget because that has a direct
impact on the overall performance of a company. It can be easily managed with the help of
monitoring on income and expenditure which has been pre planned, even if any of the changes
are needed to be made then proper communication can be done.
TASK 5
AC5.1: Explain the principles of marketing
It is said that marketing is one of the most crucial process for any of the organisation as it
provides the way that how company can perform. It is based on the principal of 7Ps. Those 7Ps
are discussed below:
 Products: It related with the product which company is willing to sell.
 Price: It is necessary to identify that how much an customer can pay for those product
 Place: Here, it is necessary to identify that where company wants to deal.
 Promotion; It becomes essential for company to use some of the promotional activity for
selling their products within the market.
 People: This related with all of the people who are included within the marketing process.
 Physical Presence: It shows that how any of the customer or any of the person sees those
products.
 Process: Here, company need to ensure that how they will deliver the product to
customer.
AC5.2: Explain a sales process
It is the mandatory process through which company can expand its overall sales and that
can easily allow them to enhance their business. Sales process can be conducted by identifying
the market in which company wants to deal. Also, company must try to find about the
requirement of customers through which sales can be enhanced.
AC5.3: Explain the features and uses of market research
Market research always have some of the features and uses through which objective of the
company can be fulfilled. Talking about features, it can be said that it allows to do primary and

secondary research which is crucial in current scenario. Qualitative and Quantitative research can
also be done where data can be collected in numerical data. In context of the use of market
research, it can easily help to determine about the behaviour of any customers within the market
and how they react within the market. Also, it can be helpful in identifying about competitor’s
activity.
AC5.4: Explain the value of a brand to an organisation
It is said that whenever value of the brand is included, perception of customers does changes
towards the organisation and that plays great role. Secondly, better customer relation can be
developed and even effective profit margin can be decided by the company.
AC5.5: Explain the relationship between sales and marketing
In current scenario, both sales and marketing are inter-related because it reflects the position
of the company. It is said that any of the company can only perform effectively if they have
proper marketing team and their contribution can easily allow to enhance overall sales of the
company. On the other side, higher sales can motive marketing team to work in more effective
manner so that goals can be accomplished.
REFERENCES
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