Welcome to Business Studies!

Miss Kular

AS Business Studies – Course delivery

• Unit 1 (BUSS1)• STARTING A BUSINESS • Chapters 2 – 7, 9 -10 Ms. Kular

• FINANCIAL PLANNING • Chapters 1, 8, 11 – 15 Mr. Bath

CHAPTER 2- Generating and protecting business ideas

1) Identify and explain sources of business ideas

2) Define franchises3) Analyse the reasons why someone may

decide to operate as a franchise

GENERATING IDEAS

• Different motivations for starting a business• 1/3 of all new businesses fail in their first 3

years• Finding a good idea that will be profitable is

not easy• Ideas created through brainstorming or from

entrepreneurs own experience

SOURCES OF IDEAS

• Spotting trends and anticipating their impact • Innocent Drinks• Tapped into the growing desire for healthier

lifestyles

SOURCES OF IDEAS

• Identifying a market niche• Involves noticing something that is missing or

can be improved• Rachel Elnaugh spotted gap in market for

interesting presents for young people who could not afford to buy things themselves.

• Created Red Letter Days selling extraordinary experiences (has now collapsed)

SOURCES OF IDEAS

• Oliver Bridge set up shoe company Bigger Feet Ltd at age of 15

• Had size 13 feet and could never find shoes in his size

• James Murray Wells set up Glasses Direct offering glasses online at little more than cost price after seeing how expensive glasses were on the high street

SOURCES OF IDEAS

• Copying ideas from other countries• Howard Schultz from Starbucks did not invent

the espresso coffee machine but saw it in Italy and thought it would be successful in USA

SOURCES OF IDEAS

• Taking a scientific approach• James Dyson developed the Dyson bagless

vacuum cleaner after technical research• Said to have made 5127 prototypes of the

product before he perfected the final design

In your groups come up with a business idea using one of the three approaches. Be prepared

to defend your idea!!

Unscramble these businesses

• MdlcDonas • HoalidynIon• Sbartkucs• Donomizziesa• Waybus• Potoffscie

• McDonalds• Holiday Inn• Starbucks• Dominoes Pizza• Subway• Post Office

What do these businesses all have in common?

Franchiseswhen a business (franchisor)

gives another business (franchisee) the right to supply

its product or service

FRANCHISING

• Allows an individual to use a proven business idea , to trade under a well known brand name and to gain help and support

FORMATION OF FRANCHISE

• Business format franchise• When owner of business (franchisor) grants a

licence to another person (franchisee) to use their business idea

• Franchisee sells franchisors products, trades under franchisors trademark and benefits from franchisors help

FORMATION OF FRANCHISE

• Franchisee pays initial fee to franchisor and percentage royalty on sales

• Franchisees owns outlet they run but franchisor maintains control over how products and services are marketed and sold and how business idea is used

BENEFITS OF OPERATING AS FRANCHISE

• Least risk for start up business• Established brand names• Easier to finance business• Low advertising costs• Exclusive rights in their area• Established relationships with suppliers• Franchisor offers support and training• See Page 17 for more

POSSIBLE PITFALLS OF OPERATING AS FRANCHISE

• Franchisor might not have researched business carefully

• Costs may be higher than expected• Other franchises could give brand name bad

reputation• Franchise agreement includes restrictions on

how business should be run

POSSIBLE PITFALLS OF OPERATING AS FRANCHISE

• Franchisees required to sign non competition clauses – agree not to set up competing business in industry for period of time after franchise ends

• Franchisees must be approved by franchisor• If franchisor goes out of business, there will be

a direct impact on franchisees business

Questions

• Why is opening a franchise often considered lower risk for an entrepreneur than setting up a new business?

• Why do franchises usually involve operating a service sector business rather than a manufacturing or secondary sector business?

KEY TERM

• Copyright – legal protection against copying for authors, composers and artists

PROTECTING A BUSINESS IDEA

• Copyright means material cannot be copied without permission from the owner of the copyright.

• Copyright lasts for 70 years after death of the creator for literary, musical, drama and artistic work

• Lasts for 50 years for sound and TV recordings• Governed by Copyright, Designs and PATENTS Act

1988. ©

KEY TERM

• Patent –an official document granting the holder the right to be the only user or producer of a newly invented product or process for a specified period

PATENTS

• Apply for a patent to prevent other people copying the invention and then making and selling it

• Register with UK Intellectual Property Office (UK-IPO)

• Copyright Act gives patent holders right to use, make, licence or sell invention for up to 20 years after it is registered

PATENTS

• Issues to consider:• Allows product or process to be developed

further• Invention becomes property of inventor• Purchasing business with patent is attractive• Can be a valuable asset for a business• See page 20 for more

KEY TERM

• Trademark – signs, logos, symbols or words displayed on a company’s products or on its advertising, including sounds and music which distinguish its brands from competitors

TRADEMARKS

• Can be powerful marketing tools• Helps customers recognise products• Trademark must be registered at UK

Intellectual Property Office• When trademark is registered, company has

exclusive rights to its use• ®

Gill writes highly specialised training

packages and sells them via her website

Dave has invented an economical diesel engine

A logo which displays a boy and girl holding hands

for children's clothing

Patent

Copyright

Trademark