Business Activity & The Changing Environment

Task 1
Write down your name and what grade you would like to achieve in Business & how you expect to get that grade

What is business?
A place where a firm buys and sells things in exchange for money They aim to make a profit
What ways do you think they could make a profit/

Your activity
Write down three things that a business may aim to do from the beginning
What do you think their objectives would be?

Task 2
Think of 1 business that you are familiar with & write down three things about this business
Why do you think this business is successful?

Homework
Pick an organisation that you either like or dislike Research the company and give your findings Headings may include, company history, products/services, employees, market share etc Please do not copy from internet

Year 10 Business Business activity & the changing environment

Objectives
W.A.L.T: Distinguish between the different types of business organisations Explain what these different types of organisations offer W.I.L.F: You to give your own thoughts& opinions You to participate You to work as part of a team

Starter activity
What are the functions of a business? List all the people that are involved in a business What ways can people raise finance for their business?

Types of businesses
Sole Trade Partnerships Public Limited Company (PLC) Co-operatives Franchises

Private Limited Company (LTD)

Sole Trader
An individual which trades under his/her own name
Is totally independent Makes all the important decisions Responsible for paying all of the debts Few formalities in setting up Can employ as many people as he/she wishes

Advantages of a Sole Trader

Decisions can be made quickly Leads to greater interest & more dedicated & hard working owner Profits are kept by the sole trader Paperwork is minimal Easy to start trading as the sole trader Has close contact with employees and customers Problems are easier to solve

Disadvantages of a Sole Trader

Personally liable for all debts that it occurs (unlimited liability)
Less capital available for expansion

Taxed at a higher rate than a private company

May have difficulty in managing all business functions When the sole trader dies so does the business Raising capital could be difficult for one person

Examples of Sole Traders

Corner shop
Coffee shop Carpenters

Your task
Suggest two advantages & two disadvantages of a person setting up as a sole trader
List two objectives that a sole trader may have

Partnerships
Can have between 2 & 20 partners Set up under the Partnership Act 1890

A partnership deed can be used to set out the rights of the partners Aim to make a profit

Examples of partnerships
Doctors
Accountants Solicitors

Advantages of a partnership
More capital is available than for the sole trader because more people are contributing Better use of business expertise because each partner can concentrate on what they are good at Better decision making because decisions are made after discussions

Disadvantages of Partnerships
Group decision making may cause conflict between partners
Like sole traders, partners have unlimited liability thus they are liable for all the debts of the business Decision making can be slower which can lead to inflexibility Profits must be shared

Your task
Why is it important that a business has a deed of partnership? Why do you think partnerships are a good idea?

Key terms
Unlimited liability The owners are personally responsible for paying debts if the business goes bankrupt
Limited liability If the company goes into liquidation, the shareholders of the company are not responsible for paying the debts of the business

Business Activity and the changing environment

Objectives
W.A.L.T: Explain the different types of business organisations Examine the different finance methods available to business W.I.L.F: Your participation Your ideas and opinions Complete tasks

Starter Activity
You have started up your own business in Nottingham Make a list of all the things which are necessary to make this business successful

Private Limited Company

A company that is a legal entity in its own right It can be sued and can sue Shareholders own the business A group of between 2 & 50 people who buy the shares are called the shareholders Cannot sell shares to the public

Public Limited Company

Can sell their shares to members of the public through the stock exchange
Must have at least 7 shareholders with no maximum limit Must issue a prospective detailing the history of the company & inviting the public to buy shares

Public Limited Company

Shares are bought & sold on the stock exchange Accounts must be published and audited on an annual basis An annual report must also be compiled each year

Advantages of a public limited company

Limited liability Easier than private limited company to raise capital Attract top management because of public image Continuity of existence Lots of publicity based on stock exchange quotations

Disadvantages of a public limited company

High formation costs
Accounts have to be published

Profits must be distributed to shareholders

Ownership & control are separated because although the shareholders own the company the Board of Directors make the decisions

Key Terms
Shares These are long term sources of finance Sold to people who become shareholders of the company A plc is able to advertise its shares for sale to the general public A private limited company must sell their shares privately
Shareholders These are people who own part of the Business

Sources of finance
Internal sources of finance External sources of finance

Internal sources of finance

Retained profits
Stock reduction Assets sale

Limiting credit to customers

External sources of finance

Owners capital
Hire purchase and leasing Overdrafts and loans

Grants

Franchises & Sources of Finance

Objectives
W.A.L.T: Evaluate the idea of owing a franchise& determining what advantages & disadvantages there are associated with it Distinguish between the various sources of finance available to businesses W.I.L.F: You to create a suitable advert for the sale of a franchise You to answer multiple choice questions and exam style questions

Starter Activity
What are the various businesses organisations that we have done? What is an entrepreneur? What are the characteristics of an entrepreneur? What are the two sources of finance called?

List three finance methods associated with each

What is a franchise?
Involves paying a fee & agreeing to produce goods exactly in accordance with the franchise companys policy Payments are made on a regular basis depending on profits made Training & supervision are provided

Your task
Create a newspaper advert selling a franchise Example: Mc Donalds largest restaurant for sale as a going concern to suitable franchisee(address) Excellent trading figures, full training provided. Price 375,000

The Stock market Internet site

The public and private sector

The public sector includes everything that is owned by the government
Examples-army, police force, schools & hospitals Public means that they are owned by the government for the benefit of the people who run them

The public and private sector

The private sector contains all the businesses owned by private individuals Almost all the businesses you can think of are in the private sector Private means that these businesses are run for the benefit of the people who own them

Strengths of the free market private sector

Employers & employees can create their own personal wealth through the profit motive & hard work A greater range of products are supplied
People have greater freedom to choose & but what they want Competition helps keep prices down & encourages new ideas

Strengths of the planned public sector

Public services do not depend on the profit motive & will be supplied even at a loss
The provision of basic services available to all regardless of peoples ability to pay them

Objectives
W.A.L.T: Outline the various factors of production Explain how each factor is important to a business
W.I.L.F: You to distinguish between the different factors of production You to start working on cash flow and its importance

Factors of production
These four factors of production are the resources that are used to produce the economys goods & services Land Labour Capital Enterprise

Factors of production
Land All businesses need land to create their products
Labour Businesses need to employ people to make and market their products The UKs labour force is made up of all the men & women who are available to work

They may use the land, build on the land or extract from the land

Factors of production
Capital

Enterprise

To make their goods or to provide their services, firms need to invest money in machinery, buildings, vehicles and other major resources

The entrepreneur owns the business and is prepared to take the chance that his or her product will be a success

Cash Flow

Objectives
W.A.L.T: Create a cash flow statement Differentiate between fixed & variable costs & total costs
W.I.L.F: You to create a cash flow with various figures given

Starter Activity-match the key word to the meaning

Sole Trader Entrepreneur You must pay back what you put in & all debt You only lose the amount of money put into the business An individual willing to take risks in setting up a business Business organisation that is owned by a single person

Limited Liability

Unlimited Liability

Cash Flow
Is the flow of all money into and out of the business Cash flow is important because if there is not enough money flowing in you dont have enough to pay bills

Poor cash flow=big problems

Not enough cash to pay daily expenses
Lack of working capital Staff dont get paid on time Creditors may not get paid on time May become bankrupt

Your task
1) What is a cash flow?
2) Why should a business prepare a cash flow? 3) Why does a business need to keep an eye on their finances?

Reasons for preparing a cash flow

Lets a business know if they will have enough money to meet payments due Indicates which months there will be a cash shortage

How to prepare a cash flow

Estimate money coming in
Estimate money going out Subtract payments from receipts The closing balance will be the opening balance for the following month

The different costs involved

Fixed costs: Costs which have to be paid no matter what has been sold or produced Variable costs: Costs that vary according to the amount produced or sold Total costs: Fixed costs + variable costs

Tick which source of finance is necessary for the following

Stock for resale Premises Machinery Vehicles Land Oil Wages Telephone Computers 10, 000 120,000 50,000 18,000 60,000 2000 1800 400 6000 Short term Medium term Long term

Objectives
W.A.L.T: Distinguish between the various types of stakeholders Match the type of stakeholder to a various aim W.I.L.F: You to relate questions to lessons that we have completed already

Starter Activity
1.
1. 1.

Customers are an example of a firms -----------(12)

Business objectives are set by the ------(6) An example of an internal stakeholder group is --------(9)

1.

Public sector organisations have objectives based on -------(7)

Stakeholders
Internal-owners, managers, directors Variable costs: External-local community, bank, suppliers

Your task
Select a business of your choice and write about the various stakeholders that would be affected by it

Match an appropriate aim to each stakeholder group

Group Customers Local Community Lenders Employees Aim No pollution A return on their investment Job security Lower prices

Judging success-how are objectives measured?

Size
Turnover/market share Shareholders Number of employees/staff turnover Customer satisfaction/number of complaints

Factors of production

Objectives
W.A.L.T: Examine the different factors of production and how they affect a business Relate the factors of production to a particular business situation
W.I.L.F: Your thoughts and opinions based on these topics and how they would relate them to a particular business scenario

Starter Activity
What are the four factors of production? Explain what is meant by each of those factors Fill in the blanks: Employees earn -----(w) The owners of capital receive --------(I) Entrepreneurs make -------(p) The owners of land receive ----(R)

Areas to be covered
Primary Industry
Secondary Industry Tertiary Industry

Employment

The primary industry

These are businesses that extract something e.g. coal, oil, stone, fish and ore
The location of these businesses usually depends on where the resources being extracted are found

The secondary industry

Theses are businesses that construct or manufacture something Their location is influenced by many factors such as government support and the existence of a suitable labour force

The Tertiary industry

This is the service sector and supports the other two industries
Services include transport, finance, insurance, training and advertising Their location will be influenced by the services required by firms in the other two industries

Your task

Classify each of these businesses as either primary, secondary or tertiary: A specialist distribution firm A builder A building society A forestry plantation A computer manufacturer
List four major influences on location

Objectives
W.A.L.T: Distinguish between the different types of production Categories different items into the correct production method
W.I.L.F: You to distinguish between the different production methods and give relevant examples

Starter Activity
Factors of production jumbled up words Access business studies on line http://www.businessstudiesonline.co.uk/Gc seBusiness/Activities/Module1/Module1Me nu.htm#GCSEBusMod1Factors

Methods of production
Job production:
when a business makes a single one of product The job is often built by skilled labour working to the customer requirements Since only one item is made the business may not gain economies of scale

Methods of production
Batch production:
When there is more than one item made Each batch of products are finished before the next batch

Methods of production
Mass production When identical items are made on a production line The product moves from one stage to the next

Chose either job, batch or mass

Cans of paint A factory extension Shoes, size 7 Television The channel Tunnel
State one advantage and one disadvantage of mass production

Starter Activity
Refer to hand out sheet
Also grade or no grade quiz http://www.businessstudiesonline.co.uk/Gc seBusiness/Activities/Module4/Module4M enu.htm#GCSEBusMod4ProductionMethod s

Factors of location & PEST analysis

Starter Activity
1) Describe what is meant by batch production 2) A cost which remains the same regardless of the level of production is _____ cost 1) A cost which changes according to the level of production is a _____ cost

Developments in production
Just in time-only buy stock as you need them, no need for additional storage facilities Cell production-where people make a particular part of the product and moves continually
Kaizen-invest in skilled people rather than technology ( continuous improvement)

Lean production
Refers to the various ways that are now used to improve the efficiency of production Tries to cut development time
Associated with just in time, cell production and the Kaizen system

Your Task
Choose an organisation of your choice and outline what type of production mostly suits them and give relevant reasons why

The Government
They create various laws and regulations that affect businesses
The EU and the UK Government also support firms The Government want to be paid VAT and taxes

The P.E.S.T analysis

15th October 2007

Objectives
W.A.L.T: The importance of the p.e.s.t analysis on a business Distinguish the difference between P.E.S.T W.I.L.F: You to relate the p.e.s.t analysis to a particular business (case study)

The PEST analysis

Refer to the handout
A scan of the external macro-environment in which the firm operates can be expressed as; Political Economic Social Technological

The steps involved

Environmental Scan

External analysis

Internal analysis Ma croenvironment

Microenvironment
P.E.S.T

Political Factors
These include government regulations & legal issues Defines both formal & informal rules Examples-tax policy, employment laws, environmental regulations, trade restrictions and tariffs, political stability

Economic Factors
Economic factors affect the purchasing of potential customers and the firms cost of capital Examples-economic growth, interest rates, exchange rates, inflation rates

Social Factors
These include demographic and cultural aspects of the external microenvironment These affect customer needs and the size of potential markets Examples-health consciousness, population growth rate, age distribution, career attitudes, emphasis on safety

Technological Factors
These can lower barriers to entry, reduce minimum efficient production levels and influences outsourcing decisions
Examples-research and development, automation, technology incentives, rate of technological change

Case study
Relate to the p.e.s.t case study Read through case study and answer questions based on this case study

The Business Cycle

This shows the regular patterns of upturns and downturns of the level of output in the economy Goes through stages-boom, slump, recovery Diagram
The business cycle business studies on line part

The phases
Boom-is the part of the business cycle in which output rises
Slump-is a severe form of recession Recovery-is the part of the business cycle when output begins to grow again after a slump

Your task
Look at the shops, offices or factories in Witham. Have any of them opened or closed recently?
Are there other reasons or is it a result of the business cycle

The E.U

Objectives
W.A.L.T: Understand the purpose of the European Union Determine what has happened since the introduction of the E.U W.I.L.F: You to answer the questions based on the European Union

Starter Activity
The face off quiz on www.businessstudiesonline.com where you answer a series of questions based on the E.U

What is the E.U?

This is a political and economic community
Made up of 27 countries member states located in Europe In 1957 6 European countries formed the European Economic Community (EEC) by the Treaty of Rome

What has happened since then?

The EU has grown in size through new member states In 1993, the Maastricht Treaty established the base of the current legal framework

Task 1
Write down three things that you know about the E.U already One Two Three Compare answers and then list on board

The purpose of the E.U

The EU created a single market which seeks to guarantee the freedom of movement of people, goods, services and capital between member states
It maintains a common trade policy, agricultural and fisheries policies and a regional development policy

Advantages of the EU
Free Trade (no tariffs or quotas) benefits industries as they have a larger market to sell their goods to Greater co-operation between countries should prevent the outbreak of war between members Greater cultural understanding results from freedom to travel within the EU The E.U has a greater influence on world events than the individual countries could have European Union regional development funding has improved conditions in the poorer countries and areas

Disadvantages of the E.U

Goods cost more to import from non-EU countries due to tariffs E.U funded schemes such as the Common Agricultural Policy, are expensive, inefficient and sometimes corrupt It reduces the political independence of each country-decisions are taken for all countries by the European Parliament

Task Two
Look at the handout regarding the history of the E.U
Draw arrows to link to the correct sequence of events Discuss with your partner and then draw in the arrows

The European Union

Introduction of the euro

In 1999 the EU introduced the euro
Has been adopted by 13 member states

Your task
Name the country
www.businessstudiesonline.com The drag and drop section

Members of the E.U

Czech Republic Poland France Albania Sweden Lativa Serbia Belgium

Moldova Slovakia Estonia Iceland U.K Luxembourg Romania

Members of the E.U

Bulgaria Switzerland Greece Finland Ukraine Spain Ireland Hungary Austria Italy Lithuania Montenegro Slovenia Denmark Malta Belarus Netherlands Cyprus Norway Germany Potugal

Business and the EU

Has helped increase trade between member countries
Businesses has the opportunity to expand The Eu has tried to protect businesses by imposing custom duties on goods imported into the EU

Homework
Essay (Red tasks) Why are more countries wanting to join the European Union/ What might their concerns be? Yellow tasks Create a poster about the European union. On the poster include a small map of the E.U, information about the E.U, the countries in the E.U and the purpose of the E.U

Importance of the E.U

The European Union contains four of the worlds major economic powers;France, Germany, Italy and the U.K
The E.U is now the UKs main market

U.K imports in 2000

UK imports 2000

EU Rest of Europe North America Rest of the world

The EU=58% Rest of Europe=6% North America=15%

Rest of the world=21%

U.K Exports in 2000

UK imports 2000

EU Rest of Europe North America Rest of the world

The EU=54% Rest of Europe=7% North America=15% Rest of the world=24%

The single market

Promoting trade between the member states was a major influence in establishing the EU
Its common market is now a single market consisting of about 400 million people

Purpose of the single market

Free movement of people (labour)
Free movements of goods (no internal tariffs) Common technical and other standards

How the single market has influenced UK businesses in several ways

Common standards of quality and safety
Open market encourages competition Free movement of labour and good encourages employment and skills development

The monetary union

Economic and monetary union is closely linked with the euro and eurozone
The single currency will affect the EU: Trade will be valued in euros, exchange rate fluctuations will have an impact and also price difference may cause problems

Your task
In the EU what is the social charter?
What is the difference between the eurozone and the euro? What does the EUs single market seek to do?

Answers
A charter protecting the rights of workers
Eurozone is the member states who have signed up to the single currency. The euro is the name of the single currency

Provides free movement of labour and goods and establish common technical standards

Plenary
Test the person beside you regarding the true and false statements and see if their answers have changed

Objectives
W.A.L.T: Determine how businesses grow Discuss how businesses grow internally
W.I.L.F: You to create a spider diagram outlining how businesses grow You to participate and engage fully in lesson

Starter
List ways that a business may grow
Create a spider diagram to display these

How a business grows

There are several methods to measure an organisations size: Profits Turnover Employees Capital employed

Profits and turnover

Profits-how much the business keeps from selling its goods and services Turnover-the sales that the business makes

Employees and capital employed

Employees-the number of people employed in the business Capital employed-the resources the business has invested in it

Key terms
For a firm, greater size through growth makes: Economies of scale possible Survival more likely

How can firms grow internally?

They grow organically
Can grow through mergers or takeovers This usually happens when an organisation sell more of its existing products, starts selling new products and when businesses enter new markets

Integration
In a merger two companies agree to join
This external growth is the quickest way for organisations to grow In a takeover one company buys enough of another companys voting shares to take control

Economies of scale
They are the reasons why the average cost of production may fall with increasing levels of output What is your opinion? Would it be a good idea for a company to produce in large amount or do you think they should only produce as needs be

Task
You own a small business and you want to ensure that your business provides the best possible service to their customers
Create a questionnaire finding out if customers are happy with the service they are getting from your company

Starter Activity
Merger Takeover Turnover Retained profits Economies of scale
The businesses own money that is ploughed back in If large amounts are made and it reduces the average cost When one company buys enough of another companys voting shares Way of comparing a businesses size Takes place between two companies through their agreement

Externalities
All businesses bring benefits to people and others outside the business this is called externalities Externalities are costs or benefits arising from business activity that are experienced by people or organisations outside the firm

Example
A new housing developing is opening up in Witham
They are aimed at people from deprived areas

These people have been involved in crime and substance abuse

You must outline the negative and positive externalities associated with this venture

Your task
Create a spider diagram showing the positive and negative externalities

Positive

Negative

Year 10 Business
Monday

Objectives
W.A.L.T: Distinguish between imports and exports Distinguish between visible and invisible trade W.I.L.F: You to complete the starter activity You to answer the questions based on importing and exporting

Starter Activity
Home Trade Importing
Exporting Visible Trade Invisible

The export and import of services Selling to other countries

The import and export of goods Buying or selling to people in same country Buying from other countries

Trading
Is the buying and selling
Home trade is when businesses buy or sell goods to people in the same country When businesses buy or sell from other countries outside the home country is foreign trading

Importing vs. exporting

When businesses buy goods or services from other countries is called importing
When businesses sell goods or services to another country is called exporting

Visible trade
Is the export and import of goods
Dairy produce, livestock, machinery, oil, clothes, shoes are all examples of visible trade

Invisible trade
Is the export and import of services
When Americans or other foreign tourists come to the U.K on holidays, it is an example of invisible trade

Your task
Outline on a spider diagram the reasons why the U.K imports and exports
Exporting

Importing

Reasons for importing

Climate is not suitable to produce all crops
Lack natural resources Needs to import certain raw materials

Wider choice

Reasons for exporting

Easier for the U.K to produce agricultural produce because of climate
Businesses need more than the home market Creates extra employment Foreign currency

Task
Explain the difference between home trade and foreign trade?
Give three reasons why the U.K imports goods from other countries Why do we export to other countries?

Task-tick the correct answer

Exports
U.K tourists going to Italy U.K computer parts sold to France

Imports

An U.K business buying parts from China

Year 10 Business
Wednesday

Objectives
W.A.L.T: Distinguish between the various types of finance Distinguish between ordinary and preference shares
W.I.L.F: You to attempt the starter activity You to complete all the relevant task

Starter Activity
Why do businesses need finance?
Give two examples of sources of finance Give two examples of each of the two finance types

Internal sources of finance

Retained and using profits
Selling assets Using trade credit Investing any surplus cash Reducing stocks held

External sources of finance

Personal savings Borrowings Issuing shares Loans and mortgages Overdrafts Factoring debts

Types of shares
Two types of shares-ordinary and preference
Ordinary shares allow holders to vote at company meetings This makes an ordinary shareholder an owner of the company

Preference shares
These dont usually give their holders the right to vote at company meetings
Preference shareholders receive priority over ordinary shareholders when it comes to paying dividends and repaying capital

Your task
List three reasons why businesses need finance State two differences ordinary shares and preference shares

Ordinary and preference shares

Ordinary Voting rights? Normally one per share Dividend Variable Payment? Capital Paid after repaid? preference;re paid last Preference Usually nonvoting Fixed Paid before ordinary;repai d before ordinary

Homework
Red task-Choose a business of your choice and explain what source of finance would be most adequate for that business to grow
Yellow task-Write a letter to a company of your choice explaining the difference between ordinary shares and preference shares (you must research)