1
Q
Needs
A
What we require in order to survive (food, water, shelter)
2
Q
Wants
A
Goods/services that make our lives more enjoyable and pleasureable, but we dont require in order to survive ( games consoles, tv)
3
Q
Goods
A
A Physical product that we can see and touch ( newspaper, jacket
4
Q
Services
A
Something that is provided for us by an organisation (taxi, haircut)
5
Q
Consumption
A
The using up of a good/service ( wearing a jacket, eating a sandwhich, watching a film at the cinema)
6
Q
The cycle of business
A
- Consumers have needs and wants
- Business carry out market research to identify those needs and wants
- businesses produce goods and services
- goods and services are bought and consumed
7
Q
1.Land
A
This refers to natural resources and includes not only the surface of the earth but all other natural resources discovered within it ( fish, oil,coal)
8
Q
- Labour
A
This refers to human resources (employees who work for the business)
9
Q
- Capital
A
This refers to human-made resources ( the buildings, machineiry and equipment used in the production process)
10
Q
- Enterprise
A
This is the art of bringing together the other factors of production in order to produce goods and services
11
Q
Chain of production
A
The stage a product passes through from start to finish
At each stage of the chain of production, value is added to the prodcut. This is known as creating wealth
12
Q
Primary sector of industry
A
Buisnesses inloved in the extraction of our natural resources from above and below the earths surface ( farming, fishing, coal mining)
13
Q
Secondary sector of industry
A
Businesses involved with taking raw materials and manufacuring a product ( car manufacturing, cake making)
14
Q
Tertiary sector of industry
A
Businesses involved with providing a service ( cinema, hotel, supermarket)
15
Q
Private sector
A
Organisations owned by private individuals that exist to make a profit
16
Q
Public sector
A
Services and agencies run by the goverment on our behalf
17
Q
Third sector
A
Non-profit makiing organisations that exist ot support a cause or aim
18
Q
Sole trader key features
A
A business owned and run by one person
Owned by one private individual
Controlled by the private individual
Financed by their own personal savings, or possibly a bank loan or grant
19
Q
Sole trader advantages
A
Easy to set up
Owner gets to keep all the profit
Owner gets to make all their own decisions
20
Q
Sole Trader Disadvantages
A
Unlimited Liability- if the business goes into debt, the individual owner is resposible for paying it back. This could mean their personal possestions are taken to pay for this
Raising finance can be dificult- banks will often look at sole traders as high risk
Workload and responsobilites canbnot be shared with another work loader
21
Q
Partnership key features
A
A business owned by and run by 2-20 people
Owned by the 2-20 partners
Controlled by the 2-20 partners
Financed by the investment of each individual partner
22
Q
Partnership advantages
A
More finance can be raised compared to a sole trader
Workload and responsobility can be shared between partners
Partners each bring different experience and expertise to the business
23
Q
Partnership disadvantages
A
Unlimited Liability- if the business goes into debt, the partners are resposible for paying it back. This could mean their personal possestions are taken to pay for this
Profit is split between partners
There could be arguments between partners
The actions of one partner are legaly binding on others
24
Q
Private limited company key features
A
A business owned by 1-50 private shareholders
Owned by private shareholders- shares cannot be sold on the stock market
Controlled by a board of directors who run the business on the behalf of the shareholders
Financed by share equity invested by shareholders
25
Private limited company advantages
Limited Liability- if the business goes into debt, the owners are not responsible for paying it back. They can only ever lose what they have invested.
more finance can be raised compared to sole traders and partenrships
viewed as less risky compared to sole traders and partnerships
26
Private limited company disadvantages
Financial acounts must be published which the public and competitors can see
More complicated and expensive to set up compared to sole traders and partnerships
profits shared between many shareholders by paying dividends
27
Aims of the Private sector
Profit Maximisation- to make as much profit as possible
Acheiving quality- to provide the highest standard of product/service
Survival- to continue to exist from one year to the next
Customer satisfaction- To ensure your customers are happy with their purchase
Increase market share- to gain more customers relative to your competitors
Social responsoblility- to act in a responsible way towards the environment, your community and wider soceity
Innovation- to create new and unique ideas
28
Key features of the public sector
Services and agencies run by the goverment on our behalf
Owned by the goverment on our behalf
Controlled by goverment departaments at UK, scottish and local levels
Financed by taxation
29
Public corporations
Business organisations owned by the goverment on our behalf (BBC)
30
Aims of the public sector
Make the best use of funds- spending taxpayers money wisely to get the most value
Quality of service- to provide a high standard of service to the community/users
Raise revenue- to increase the amount of funds generated
Cut costs- to reduce spending on public services
Improve infrastructure- to develop and build new roads, rail links and cycle paths
31
Charaties
Charaties have no recognised owner
Controlled by a board of trustees who represent the charity
Financed by donations, fundraising, grants from government and sales from charity shops
A charity will mostly be run by volunteers but may also have some paid employees
32
Advantages of charaties
Exempt from paying certain taxes
Low wage costs due to using mostly volunteers
33
Disadvantages of charaties
High turnover of volunteers who may leave for paid work
Difficult to compete for donations against thousands of other charaties
34
Clubs and assosiations key features
Clubs and assosiations have no recognised owner
Controlled by an elected comitee
Financed by membership fees/subscriptions paid by members
35
Aims of the third sector
Increase funds- raise as much funds as possible for their cause
Provision of service- to provide a service to people/animals in need
increase awarness- to increase the number of people in soceity who are aware of the aim/cause
Pressure goverment- to campaign to goverment to change a law/policy related to their cause
More branches- to open more branches of charity shops
36
Social Enterprises key features
Organisations that trade and earn income from business but use the profits to help their cause
They use profits to help their cause
Funded by grants
They operate in the third sector
37
Social enterprise advantages
Social aims/cause can help attract customers to buy products/use service
More likely to recieve grants from the goverment due to their postitive impact on soceity
Easier to attrack high quality employees who want to support the aim/cause
38
Social enterprise disadvantages
Due to heavy reliance on grants, levles of funding can be unpredictable
Difficult to compete against profit driven sector businesses
39
How do organisations ensure customer satisfaction
Provide the highest possible quality product
Train employees to the highest standards
Recruit candidates with customer service expeirences/skills
Have a customer care policy ( a document outlining the terms of service that will be offered)
Having a customer complaints procedure
Having a FAQ (Frequently asked questions) section on your website
Offering an after-sales service (eg: warranty, installation,advice).
40
How do organisations know if customers are satisfied
Customers filling in surveys (online, in store or via telehpone).
Reading comment/suggestion cards left by customers
Engaging with social media (eg: reading posts on X)
If customer numbers are increasing/decreasing
Focus groups (gathering a group of customers to seek their opinion on products/services).
41
What are the benefits of satisfying customers
Increased sales/profits for the organisation
Customers will return to the organisation( customer loyalty)
New customers will be attracted to the organisation increasing market share
improves the reptation of the organisation
Higher prices can be charged as customers know they'll get good service resulting in higher profits
Reduction in customer complaints meaning more time to focus on core activities
Organisations may win awards for their customer service improving repuation
42
What are internal factors
Influences within the control of the organiastion which will affect how it opperates (inside the business)
43
Availability of finance examples
-The amount of money a business has available-
If a business has a lot of fianance available it will be able to hire the most qualified/experienced employees
if a business has a lot of finance available it will be able to fund a marketing campaign to promote their products/services
If a business doesnt have a lot of finance available it may be unable to pay bills on time
if a business doesnt have a lot of finance available it may have to purchase lower quality materials for their products
44
Human resources (Employees and managment) examples
-The ability/skills of employees/managment within the organisation-
If employees are highly skilled they may be able to produce a higher quality product
If employees are highly trained they will be able to offer good customer service
If managment is highly experienced it will make better decisions for the organisations (eg who to hire and how to grow the business)
45
External Factors (PESTEC)
Influences Outwith the control of the organisation which will affect how it opperates (outside the business)
Political Economic Social Technological Environmental Competetive
46
Political
-Changes in goverment policies, legislation or taxes-
Legislation- National minimum wage act, National living wage, Equality act, Health and safety at work act, GDPR
Taxes- Corporation tax, Income tax, VAT
Policies- Increase spending on schools, set environmental limits, Build new roads
47
Political explain points
If the goverment increases the National Minimum wag this will lead to the business' wage bill increasing
If the goverment increases corporation tax it will lead to the business having less profit
If the goverment improve local infrastructure it could mean your business becomes more accesible for customers
48
Economic
-Factors which encourage people to spend or save their money (eg unemployment, recession)
Unemplyoment- People of working age who are not currently employed, but are actively seeking employment
Recession- A period of economic decline when trading slows and incomes decrease
Inflation- An overall increase in prices for goods and services
Interest rates- The percentage amount set by the Bank of England as a minimum to be charged when borrowing money
Exchange rates- The value of one currency against another
49
Economic examples
If unemployment levles rise, people will have less money available to spend in your business
If interest rates increase, it will become more expensive for a business to borrow money from the bank
If the pound weakens against other currencies, it may make it more expensive to purchase materials from other countries
50
Social Changes
-Changes in demographics, characterstics of the population, culture and values-
Continually changing trends in fashion
Changing food tastes (eg vegetarian, Gluten-free)
Customers becoming more conscious about ethical and environmental issues
Changing work-life balance (eg working from home, Condensed hours)
UK's Aging population
51
Social Explain Examples
Changes in consumer tastes over time could lead to a decreased demand for your product/service
The Uk's ageing population may lead to organisations having to design new products for older customers (eg mobile phones with big buttons)
Customers being more conscious about ethical/environmental issues may mean that you have to source your raw materials from particulars suppliers (eg Local suppliers to reduce carbon footprint)
52
Technological Developments
-Advancements in technology happening in a organisations industry -
Increased use of e-commerce by competitors and customers
increased use of social media
increased use of cloud computing for data storage
increased use of tablets, smartphones and apps
increased use and availablity of robotics for production
53
Technological explain examples
Increased use of e-commerce by a business competitors may lead an organisation to decide to launch its own website with selling capability
Increased use of social media by potential customers may lead an organisation to decide to launch its own social media platforms for marketing purposes
increased availablity of robotics may lead an organisation to invest in new machinery for production
54
Environmental causes
-Pressure from the goverment/society to be more environmentaly freindly and the influence of adverse weather-
Goverment- may set environmental targets for businesses to acheive (eg reduce pollution)
Pressure from socieity to be more environmentaly freindly (eg increase recycling)
Adverse weather- Unexpected changes in weather patterns (eg heavy snow, flooding, high winds)
55
Environmental explain examples
Pressure from goverment to meet pollution targets could lead businesses to invest in new greener technology in prodcution
Unexpected heavy snow could prevent businesses from being able to deliver products to customers on time
56
Actions of competitors
-The actions of your competitors that affect your business-
Lowering their prices
launching a new product/service
launching a new market campaign
expanding to new locations
investing heavily in new technology
forming new partnerships with charaties/initiatives
57
Stakeholder
A person or group of people who have an interest in the success of an organisation
Can be internal or external
Intrest- What the stakeholder wants from the business
Influence- actions of a stakeholder that affect the business
58
Shareholders/Owners
Internal
Interest- Want to recieve a good dividend/share of the profits
influence- Can more or less money into the business
59
Employees
Internal
Interest- Want to receive a fair wage for the work that they do
influence- can offer good or bad customer service, can take industrial action (strikes)
60
Customers
External
Interest- want to recieve good quality products at a fair price
Influence- can decide to shop elsewhere, can leave positive or negative reviews
61
Suppliers
External
Interest- Want to be paid on time and receive future orders
Influence- can increase the price of their raw materials, can fail to deliver materials on time
62
Local community
External
Interest- Want local jobs created in the area
Influence- Can complain to the local council or MP
63
National goverment
External
Interest- Want corporation tax paid on time
Influence- can increase or decrease the rate of corporation tax
64
Banks
External
Interest- Want loans to be repaid on time
Influence- Can refuse to provide loans
65
Tax payers (public sector)
External
Interest- Want to see that their tax money is being spent wisely
Influence- Can complain to their MP or local press if disatisfied
66
Pressure Groups (public sector)
External
Interest- Want the goverment to support their cause
Influence- can hold demonstrations and protests against the goverments stance on their cause
67
Board of trustees (third sector)
Internal
Interest- Want the aims/purpose of the charity to be acheived
Influence- Can make positive/negative decisions about the work of the charity
68
Donors
External
Interest- Want their donation to be used wisely
Influence- Can decide not to donate again in the future
69
Volunteers
External
Interest- Want to gain experiance/skills from helping the charity
Infuence- Can leave for a paid position at any time
70
Recipients of help
External
Interest- want to receive continued support
Infuence- Can misuse received funding from the charity
71
Current technology examples
-The technology/ICT that an organisation currently has available to use-
If an organisation has up to date technology/ICT it will be able to produce products to the highest specification
If an organisation has up to date technology/ICT it may be able to sell to customers online ( e-commerc
72
Competetive examples
If a competitor lowers its prices for a similar product it may lead a business to have to lower its prices too
If a competitor launches a new product to market it may lead a business to have to bring forward its own plans for launching new products
If a competitor opens up in new locations it may lead a business to have to offer special deals/promotions to prevent customers going to competitors
73
Skills of an entrepreur
Decision making
Financial skills
communication skills
Leadership skills
74
Qualities of an entrepreneur
Risk taker
ambitious
creative
determined
Flexible
75
What is a business plan
A cruical document for starting a business, detailing each element and helping entrepreneurs consider all necessary aspects
76
Content of a business plan
Introduction
Business aims
Marketing plan
Production Plan
Financial plan
77
Purpose of a business plan
Minimizes risks
allows managment to make informed decisions
Allows the business to set clear goals
Helps to have a better understaning of the business
Business Nat 5
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