Gcse Business Revision Notes.

GCSE BUSINESS REVISION NOTES
Toni - Denis Tanase >>> Ducan Vinci

Copyright to the Owner ( Toni- Denis Tanase / Ducan Vinci ) of content from 2018.
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1.1 Introduction to Small business Page

1. Customer needs
a. Market Research :Primary and Secondary Research
b. Quantitative and Qualitative data
c. Interpreting the data………………………………………………………………….10
2. Market Mapping
a. Analysing the Customer
b. Market Segments
c. Market Map
d. Gaps in the Market…………………………………………………………………….10
3.Competition
a. Analysing the competition
b. Competitive advantage……………………………………………………………10-11
4. Added Value
a. Added Value
b. Importance of value added…………………………………………………………..11
5. Franchising
a. What would a Franchisor get out of it.
b. Franchisor, Franchisee
c. Royalty…………………………………………………………………………………11
1.2 I do not know what this is but I think is about giving the skills and qualities for start.
6. Showing Entreprise
a. Taking risks
b. Showing Initiative
c. Willingness for new venture
d. Thinking creatively
e. Deliberate creativity………………………………………………………………..…11
7. Lateral Thinking
a. Lateral thinking techniques - Blue Skies………………………………………..….12
8.Thinking Creatively
a. Deliberate creativity
b. De Bono Thinking Hats-Six thinking hats.
c. Why is it important……………………………………………………………...…….12
9. Questions to be asked
a. The questions in order……………………………………………………………….12
10. Invention and Innovation
a. Meaning of them
b. How do new business ideas come about………………………………………..12-13
11. Copyright, Patents and Trademarks
a. Meaning
Toni-Denis Tanase >>>Ducan Vinci
& & & & & @tonitanase
2
b. Examples
c. Time to last in uk………………………………………………………………….……13
12.Calculated Risk
a. Upsides
b. Downsides……………………………………………………………………….……..13
13.Skills of Entrepreneurs
a. The qualities shown by Entrepreneurs
b. Leadership skills
c. Meaning of them……………………………………………………………………….13
1.2 Puting business idea into action
14. The business plan
a. Advantages of writing a business plan
b. How to, and what to include…………………………………………………………..13
15. Business objective
a. Financial and Non-Financial Objectives
b. Business objective SMART…………………………………………………..……….14
16. Cost, Revenue, Profits
a. Estimated costs
b. Fixed and variable costs and Total costs
c. Revenue - Turnover - Sales Revenue - Total Receipts
d. Total Revenue
e. Profit/ Loss ……………………………………………………………………………..14
17. The role cash in a business
a. Importance of cash
b. Three problems when managing cash
c. Ways to manage cash…………………………………………………………….…..15
18. Cash Flow Forecasts
a. Cash Flow Forecasts - The key Terms
b. Cash Flow Insolvency………………………………………………………………....15
19. Obtaining Finance
a. Long and Short Term Source
b. Internal and External Sources +Advantages and Disadvantages……..…..…15-16
20. Type of ownership
a. Sole trader
b. Private Limited Company
c. Public Limited Company………………………………………………………………16
21. Customer Focus
a. The importance of staff
b. Identify Customer needs
c. Anticipating Customer needs
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d. Meeting Customer needs……………………………………………………....……..16
22. The Marketing Mix
a. Product
b. Price
c. Place
d. Promotion
e. People
f. Process
g. Physical Evidence………………………………………………………………....16-18
1.4 Making an effective start-up
23. Customer Satisfaction

a. Customer Service
b. Repeat Business / Repeat Purchase
c. Write a customer service policy………………………………………………….…..18
24. Ownership and Limited Liability
a. Sole trader
b. Private Limited Company
c. Public Limited Company
d. Partnership
e. Franchise…………………………………………………………………………...18-20
25. Ownership comparison table………………………………………………………….….20
26. Start-up legal and tax issues
a. Business name
b. HM Revenue & Customs
c. VAT - value Added Tax
d. Income Tax
e. National Insurance Contributions ( NIC )
f. Corporation Tax……………………………………….……………………………...21
27. Recruiting & Training Staff
a. Recruitment and Selection
b. Retention
c. The recruitment process
d. Documents in the recruitment process
e. Skills employers look for -the 10 key attributes
f. Advertising the job - Where?..........................................................................21-22
g. Selection
h. How do firm Select?
i. Selection
j. References
k. What happens next?
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l. The Contract of Employment
m. Skills versus attitude
n. Motivation
o. Training
p. Key Employment Legislations
q. Induction…………………………………………………………………………….22-24
28. The Law
a. Appointment and training of staff
b. Protection at work
c. Leaving Work
d. Other rights………………………………………………………………………....24-25
Unit 3 - Marketing and Customer Needs
29. Marketing
a. What is marketing?
b. The need for Market Research?
c. Stage of Market Research
d. Survey
e. Sampelning
f. Decisions…………………………………………………………………..……….25-26
30. Product Life Cycle
a. The Development Stage
b. Launching The product
c. Product Maturity
d. Extension strategy
e. Saturation and Decline…………………………..…………………………………...26
31. Cash Flow Through the Phase
a. Development Phase
b. Launch Phase
c. Growth Phase
d. Maturity Phase……………………………………………………………………..….27
32. Product Portfolio Analysis
a. Product Portfolio or Product Mix
b. The Boston Matrix………………………………………………………………….27-28
33. Product Trial and Repeat Purchase
a. Product trial
b. Free Publicity
c. Viral Marketing
d. Repeat Purchase and Customer Loyalty…………………………………………....28
34. Branding and Differentiation
a. Branding
b. Product Differentiation……………………………………………………………..28-29
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35. Managing Stock
a. Stock
b. Stock Control - JUST IN CASE
c. Uncertainty
d. Just in time stock control……………………………………………………………...29
36. Quality
a. Traditional Quality Control
b. Quality Assurance
c. The process of Quality Assurance
d. Quality Standards………………………………………………………………….29-30
Unit 3 - Economic Context
37. Demand and Supply
a. Demand
b. Supply
c. Difference between Markets………………………………………………….……...30
38. The impact of change in Exchange Rates
a. Exchange Rates
b. Calculating the cost of Foreign Exchange
c. Fluctuating Exchange Rates and Prices
d. Impact of a fall in the value of the pound on small businesses
e. Impact of a rise in the value of the pound on small businesses…………………..31
39. The impact of interest rates
a. Credit
b. The cost of borrowing for small businesses
c. Research……………………………………………………………………………31-32
40. The impact of the Business Cycle
a. The Economy
b. Economic Growth
c. The Business Cycle
d. Boom
e. Slowdown / Downturn
f. Recovery……………………………………………………………………………….32
41. Organisational Structure
a. Division Structural
b. Regional Structure
c. Organisation charts
d. Organisation chart
e. Chain of Command
f. Span of control
g. Centralisation and Decentralisation……………………………………………..32-34
42. Motivation Theory
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a. Benefits of a more motivated workforce
b. Maslow’s hierarchy of needs
c. Motivation comes from within
d. Using maslow’s hierarchy of needs………………………………………………….34
43. Communication
a. What is communication?
b. Linking words
c. Communication skills……………………………………………………………..34-35
44. Remuneration
a. Time based systems
b. Results - based systems
c. Salaries
d. Bankers bonuses
e. Fringe benefits
f. Which payment system to use?..........................................................................35
Unit 3 - Finance - Effective Financial management
45. Improving cash flow

a. Cash and Cash flow
b. Cash Inflows
c. Increasing cash inflows
d. Destocking
e. Increasing sales revenue
f. Improving cash flow from customers
g. Changing cash outflows…………………………………………………………..36-37
46. Improving profit
a. Calculating profit & loss
b. Defining profits & loss
c. How cost can be lowered
d. How can revenues be increased…………………………………………………….37
47. Break Even
a. Break even formula Margin of Safety Formula
b. Break even Chart
c. Why businesses understand its break even point
d. Limitation of break-even charts?.........................................................................38
48. Financial Growth
a. Growing a business
b. Why do firm want to grow?.................................................................................38
c. How can firms grow?
d. Financing Growth
e. Sources of finance
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f. Internal Sources of finance
i. RETAINED PROFIT
ii. SELLING ASSETS.
iii. Owner capital or Savings…………………………………………………….39
g. External Sources of finance
i. Share capital
ii. Venture capitalists
iii. Loans
iv. GRANTS
v. Bank Overdrafts
vi. Trade Credit
vii. Factoring……………………………………………………………………39-40
Unit 3.5 The wider world affecting business
49. Environmental Issues
a. Short Term Effects- Traffic Congestion
b. Short Term Effects - Air, Noise, Smell and Water Pollution
c. Long Term Effects - Climate Change
d. Long Term Effects - Resources Depletion
e. Environment - Recycling
f. How can a business minimise its impact on the environment?
50. Economic Issues Affecting International Trade.
a. Developed and Developing Countries
b. Average Income
c. Wages and Prices
d. Quality and technology of products
e. Import Protection - Tariffs or customs duties
f. Quotas and Safety Standard
g. Export Subsidies
51. Ethics
a. Ethics in a business
b. Production
c. Suppliers
d. Workers
e. Customers
f. Products
g. Environment
h. Local Communities
i. Possible trade offs
j. Disadvantages of being ethical
k. Pressure Groups
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52. Impact of Government and the EU on business.
a. The Uk government and the EU
b. What EU means for each country?
c. Single or Common Market
d. Taxation
e. Regulation
f. Minimum Wages
g. Maternity and Paternity Rights
h. Health and Safety Regulation.
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1.1 Introduction to small business

1.Customer Needs
● The want and desires of customers that Market Segments
purchase your product.
● Is a part of the market that contains groups of
buyers that have similar characteristics.
Market research
● A business can target more than one segment.
● Gathering informations about customers,
competitors and trends in the market. ○ E.g: Gender, Job, Hobbies, Income,
● Collected through primary and secondary data. Class, Age, Ethnicity, Religion, Area.
Primary Research Market Map

● This is when a business collects market research
for themselves. ● A diagram that shows where products/business
○ E.g : Focus group activity are in comparison to competitors base on two
○ Surveys - asking questions of particular things- those can be anything.
respondents, called questionnaire.
○ Observation - see the reaction of
customer to products.
○ Experiments - building products and trial
them on customers.
Secondary Research
● Collecting research that has already carried out.
● Could come from inside the business or outside
of the business.
● This could help to analyse sales and to see how
well your business is doing in comparison to
competitors.
Qualitative data: This involves collecting data about
people’s thoughts and opinions - it gives in depth details.
Quantitative data: This involves collecting data that can be Gaps in the Market
displayed in a numerical way, for example percentages.
● This should highlight whether there are any gaps
Interpreting the Data in the market.
● This occurs when no other business is offering
● Once the data is collected you have to analyse it. the CURRENTLY needs of wcustomers.
● Finding out what your research is telling you.
● Following this a business will make changes to 3.Competition
their products/services base on the researcher
thinking. Terms to know: 1. Product offering - this is the different
individual products that a business sells.
2.Market Mapping 2. Product range - this is the products
that a business makes that are similar.
● Going after your customer.
Analysing the Competition
Analysing the Customer
● Analysing the strengths and weakness of the
● Before opening a business, the owner must competition and then offering something that they
analyse their potential customer. do not offer to the customers needs “ known as
filling the gap.
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○ Eg: Product range, Quality, After Sales
Service, Design, Selling Experience, Royalty
Price, Brand Image, Suppliers.
● A Franchisee will have to pay the Franchisor a
share of the money that they make - this is like
Competitive Advantage paying for the right to continue using the
● When a business does something that stand out Franchise brand. The share of the money is
from their competitors and it is difficult for know as ROYALTY.
competitors to copy or replicate what that ● It will be a fixed percentage of the earning and
business is doing. will usually be paid at the end of the financial
year.
4.Added Value Advantages Disadvantages
● Adding something to your product/service to have
something more than the competitor. Strong Brand image Can never have 100%
control
Added Value Training provides Royalty Payments

● Increased worth that a business creates for a
Control day to day running Costs
product.
● Difference between what a business pays its
sulier and the price that it is able to charge for the
6. Showing Enterprise
product/service. ● Enterprise is when entrepreneurs : Take risk,
○ E.g: Quality, Design and Formula, Show initiative, Undertake new venture.
Speed and quality of Service, Branding,
USP. Taking risks
● Things may go wrong not according to plan. If the
Importance of value added risks has been taken in consideration before and
● Successful businesses are the ones that can planned then it is easier to overtake. You should
create the most added value for their particular take a calculated risks.
product.
Showing Initiative
5.Franchising ● This is setting entrepreneur away from the
● This is an option for starting a new business that regular business people. Thinking creatively,
already exists. outside the box and the first step is always to get
● A well established business will sell the right for things done.
other people to open a business under their
name and trademark. Willingness for new ventures
○ E.g: McDonalds, Subway etc.. ● Being on the look for new ventures and ideas.
Franchisor: The company selling the franchise. This does not guarantee always success but will
Franchisee: The person buying the franchise. show they are able to quit unsuccessful venture
and start new one.
What would a Franchisor get out of it?
Once a Franchisee has bought a Franchisor continue to Thinking Creatively
pay them money for : Selling their rights (Logo,name…), ● This is coming up with ideas that do not exist
from supling the products and also gets a % of the money currently. Thinking outside the box.
earned. Why is creative thinking important?
● Competitive advantage.
● Challenges Entrepreneurs.
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● Helps keep a business “fresh” and up to date.
● Creates a buzz around that particular business.
● Motivates employees.
Deliberate creativity
● This involes using a range of thinking methods to
come up with new idea.
● Naturally, new ideas will emerge and can be
developed.
○ E.g. Mind Map; Discussions; Blue Skies
thinking and Lateral thinking.
7.Lateral Thinking
Lateral Thinking allows a business to come up with an
idea that competitors have overlooked -This creates a
competitive advantage.
9.Questions to be asked
Lateral thinking techniques - Blue Skies ● Sort of issues, explore alternatives and plan for
● This is when people are encouraged to think of the future.
as many ideas or problems as they can. ● Identify what is working and should stay the
● Brainstorming, mindmapping many different same and what is not and need to change.
ideas ● CONTINUALLY EVALUATE THEIR ACTIVITY.
● Group discussion. The Questions in kind a order :
1. Why?
8. Thinking Creatively 2. Why not?
3. What?
● Coming up with an idea that didn’t exist before.
4. How?
● Thinking outside of the box.
5. Where?
Why is creative thinking important?
6. When?
1.Helps gain a competitive advantage.
2.Keeps businesses ‘fresh’.
3.Challenges entrepreneurs. 10. Invention and Innovation
4.Creates excitement and a buzz. Invention: The discovery of new processes and potential
5. Motivates and stimulates. new products, typically after a period of research.
Innovation: The process of transformation inventions into
Deliberate Creativity products that can be sold to customers.
● Involves using a range of thinking methods that
help us create new ideas. By going through How do new business ideas come about?
different processes, new ideas. ● People using products.
○ E.g: Discussions, mind maps, lateral ● Ideas developed by people who already have a
thinking and blue skies thinking. good understanding of the market.
Two lateral thinking techniques. ● Research department.
1.Blue skies thinking (up).
2. De Bono’s Thinking hats.- Six thinking hats. 11. Copyright, Patents and Trademarks
1. Patents: Right of ownership of an invention that is
registered with government. ----Uk patents are for
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20 years. International Patents are more G. Business plan- Advisor,investors, bank.
expensive. H. Leadership-Leadership skills.
2. Copyright: Legal ownership of material. Given for a. Having a vision
IPR such as films, books and music. Gives the b. Leading by Example
right to copy, produce and control material. c. Self confident and belief
Copyright protection is longer than patents. E.g: d. Excellent Communicator
Books for lifetime +70 years after death. e. Delegation skills
3. Trademarks: The symbols, signs or features of a f. People management skills
product protected in law. E.g: Coca Cola, Lego, g. Motivation
BBC, Scrabble. h. Humour
a. Logos:Mcdonalds i. Reliable and Trustworthy.
b. Picture or drawing: Pink Pantera I. Being Lucky- No luck , perseverance is key.
c. Combination of letter and a design: IBM
d. Slogans: I’m loving’ it 1.3 Puting business idea into action.
e. Product shape: Coca cola.
f. Colours : Red-Coca cola.
14.The business plan
12. Calculated Risk It is detailed development plan for a business. It includes
information about the company’s:
Is about putting a numerical value or probability on the ● Location
risk. It is the chance of something negative happening. ● Ownership
● Product/Service
Upsides ● Resources
● It is what can go right in a business. ● Production Methods
● Something that is positive. ● Marketing
● The advantage of a course of actions, including ● Financial Details
what can go right. ● It is usually Completed on a 2-5 year basis
○ E.g: potential money, gaining machinery
or materials for less. Advantages of writing a business plan
● Clarify your vision and decide whether or not to
Downsides go ahead with an idea.
● It is what can go wrong in a business ● Determine if your product and/or service has a
● The disadvantages of a course of action including sufficient market to support it and whether or not
what can go wrong. it will be profitable.
○ E.g: machine or goods being bought ● Estimate your start-up costs and how much you’ll
being faulty, money that could be lost of need to invest or finance.
customers. ● Convince investors and lenders to fund your
business.
● Define your Target Market.
13.Skills of Entrepreneurs
● Establish who your competitors will be.
● Define corporate objectives and how to achieve
The qualities shown by Entrepreneurs those objectives.
A. Determination-About not giving up. ● Help your business makes money from the start
B. Initiative-Making the first move. by developing effective operational strategies.
C. Taking risks-Being a E is riskier. ● Understand the risks involved and anticipating
D. Decision making-Listen, take information potential problems so that you can solve them.
E. Ability to plan- Expecting and exceeding ● Set value on a business for sale or for legal
F. Persuade- Believe your beliefs. purposes.
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15.Business objective 16. Cost,revenue, profits

● Business objectives are the stated, measurable
targets of how to achieve business aims. Estimated Costs
● Setting your goal:financial or non financially etc.. ● All businesses will have a number of different
This could help to have a clearly define vision costs associated with running their business.
and target. Then plan are made to achieve this. ● Cost are separated into FIXED AND VARIABLE
COSTS.
Two types of objectives
Objective could be split into financial or non-financial A.Fixed Costs
objectives. ● Costs that do not change with the output produce
of service provided. Fixed costs will remain the
A.Financial same and have to be paid regardless of whether
● To survive in the market the business is busy or not.
● Break even ○ E.g : rent, salaries, insurance,
● Improve image administrations costs.
● Have high motivation amongst employees
● To maximise profits B. Variable Costs
● To increase market shares ● Costs that change directly with the level of
● To grow in size ( Sales, Employees. etc) production or service provided.
● To sell abroad ○ E.g: Costs of buying raw material, Fuel
● To make returns to shareholders. Costs, Utilities such as gas, electricity
and water, wages for casual staff,
B.Non-Financial Telephone bills, Stock.
● Personal satisfactions
● Challenge A.+B./ Fixed + Variable costs = Total Costs
● Independence
● Control
TC = FC + VC
● Helping others
● Using your kills Revenues - Turnover - Sales Revenue - Total
● Being your own boss (desire) Receipts
● Something to be proud of ( for building it) ● Revenue is the amount of income a business will
earn over a period of time like a week or year.
Business objectives must be SMART
1. S- Specific= Objective must be specify what/why To predict the total revenue, a business has to predict how
they want to achieve. many sales it will make (Sales Volume) and what the
2. M- Measurable= You should be able to measure average price charged per product will be.
whether you are meeting the objectives or not.
3. A- Achievable= Can the objectives be met by Total Revenue = Price x Quantity Sold
your business? E.g Is it to big? Nope,never.
4. R- Realistic= Can you realistically achieve the TR = P X Q
objectives with the resources you have?
5. T- Timed= When do you want to achieve the set Profit/ Loss = Total Revenue - Total Costs
objectives?e.g:Within 12 month
P / L = TR - TC
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5. Closing Balance - How much cash the business
17. The role of cash in a business has at the end of the month( Net Cash Flow +
Opening Balance)
Importance of cash
Cash Flow and Insolvency
● On a day to day basis cash is more important to
a business than profit. Insolvency - This means a business is likely to go
● Cash refers to all money that a business has that bankrupt, this happens when a business does not have
it can use to pay its bills, wages and rent. enough cash flow available to pay all of its outflows, such
● It can be; notes, coins, debit cards, credit cards, as rent and staff wages
and cheque payments. Solvent - This is the opposite , a business has the cash
available to ensure it runs effectively
Three problems when managing cash.
19. Obtaining Finance
1. Seasonal sales - many toy shops do 50% of their
sales in the month leading up to Christmas, they Finance refers to the different ways in which a business
can access money which can be used for the following:
have to plan how they will use this cash wisely to
● Paying for any cash outflows
spread over the year.
● Used for expanding the business
2. A few large customers - if they do not pay on time
● Pay for marketing the business - promotions
these stretches the cash that is available.
3. New businesses - have many start up costs to
Long and Short Term Sources
cover which are usually very expensive
● Long Term - This is source that is used for the
Ways to manage cash long term plans of the business.
The money will be used within the business for more than
● Negotiate a generous overdraft facility.
a year and it will be a large amount.
● Keep costs under control - try to cut costs where
● Short Term - This is a source that is used for the
possible, pay bills on time.
short term plans, such as paying for stock.
● Keep the cash coming in - try generate as many
The money will be spend within a year and it is usually not
sales as possible and make sure customers who
a huge amount.
pay on credit pay their bills on time.
Internal and External Sources

18. Cash Flow Forecasts
A. Internal Sources - this is money that comes from
Cash Flow Forecasting is concerned with predicting all the
INSIDE the business.
money coming into a business (Cash Inflows- Income )
Advantages
and all the money going out of a business ( Cash
Outflows- Spending)
1. The money is ready and available immediately.
2. It does not have to be repaid there is no interest
Cash Flow Forecasts - the key terms payments.
1. Receipts / Total Receipts / Cash Inflows - This 3. It is less time consuming and less hassle.
simply refers to all the cash that is coming into Disadvantages
the business.
2. Payments / Total Payments / Cash Outflows - 1. The money that is available may not actually be
This simply refers to all the cash that is going out enough.
from the business. 2. There is less available in the future in case of an
3. Net Cash Flow - This is the difference between emergency.
receipts and payments (Receipts - Payments ).
4. Opening Balance - How much cash the business B. External Sources - this is money that comes from
has at the beginning of the month. OUTSIDE the business.
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Advantages ● What customer do not want.
1. Allows access to a large amount of money. Everything about them. It is all about you (Selfish.)
2. Borrowing from a bank is safe and secure.
3. Venture capitalists can provide knowledge and The importance of staff
experience.
● Staff must be trained to believe in the importance
Disadvantages
of customers - the customer is always right.
1. It has to be repaid with interest added on.
● Use market research to continually find out about
2. Shareholders will take a share of the profits
customer thought . (PR-SR)
3. Shareholders/Venture capitalist will also have a
● Get senior managers to act as ‘mystery
say in decision making.
shoppers’.
● Make sure staff targets are based around
20. Type of ownership satisfied customers.
A. Sole Trader Identify Customer needs :

● A business owned and runned by one person.
● Understand what a customer needs, from a
● It tends to be a small local business - E.g
product. Different types of customers have
hairdresser, newsagent, fish and chip shop.
different needs.
● The finance to start the business will usually
come from the owner.
● Can have a few employees but all the main Anticipating customer needs:
decision will be made by the owner. ● Know what it's customer want as early as
possible to make the product as soon as
B. Private Limited Company possible.
● This tends to be a large business.
● It is owned by shareholders - the shareholders Meeting customer needs:
are just family and friends and there is a limit of ● Meet the customer needs by providing the best
50 shareholders. quality product/ service at the best price.
● The main shareholders and managers will make
the decisions. 22. The Marketing Mix
● They sell new shares in order to raise finance -
● A tool used by businesses to ensure when they
share capital.
launch a new product it is a success.
● The marketing mix is made of 7 Ps
C. Public Limited Company
● It has 4 key elements : Product, Price, Place and
● A large Business Promotion.
● It is owned by shareholders - no matter of their ● It is extended to 7 by adding 3 in the 1981 by
origin, it can be trade online . Booms & Bitner : People, Processes, Physical
● The main Shareholders and managers will make Evidence
the decisions
● They sell new shares in order to raise finance- Product
Share capital
● After careful market research a business should
be able to develop a product that will appeal to
21. Customer Focus the target market.
● Spending time with customer can allow a ● This is considered the most important P.
business to learn ; Niggles/ Weaknesses ● Does it fits the customer need at THIS TIME?
● Find out what your customers see you in relation
to you competitors. Key Elements
● What else the customer want. ● Design
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● Technology ● Penetration = Looking to obtain
● Usefulness market share in a target market
● Convenience place and enter with a low
● Value price and once you obtain the
● Convenience market share you scale your
● Packaging price.
● Branding ● Skimming = Have a high price
● Accessories and this is reducing over time,
● Warranties mostly used by technology
companies.
● Premium = High pricing to
Price reflect luxury or social desire.
● Economy = Such as cheap
● Refers to the pricing strategy a company uses to
flights.
sell their products - how much is the customer
willing to pay.
○ E.g: Perceived quality?, Customer
Place
activity? ● Refers to where and how the product is
● Customers expect the value for the money they distributed so that customers can get the product
give. when they need it.
○ E.g : People will want cheap ● Mass market use as much distribution as
butter/sugar type of products, however possible.
people are willing to pay more for ● How is it found?and Purchased?
products such as baby food and ○ E.g: Online shop, street trial, town shops
perfume. Key Elements
Price maker or price taker ● Wholesalers
● Own Sales
Most business when they launch a new product will either ● Direct Sales = A channel that
be a Price Maker or Price Taker. you sell your products
Price Makers - have the power to set prices that other ● Online Sales
products will have to follow. ● Party Plans
E.g: Chanel Perfume or Innocent Smoothies. ● Mail Order
Price Takers - a products that is priced in relation to how
other similar products are priced.
E.g: Petrol Promotion
Key Elements
● This all to do with how you communicate with
● Cost Plus = Total cost of
your customers - how do you tell them about your
producing +getting it out to the
product or service.
customer + your percentage.
● This is also the process that is making the your
● Consumer-Led = Researching
customers believe and feel your company. So do
the target customer base and
not fuck up.
consider what they will find a
fair price.
Key Elements
● Competitive = about supplying
the service at a price that is
● Advertising
competitive to other business
● Public Relations
that have a similar
● Sponsorships
product/service.
● Sales Promotion
● Personal Selling
17
● Direct Mail 3. How successful those process are managed?
● Digital Content Here is where Quality Assurance and Quality
● Social Media Management.
These tools should be used to put across the Physical Evidence

organisation’s message to the correct audiences in the
● The evidence that proves that your marketing is
manner they would most like to hear, whether it be
successful and then your product is definitely out
informative or appealing to their emotions.
there and doing what it should.
Promoting for the long term rather than

Key Elements
the short term
● Packaging
● Businesses will look to promote for the long term
● Paperwork ( Invoices / tickets /
( to ensure sales continue for years to come )
despatch notes )
rather than promoting individual products
● Vehicle Signage
repeatedly.
● Internet/ Web Pages
● Short term promoting can sometimes be at the
● Furnishings
expense of the brand image. This is a risk
● Brochures
businesses are not willing to take.
● Uniforms
● Buildings ( Offices /
People Headquarters )
● People that are involved in the selling or support ● Awards
or your product or service .
All companies are reliant on the people who run them from USP - Unique Selling Point
front line Sales staff to the Managing Director. Having the This is the way that you sell what you sell in order leave a
right people is essential because they are as much a part mark on the mind of a customer.
of your business offering as the products/services you are
offering. 1.4 Making an effective start-up
Key Element
● Advice and Sales support

23. Customer Satisfaction
● Customer Service ● This must be a the core of every business if it is
● After Sales Backup to be successful.
● Front Line Sales Staff ● A dissatisfied customer will share their
● Managing Director experience with friends and family - therefore the
business’ reputation is at stake.
Process Making them feel good about themselves when they buy
your service or products or are in one of your places.
● The delivery of your service is usually done with
the customer present so how the service is
delivered is once again part of what the
Customer Service
consumer is paying for. ● Refers to the experience a customer has when
dealing with a business - if it is positive it means
This is all about looking at: that customer expectations have been met or
exceeded.
1. How everything fit together? ● Business use customer service to attract
2. How your product and service get to the customers and then hang on them.
customers? ● It covers many areas, such as; the way the
customer is treated / greeted; the quality of
18
products; knowledge of staff and post purchase
treatment. Advantages of being a sole trader
● Total control
Repeat Business / Repeat Purchase ● Cheap and easy to start up - few forms
● Many business rely on repeat business / repeat to fill in and to start trading. ST just has
purchase - this is when customers buy from them to set up a bank account and inform the
time and time again. inland revenue.
● What supermarket do your parents use ? Do they ● Keep all the profits - as the owner, all
change supermarkets? the profit belongs to the sole trader.
● A business will put a plan into place to ensure ● Business affairs are private -
that customers continue to buy from them, for competitors cannot see what you are
example; earning.
○ A loyalty card
○ Fast deliveries A sole trader may have one or more employees. It is the
○ Easy to use website most common form of ownership in the UK.
○ Promotions aimed at existing customers Disadvantage of being a sole trader
- 20% of your next shop ● Unlimited liability
● Can be difficult to raise finance.
Write a customer service policy ● There is a problem of continuity if the
sole trader retires or dies - what
● Using the template provided - write a new
happens to the business next?
customer service policy for Primark, a business
which is renowned for terrible customer service.
● It need to be aimed at creating customer Private limited company
satisfactions. ● Owned by shareholders, people who have
● For example, Primark will give out a loyalty card invested in the company.
in order to encourage repeat purchases. ● Usually have “LTD” at the end of their name
● The company needs to be registered with the
24. Ownership and Limited Liability Companies House.
● A lot of paperwork must be in place.
UNLIMITED Liability = There is NO limit on owners legal
● They have to publish their accounts every
responsibility to repay their debts. This means they have
year.
to repay all debts even if it means selling their house !
● Shareholders get dividend if the business has
made profit.
LIMITED Liability = When shareholders liability is limited (
● Limited liability
restricted ) only to the amount of money they invested in
Differences between Private Limited Companies
the business.
and Sole Traders.
1. Risk
Sole trader
Limited liability means owning a company is less
● Owned by one person but can employ workers. risky than being a sole trader.
● Small or local businesses. 2. Control
● The owner has to put money in the business him A sole trader would be in the total control of his
/ herselves. business as he owns all the shares. In a LTD if
● Simple procedure to start. there is a majority shareholder, they have control.
● Decisions are made by the owner only. 3. Profits
● The owner keeps the profit after paying all the Higher number of share = more profits.
costs and tax Sole traders retain all their profits.
● The business and the owner exist together 4. Privacy
● Unlimited liability.
19
LTD must file their accounts each year with a ● The owners share responsibilities and profits.
government agency called COMPANIES ● They share their expertise in the business.
HOUSE. Sole traders can kept their accounts ● Decision making is shared as well.
private. ● People usually draw up a ‘Deed of Partnership’.
● The owners are personally responsible for any
Public Limited Company debts.
● Unlimited liability.
● Owned by shareholders, people who have
invested in the company,
● Usually have “PLC” at the end of their name.
Franchise
● Similar to private limited company, however, ● It is like a contractual agreement between the
PLCs can trade their share on Stock Exchange. Franchisor ( people who own the brand name
● Higher amount of capital required before and the Franchisee ( people who use this
companies can become PLCs establish brand name)).
● Anyone can buy shares from a plc. ● A fee is charged by the brand owner trading
● Limited Liability under their big names.
● The franchisee has to pay some of their profit to
the franchisor.
● Training and advertising is provided by the
franchisor
Partnership
● Owned by at least two people.
25. Ownership comparison table
Sole Trader Partnership Private limited Public Limited Franchise

Company Company
Number of 1 2+ up to 20 1+ 2+ 1+
owners :
Who gets the The owner Partners Shareholders Shareholders Franchisee and
profit? take their % take their % Franchisor
invested invested
Source of finance Bank loan. Each partener. Family and Any public From different
used : Personal Bank loan. friends buying shareholders. Franchisee.
savings. Personal. shares.
From friends. Banks.
Overdraft. Bank overdraft.
Liability? Unlimited Unlimited Limited Limited
Who is Owner Parteners Founder CEO and Franchisee

responsible for Directors
the day-to-day
running?
20
26. Start-up legal and tax issues Corporation Tax

● A tax paid by limited companies on the profits of
Business name
the company.
● Name should be different from any other ● Corporation tax is a tax on the profits of a
business. company, as Sole traders pay income tax they do
● If you are setting up a company this will be not need to pay this.
checked at Company House. ● Currently the corporate tax rate is set at 20% for
● If you are a sole trader it should not be the same small businesses.
as any in the local area.
● The name should promote the business 27. Recruiting & Training Staff
HM Revenue & Customs Recruitment and Selection
The government authorities in the UK responsible for Is the process of identifying the need for a job, defining the
collecting tax. requirements of the position and the job holder,
advertising the position and choosing the most appropriate
Vat - Value Added Tax (VAT) person for the job.
● A tax value on the value of the sales a business
makes. Retention
● The amount of VAT a business must pay Ensuring that once the best person has been recruited,
depends on a businesses sales. the stay with the business and are not “poached” by rival
companies.
● There are 3 VAT rate:
○ Standard rate - 20% The recruitment process
○ Reduce rate - 5%
○ Zero rate - 0% ● Recruitment is one of the main objectives of
● A business only has to pay VAT if its sales are management as the success of any business
more than £69,000 ( Below this it pays 0% ) depends to a large extent on the quality of its
staff.
Income Tax ● Recruiting employees with the correct skills can
add value to a business. Employees should
● Paid by anyone who has an income - both therefore be carefully selected, managed and
employers and employees. retained, just like any other resource.
Income rates
1.
Identify Vacancy
❖ Basic rate 20% - £0 to £31,865 2. Write Job Description
❖ Higher rate 40% - 0 to £150,000 3. Write Person Specification
❖ Additional rate 45% - Over £150,000 4. Advertise the Job
5. Send Application Forms
National Insurance Contributions ( NIC ) 6. Receive Applications
● These taxes are linked to government benefits 7. Shortlist Candidates
such as ; state pension and incapacity benefit. 8. Interview
● A business that employs workers will have to pay 9. Selected Best Candidate
2 types of NIC 10. Make Jobs Offer
1. It will deduct NIC from its employees
pay packet.
2. It has to pay Employers National
Insurance Contributions - flat rate % .
21
.meeting deadlines.
Documents in the recruitment process
1. Document Advert - a brief description of the job & Organisation Prioritising workload and
time.
skills needed.
2. Job Particulars - more detailed information about Ability to meet Efficiency and time
the business & the job - what is expected of the deadlines management.
applicant, condition of work, rate of pay, holidays
& how to apply. Ability to work under Calm in a crisis, not
pressure becoming stressed.
3. Jobs Description - a document describing the
duties of a worker and his / her status in the firm. Confidence In yourself, colleagues
This contains : and the company.
a. Job Title
b. Purpose of the Job Commercial awareness Knowing what makes a
c. Place in the organisation company tick.
d. Specific duties of the job
e. Other responsibilities of the job Advertising the job -Where?
f. Location of the job
g. Hours of work
h. Working conditions
4. Personal Specification - A profile of the skills
and qualities of a person needed to do the job.
5. CV’s ( Curriculum Vitae ) - Summary of one’s
education,skills, employment and experience.
Application form - The form which the applicant
fills in with their personal details.
Skills employers look for - the 10 key

attributes
● Job centers
●Internally
Skills Description ● Trade journals
● Newspapers & Magazines
Communication Wrriten,verbal and ● Internet
presentation skills.
Teamwork Team player with ability to What should the ad say?

manage others. 1. Job Description
Negotiation & Being able to get ‘Your 2. Basic Salary / Wage Information
persuasion own way’ but 3. Location
understanding other 4. Brief Description
perspectives. 5. Qualifications and Experience Required
6. Address and / or Contact Details
Problem Solving Analysis & logical thinking
7. Organisation Identity and Logo
Leadership Motivating a team,
assigning tasks and
22
● Assuming references are ok - the candidate will
Selection start work.
● Within 13 weeks of employment they must
● Once a job has been advertised and details sent
receive a CONTRACT OF EMPLOYMENT.
out to prospective employees, the applicants will
return their CV / Jobs Applications.
1. Application
The Contract of Employment
2. Selection ● This is legal document
3. Decision ● Is should contain the :
4. Results are in! ○ Name of employer and employee
○ Date on which employment started
How do firms select? ○ Job Title
○ Rate of pay, frequency of pay and
● Once applications have been received a firm
payment method
must short-list, or select the best 4 or 5.
○ Normal hours of work
● There are a number of tools that can help :
○ Holiday entitlement & Holiday pay
○ Curriculum Vitae ( CV )
○ Conditions relating to sickness and
○ Letter of Application
injury
○ Numeracy Tests
○ Pension arrangements
○ Visual Tests
○ Length of notice required by both parties
○ Aptitude Tests
○ Disciplinary rules and procedures
○ Interviews
○ Arrangements for handling problems.
Selection
Skills versus attitude
● Selecting is about choosing the right person to do
● This refers to the extent to which a business has
the job.
control over their employees
● A business will draw up a shortlist of candidates
● An employee can be fully qualified and have all
who will be invited to interview.
the right skills however, they must have the right
● Interview are an important part of the selection
attitude toward work.
process as they allow the business to find out
● Are they positive? Are they motivated?Do they
more about the candidate and find out whether
get along with colleagues?
the person is appropriate for the business.
YOU CAN TRAIN SOMEONE WHO DOES NOT

HAVE THE SKILLS BUT YOU CANNOT TRAIN
SOMEONE TO HAVE A BETTER ATTITUDE.
References
● The final part of the selection process is to Motivation
receive the references from the candidate.
● This refers to what a business can do make sure
● This can be from a personal source
its employees work to the best of their ability and
( teacher etc.. )
are committed to the business.
● Or it can be a professional reference
● Workers can increase motivation by ;
( manager at your current or last job )
○ Paying decent wages
○ Decent working conditions
What happens next?
○ Keep employees informed
● A candidate is selected and a job offer is made. ○ Give workers decision making authority
● A firm then asks for references - what referees ○ Sympathetic about time off for personal
write is confidential and must be accurate. reasons
○ Be consistent with rules that are laid out.
23
● Sex Discrimination Act
Training ● Disability Discrimination Act
● Employment Equality ( Age ) Regulations
● Once workers have been found they must be
● Equal Pay Act
introduced to their new working environment.
● Employment Protection Act
● This is done through training,
● There are usually 4 reasons why training will take
place :
Induction
○ Induction ● This is programme aimed to introduce a new
○ Upgrading skills employee to a job
○ Re-Training ● It is used to :
○ Multi-Skilling ○ Familiarise the worker with their job.
● In the modern working environment employees ○ Make the employee as efficient as
will regularly receive training - small businesses possible.
sometimes find it hard to afford it. ○ Encourage new workers to be
On the job training - training and learning as employees committed to the organisation.
work. ● Think back to your induction day at school:
Off the job training - larger businesses use this, ○ What was good about it?
employees get trained away from their workplace. ○ What was bad about it?
○ How would you improve it?
● Small businesses tend to use ON-THE-JOB
TRAINING. This is where a worker remains at 28. The Law
their usual place of work and learns how to do
● Over the years Parliament has passed many
their job.
legislations ( laws ) that give employees
○ E.g : Doctors, Teachers.
protection at work.
● Larger businesses tend to use OFF-THE-JOB
TRAINING.
○ This is where a worker is trained away
Appointment and training of staff
from their usual workplace ● Workers cannot be discriminated against on the
○ This might be at : Training center, grounds of their
University, College. ○ Age
○ Sex
Problems with training staff ○ Race
○ Disability
● It is expensive ! ● A business cannot reject a perfectly good
○ Off- the job is more expensive because application from on these grounds either.
■ Courses must be paid for
■ The worker is not producing Protection at work
anything
● Workers must be protected under the Health and
■ The worker will still have to be
Safety Act
paid
● Workers can also join Trade Unions
● Small firms are often unable to afford training.
● This is why government set up Training and
Leaving work
Enterprise Councils ( TECs )
○ These provide help and advice to small ● Workers are protected from ‘unfair dismissal’ law
businesses in a local area ● They cannot lose their job without valid reason
● Workers may have access to a pension from their
Key Employment Legislation employer - this is often paid into by employees as
they work
● Race Relations Act
24
➢ Completing the design research, getting
Other rights access to the right respondents and
carrying out said research.
● The impact of laws can be greater on smaller
❖ Analysing the information
businesses than large businesses
➢ Did people says the same things or
○ For example, a small business may only
different?
employ 3 / 4 people - if one goes off on
➢ Is there any trends or patterns in the
maternity leave, this can be disruptive
data?
and difficult to manage.
➢ Is the data useful enough for the
● Other things to consider are EU rules such as,
business to make a decision in order to
Working Time Directive - this outlines the number
make their product / service better and
of hours a worker should have to work over a
more successful?
certain period of time.
Primary Research - This is carried out by the business to
● All laws are time consuming and expensive to
meet its specific needs, e.g. observations, surveys and
implement into a business.
experiments.
Secondary Research - Information that already exists such
as, accounts and sales figures, internet and newspaper
Unit 3 - Marketing and Customer articles and government statistics.
Needs Quantitative data - data that can be expressed as
numbers and statistically analysed.
Quantitative data - data about people’s opinions,
29. Marketing judgements and attitudes.
What is marketing? Surveys

● Anticipating and meeting customer needs. ● A survey usually involves asking questions to
● Product / Service should meet customers need respondents - people or businesses who reply to
and the customer is willing to pay for it. asked questions.
● Differents kind of surveys:
The need for Market Research? ○ Postal Questionnaires
● Gaining information about customer,competitors ○ Telephone Surveys
and market trends - collected through Primary ○ Personal ( face to face) interviews
and Secondary Research. ○ Consumer panels - where groups of
● This help to identify customer needs and desire people meet to discuss and sometimes
and also help to identify when they are change so try a new product.
a business can anticipate and make change in
their business. Sampling
● This is a small group out of the total population
Stage of Market Research which is selected to take part in a survey
❖ Designing the research ● In order for the sample to be useful it must be
➢ What is the research trying to achieve? representative of the target market - no use just
➢ How should the research be conducted? asking the males as this means valuable female
➢ Should we gather primary and input would be missed.
secondary research?
➢ Survey or observation?
➢ Qualitative or Quantitative information?
❖ Undertaking the research
25
Random sampling method. Launching the product

● Once the product has been developed it is ready
● Every potential response has an equal
to be launched.
chance of being picked ( like picking out
○ What do you think will accompany the
of a hat )
launch of a new product?
Systematic sampling method
Product Maturity
● This is where, for example, every 3rd
person from a list of names is chosen to ● The product has reached its peak in term of
participate - this is quick and cheap to sales.
use. ● Research and Development costs are likely to
Quota sampling method have been paid off.
● Many buyers are likely to repeat purchase and
● This is where the respondents are there is customer loyalty.
chosen with the use of specific ● Manufactures are likely to extend this stage for
requirements, for example, a business as long as possible.
may want to conduct research on 100 , ● They do this through the use of extension
20-30 years old females. strategies
● This involves slightly changing the product to give
Decisions it fresh appeal to the target market.
● Extension strategies can aslo help a product
● The whole purpose of market research is to allow
appeal to a new segment of the market.
a business to make better and more informed
decisions about their business activities.
Extension strategy
● It should answer the following types of questions
: ● This is when something new is done with an
○ Is there any problems with our existing product in order increase the life of the
marketing mix? product and prevent it falling into decline.
○ Which particular elements of the
marketing mix are failing?
○ Why sales falling?
○ If we launched this new product, will it
be successful?
30. Product Life Cycle
The Development Stage

● The Research and Development team within in
any business will spend long time ( sometimes
Saturation and Decline
years ) to create a new product
○ 15 years - the director waited until the ● At the end of the maturity phase, the market
technology had caught up with his ideas becomes saturated. Competitors bring out
“the movie with blue people and products that takes sales away.
animals” ● Consumers have lots of choice and it becomes
difficult to grow sales
26
● Eventually, a product is likely to go into decline ● Analysing the different products in the portofolio
and there are a big fall in sales. helps a business make decisions about the future
of the products
31. Cash Flow through the Phases ○ Do some products need more
advertising?
1. Development Phase:
○ Should we take a product off the
During this phase the Net Cash Flow will be negative.
market?
Cash has to be paid out to workers and for materials.
○ Which products are doing really well?
However, no cash is coming in from sales as the product
is not currently for sale.
Product Portfolio or Product Mix
2. Launch Phase :
During this phase the Net Cash Flow is still negating. A ● This is the combination or range of different
business will have to pay considerable costs, such as products that a business sells.
promotion, these will outweigh the cash coming in from ○ E.g :Unilever has a lot of products with
sales. other companies and a lot of other
3. Growth Phase : companies.
During this phase the Net Cash Flow is likely to be positive
but small. As sales grow and cash inflows increase the The Boston Matrix
business will experience more cash being available, on
the other hand the cost of the production during this phase ● This is a method of conduct product
will be high. portfolio analysis.
4. Maturity Phase :
● In the Boston Matrix a product is described in two
During this phase, saturation and decline, Net Cash Flow
ways.
is likely to be positive. Startup and development costs
○ How fast the market for that product is
have been paid. The value of sales exceeds costs. When
growing?
extension strategies are used, Net Cash Flow is likely to
○ What market share does the product
dip as such a strategy will cost money to implement.
currently have?
32. Product Portfolio Analysis

● A business has to make decisions about its
product portfolio.
27
Viral Marketing
● When individuals use their social networking
pages to spread the message about a new
product or service.
● Sometimes a business can pay popular Youtube
to endorse their products on their channels.
Repeat Purchase and Customer Loyalty

● The cost of attracting new customers is much
greater than the cost of getting existing
customers to become loyal. If customers build
loyalty to a brand they will purchase from the
business repeatedly.
33. Product Trial and Repeat Purchase
34. Branding and Differentiation
Product trial
● This is when a customer purchase a new good Branding
for the first time and decides whether they will
● A strong brand is what all businesses will try to
purchase it again.
achieve.
● This is also linked to creating customer loyalty
● A strong brand is something that customers can
● There are many different ways that a business
relate to and it will create a positive link between
can get customers to trial a product.
the customer and the business.
E.g of product trial
● One business will aim to develop many different
● Free Samples = In a supermarket there
brands.
may , sometimes, be a special stand
○ E.g : Apple, VaynerX
that has samples of a new product that
customers can try out.
The advantage of Branding
● User Testing = With some products it is
● Premium Prices
not possible to give out free samples.
● Greater Customer Awareness
● Low Trial Prices = Business may chose
● Increased Sales and Market Share
to launch a new product at an
introductory low price.
Product Differentiation
● Targeting Trade Buyers = Big business
not always sell directly to customers. ● Producing a RANGE of products allows a
business to differentiate its products.
● Product differentiation also allows a business to
Free Publicity stand out from its competitors.
● This is also called Public Relations (PR) -

Different ways to differentiate a product
businesses that are launching a new product will
● Design
want newspapers, internet websites, magazines
● Formula
and television shows to write about their new
● Function
products.
● Name
● Therefore, businesses will invite such journalists
● Packaging
long to product launches and they will decide
● Differentiating across the value chain = This
whether they wish to write about it in their
refers to all the stages a product goes through
publication.
before it gets to the customer.Therefore, if a
28
business manufactures a product in a unique way ❖ Re-order level : This is the level that a business
then it creates differentiation over competitors. will re-order stock into the business.
❖ Maximum Stock Level : This is the largest
Strongs brands : Rolls Royce, BMW, England, U.S.A , amount of stock that a business decides to keep
NASA, TESLA, COCA COLA ETC.. at any one time.
35. Managing Stock Uncertainty

In practise, stocks and production do not change exactly
Stock as planned or in a neat and concise pattern. This is due to
● Most businesses hold stocks in some form, there the fact that many businesses will have different levels of
are 3 ways in which a business can hold stocks: production on a week to week basis.
○ Stock of materials : These are materials
that have been bought in form other Just in time stock control
businesses - for example, buying raw ● Holding stock in costly for any business
materials. therefore, some businesses have changed their
○ Stock of semi - finished materials : stock management system.
These are stocks of products that are ○ With JIT a business hold NO stock
waiting to be finished by producer. whatsoever.
○ Stock of finished goods : These are ○ When raw materials or components are
goods that are completed and waiting to needed they are delivered to the
be delivered to the customer. business at exactly the time they will be
used.
Stock Control - JUST IN CASE ○ Car production firms use this method a
lot.
○ It means there are a frequent deliveries
of stock.
36. Quality
● In a business, quality refers to comparing
products to a particular standard.
● A good quality product will meet the standards
that are set by customers.
Traditional Quality Control

❖ Step 1 : Product would be designed and material
chosen.
❖ Step 2 : The design team would decide how it
should be made and then start making it.
❖ Step 3 : Quality inspectors would then check the
product and if a product did not meet standards
❖ Minimum stock levels: This is the lowest level of
they would order it to be altered and re - made.
stock that a business wants to keep and hold at
Inspectors would also check the quality of the
any given time period. It is sometimes called
materials that are brought in.
buffer stock level. If stock falls below this level or
if a business receives an unexpectedly big order,
it may struggle to meet this demand.
29
Quality Assurance Economic Context

● This is more of a modern way of control the
quality of products or services made in a 37. Demand and Supply
business It relies on building quality into every
● Many commodities are traded on organised,
stage of the production process.
global commodity markets where buyers
● It should therefore create a ‘no - faults ‘ product
( DEMAND ) and sellers ( SUPPLY ) come
and the business an assure customers of this.
together to agree prices.
The process of Quality Assurance

Demand
1. A part of every process = Quality must be build in
❖ The amount that buyers are willing to able to
to the production process and not just checked at
purchase at any given price.
certain stages.
❖ Wheat is used to make products such as bread,
2. Everyone’s job = Every employee is responsible
rice and pasta - demand for it is impacted by
for assuring quality - it may be stages that were
many businesses and individuals worldwide.
not being checked before are now being
❖ If demand rises what do you think will happen to
checked. It may be that team working is used to
price?
check quality.
➢ China is fast growing economy, as
3. Kaizen = This means ‘ continuous improvement ‘
people have higher incomes.
- Japanese. In order to achieve the highest level
of quality a business must seek to make itself
better and better on continuous basis.
Supply
4. Zero Defects = A business may set itself regular ❖ The amount sellers are willing and able to sell at
targets where it aims to reduce the number of any given price.
errors or defects - the ultimate goal is that the ❖ There are hundreds of thousands of growers of
production process ultimately runs with no wheat - the supply depends on the price farmers
defects at all. think they will get compared to other products
5. Management = Although workers have an they could grow.
individual responsibility, managers have a level of ❖ It also depends upon weather conditions ; pests
responsibility as it is their role to ensure that and diseases - all of which will impact the
workers have full training and development in harvest.
their particular job. This should mean that zero
defects are created throughout the production Difference between Markets
process.
● In recent years the price of oil has changed
dramatically - rising quickly and sharply, but then
Quality Standards
falling just as quickly.
British Standards Institute ( BSI ) - products with ● However, in shops prices do not change like this
Kitemarks show that they have met standards set. - this is the difference between commodity
● There are also standards for the quality of the markets and a goods market.
production systems that are used to make ● Customers do not want prices to change -
products. therefore businesses are under pressure to
● ISO - International Organisation for maintain prices - the cost of regularly changing
Standardisation : ISO 9000 is the basic standard prices can also be high.
for quality management systems. ISO 9001
covers quality assurance in design, development
production, installation and servicing.
30
38. The impact of changes in Exchange Impact of a fall in the value of the pound on
Rates small businesses
● For a firm that exports - a fall in the value of the £
Exchange Rates makes products cheaper to foreign markets. As a
● The exchange rate is the amount of currency you result, they should be able to sell more and be
can buy with one unit of another currency. more price competitive.
● For example, how many American Dollars will ● For a firm that imports - a fall in the value of the £
you get for one English Pound. makes imported good more expensive. This
● Businesses and consumers that buy or sell with a increase in price may have to be passed on to
foreign country will need to be aware of the customers - who will then have to put higher
exchange rate. prices for their usual purchases.
Calculating the cost of Foreign Exchange Impact of a rise in the value of the pound on
small businesses
1. Step 1 : You must know the exchange rate.
2. Step 2 : How much have we sold? For example, ● A business that exports - a fall in the value of the
we have sold £10, 000 worth of goods to an £ is a bad things as the price of their goods will
American buyer, we multiply the value of sales by rise for foreign customers, so they will buy less.
the value of the American currency = 10,000 x ● UK based businesses - the price of imports will
1.2 = $12,000 fall, meaning that more foreign products will
3. Step 3 : Coming back to British Pounds. For come into the country. Therefore, UK based
example, imagine we sold $24,000 worth of businesses will become less price competitive
goods to an American buyer, to find out how and may lose sales.
much this is worth in pounds we divide the value
of sales by the American currency = 24,000 / 1.2 39.The impact of interest rates
= 20,000
Key terms to understand
Fluctuating Exchange Rates and Prices
● As exchanges rates fluctuate, the price of imports ❖ Bank of England : The central bank for the UK.
and exports will also fluctuate regularly. Responsible for banking in the UK, it is
● If the value of the pound falls then foreign responsible for setting interest rates in the UK.
countries will get more British products for their ❖ Interest Rate : The % reward or payment over a
money = a fall in prices of UK exports. period of time that is given to savers or paid by
● If the value of the pound rise then foreign borrowers on saving or a loan.
countries will get less British products for their ❖ Variable Interest Rates : These are rates that can
money = a rise in prices of UK exports. change over the lifetime of a loan - depends on
● If the value of the pound rises the price of imports what is happening in the economy.
that UK customers buy will fall - this is a good ➢ This type of rate makes it difficult for
thing business to predict the cost of
● If the value of the pound falls the price of imports borrowing.
that UK customer buy will increase - this is bad ❖ Fixed Interest Rates : These are rates that stay
thing. the same over an agreed period of a loan
➢ This makes the borrowing a lot less
risky for small businesses
31
by calculating the value of sales in an economy
Credit over a period of time.
● Credit is a term used to describe the different

ways in which a business can borrow money
The Business Cycle
○ What are some long term ways to fund a ● As we have discussed in some years economic
business? activity is different and changes occur - this is
○ What is an overdraft? known as the business cycle.
The cost of borrowing for small businesses

● Banks change interest on the money they lend
out, it is sometimes known as the price that has
to be paid to borrow money.
● For example, a business may charge 10% a year
to borrow money on an overdraft.
Research
● Go on to different banks’ websites and locate
their loan calculators
Boom - when the line reach the Peak
● Have a play around with different loan amounts
and interest rates to see how it impacts the ● During ‘Boom’ the level of economic activity is
monthly repayment amount. strong and increasing.
● Type into Google (Bank Name ) loan calculator. ● Consumers feel more confident and are more
likely to spend on large / luxury items, such as
40. The impact of the Business Cycle cars, furniture and holidays abroad.
The Economy Slowdown / Downturn - when the line goes

down and reach the Trough
Economic Activity - This is the amount of buying and
selling that takes place in a particular period of time. ● This is economic activity begins to slow down.
The Economy - This is a term used to describe all the ● In this situation consumers feel less confident
people and businesses in a country that engage in buying and are less willing to borrow from banks.
and selling.
Recovery - when the line start from the Trough
● Sometimes buying and selling will increase, this to the Peak which is going up.
is when people feel confident in their jobs and
● Eventually, an economy will begin to recover.
they may see their income rise ( Economy is
● Economic activity will begin to increase,
expanding )
consumers will feel more confident and borrowing
● On the other hand, when there is news of job
from banks will increase.
losses people can worry. This will cause them to
● Recovery from a recession is a lengthy process.
think more carefully about their spending.
Economic Growth
41. Organisational Structure
● The way in which a business is organised
● The reason we are able to live the way we do
● Managers will organise a business to ensure that
now is because of Economic Growth.
it runs efficiently and effectively.
● Economic Growth - this is a rise in the rate of
● Overall, this help the business to achieve its
economic activity in an economy. It is measured
objectives.
32
Division Structural
Organisations can be separated into different divisions.
For: example a product base division
Rolls Royce
Airplanes Cars
★ One way in which an organisation is organised is
on a product basis. Organising on a product
basis allows businesses to specialise and split
members to staff by expertise. Each division will
be accountable for its own performance. This
type of structure allows business to see which Chain of Command
areas of the company are performing well and to Director>> Manager >> Supervisor >> Operant
identify parts which are not doing so well. This
will help managers to make decisions. Span of control
Regional Structure ● The number of people that a worker is directly
responsible for.
★ Companies that organise themselves on a ● Varies in different situations:
regional basis may sell a fairly region to ○ The more complex the supervision tax,
co-operate with each other. They can, for the more smaller the span of control.
example, share their region to co-operate with ○ The span of control has to be small if it
each other. They can, for example , share their takes time to communicate with
knowledge about the market in the region,its subordinates.
economic environment and government ○ The better the supervisor, the more he
regulations. or she can supervise.
○ The more delegation that occurs, the
Organisation charts greater the span of control.
● In a business every worker need to know their
role and to know what is expected of them. Centralisation and Decentralisation
● This shows the internal structure of a business
● This shows the hierarchy of a business. This is a
series of layers in a business which shows where
all employees are within the business and how
they relate to other employees in the business.
Organisation chart
● Some organisational charts are organised on a
geographical basis, most are done on a
functional one.
● They are split into different departments - Decentralisation = leaders obey to leaders
Finance, Sales , Human Resources. Centralisation = employees obey to leader
42. Motivation Theory

● This refers to the extent that an individual gives
their best at all times in work.
33
● Most businesses will find ways to motivate and ○ Flexible working arrangements / Good
encourage employees. work life balance.
● This will mean that their business aims and
objectives are more likely to be met. Using Maslow’s hierarchy of needs
● A lot of businesses believe that pay is the
Benefits of a more motivated workforce greatest motivation for people at work.
● Tend to produce higher quality and better work - ● Therefore, some businesses offer pay packages
take pride in their work that are linked with motivation
● More committed to the business - they want it to ○ Performance related - the more you do
do well. the more you’ll get paid ( Aldi )
● Tend to be more flexible - more willing to learn ○ Bonuses - big businesses offer large
● Overall - they will help the business to achieve its bonuses at the end of the year ( Banks )
aims and objectives
43. Communication
Maslow’s hierarchy of needs
● In order to motivate workers, a business needs to What is communication?
understand what makes a person accept a ● Communication is about passing messages
job/career. between people or organisations. Messages
● Abraham Maslow suggested that people have a between a sender and receiver take place using
hierarchy of needs. a medium such as email or phone.
● Businesses can use this hierarchy to ensure that
, at work, these needs are met as closely as Linking words
possible - the result should be a motivated
employee. ● Try to link points and explanations in your work
● Appropriate phrases can be
○ This leads to…
○ As a result…
○ Therefore…
○ Because of this...
Internal External
A formal Conversation A customers service

between employees employee calling an
account holder
An employee receive The managing Director

Motivation comes from within training form his manager holding a meeting with
shareholders
● The idea that a business can influence workers
motivation is hotly contested A contract being faxed / A builder calling to
● Many professionals believe that some people are emailed between organise repair works
departments
naturally more motivated than others - they just
work harder.
● Research conducted by City and Guilds
Communication skills
organisation ( 2008 ) found key motivators to be: ● To ensure that communication is effective and
○ An interest in the job itself that it enables employees to work more
○ Relationship with colleagues productively it must ;
34
○ Be accurate - clear information must be
provided. Bankers’ bonuses
○ Correct sender and receiver
● Despite the recession big time bankers were still
○ Take place in the right time and place
awarded hefty bonuses.
○ Be in the correct method ( email,
telephone , call, letter )
Bank Amount
44. Remuneration
HSBC £2.4 billion
● This simply refers to the different methods of pay
( payment systems ) that businesses use in order Barclays Bank £1.85 billion
to pay those in employment.
● There are many different payment systems Royal Bank of Scotland / £607 million
NatWest
available - businesses have to carefully choose
the most appropriate. Lloyds Banking Group £365 million
Time based systems Santander £150 million
● This is when workers ( manual or blue collar

Fringe benefits
workers ) are paid wages on a time based
system. ● These are used as another form of motivation.
● They get paid ‘so much’ am hour, the national ● They tend to non monetary forms of payment and
minimum wage for over 21’s? can include…
● https://www.gov.uk/national-minimum-wage-rates ○ A company car
● When workers work over their agreed hours they ○ Pension Scheme
get paid overtime which is usually paid at a ○ Free healthcare
higher rate than their normal wage… e.g double ○ Gym membership
time. ○ Store discount
Used for tax purposes also - will pay less tax on £1,000
Results - based systems worth of fringe benefits rather than paying staff an extra
£1,000.
● Paid based on how much they produce.
● Piece rates - workers are paid for each item they
Which payment system to use?
produce ( the more they produce the more they
are paid ) ● What is possible? The system used depends on
● Commission - sales staff, each sale they secure the job being done. For example, a business
they get paid a certain amount. would struggle to pay its cleaners on commision.
● Bonuses - these are warded when targets are ● Tradition - Workers fear change in pay systems
met or agreed after a performance review. as they believe that they will earn less, therefore
businesses maintain old systems
Salaries ● Tax and other employment costs - some payment
systems are sued because they reduce the tax
● Non manual workers or white collar workers (
bill of both employers and employees. Fringe
doctors / accountants ) tend to be paid a salary.
benefits are an example of this.
● A salary is paid monthly rather than weekly.
● Motivation - Payment systems can be used to
● No overtime is paid and employees are expected
motivate workers e.g. piece rate, bonuses, higher
to stay at work until their tasks / responsibilities
pay. However using pay as a tool for motivation
are completed.
can be damaging to a business, how?
35
Unit 3 - Finance - Effective Financial Increasing cash inflows

Management
45. Improving cash flow
Cash and Cash flow

● Cash is vital to a business's success and
includes notes, coins and money in the bank.
Cash flow is : The flow of money coming into and going
out of a business
Cash Inflows
● Cash inflows : the cash coming into a business
Destocking
● Reducing stocks of finished products ( possibly
having a sale to shift stock surpluses) .
Increasing sales revenue

Cash outflows ● Sales revenue = Selling price x quantity sold
Cash going out of a business
Main ways to boost sales revenue
● Better products : Introducing new or differentiated
products to the marketplace.
● Better products : Introducing new or differentiated
products to the marketplace.
Improving cash flow from customers

1. Reduce trade credit
2. Chase up late payments
3. Employ a factor
( A factor is a financial company, often a bank that will
advance the money owed to a business by its customers. )
What long term solutions are there to improve cash
flows?
Solutions : Bank loan, issue shares ( PLC’S ) or sales of
assets
36
natural alternative more

Changing cash outflows Wastage. suppliers. energy
. efficient.
Possible 1.May 1.Poorer 1.Might

dangers affect quality demotivate
customer products. workers.
service. 2.May cost
2.Loss of more
skills and initially.
experience.
How can revenues be increased
Method of Improve Increasing Reduce

Increasing Marketing Prices Prices
46. Improving profit Revenue
Calculating profit & loss Why 1.Attract 1.More 1.Customer

Revenue customers money is s will
●You may remember that profit can be calculated is 2.More received hopefully
using following formula: Increased people from each buy more
PROFIT = SALES REVENUE - TOTAL COST know about sale
the product
Sales revenue = This is the total money received from How it can 1.More 1.Use small 1.Need to
selling goods or services. be promotion price ensure
Total cost = This is the total money spent in order to make achieved 2.Better increases enough
Promotion that extra units
the goods or services. 3.Changing customers are sold.
packaging don’t notice 2.Be
Defining profit & loss cheaper
than
● If revenue is greater than costs, the answer is competitors
POSITIVE because a PROFIT has been made
■ Revenue > Costs =Profit Possible 1.May be 1.Customer 1.If enough
● If revenue is less than cost, the answer is dangers expensive s may stop extra units
which could buying are sold
NEGATIVE because a LOSS has been made decrease 2.May help profit will be
■ Revenue < Costs = Loss profits competitors lower
How cost can be lowered 47. Break Even

Method of Reducing Using Reducing ● Break even analysis is useful as a business can
reducing staff levels cheaper other bills work out what volume of sales it needs to
costs materials achieve to cover its costs.
● The key to break even is to work out the
Why costs 1.Wage bill 1.Less will 1.Less contribution made from the sale of each unit.
are will be be spend money is
reduced reduced on raw spent on ● The amount of money from each unit sold
materials bills contributes to pay for the fixed and indirect costs
of the business.
How it can 1.Making 1.Negotiati 1.Not
be people ng better increasing
achieved Redundant deals. pay levels.
2.Through 2. Finding 2. Being
37
● It works out whether the forecast sales will be
Break even formula enough to produce a profit and;
● Whether or not further investment in the product
Break Even Point = Fixed cost / Contribution (Selling
is worthwhile.
price - Variable cost per Unit )
Margin of safety Formula

Limitations of break-even charts?
● The difference between the planned number of
1. Assumes all stock is sold
units or actual sales and the number of units of
2. Does not take into account possible changes in
sales at break even point.
costs over the time period
3. Does not allow for changes in the selling price.
4. Analysis is only as good as the quality of
Break even Chart
information.
5. Does not allow for changes in the market
conditions in the time period - e.g. entry of new
competitor
48.Financial Growth
Growing a business
● Once a business has begun to make profit it may
look to become more successful.
● One way of doing this is thought GROWTH.
● Growth can mean a number of different thing:
○ Employing more people
○ Opening more offices / shops
○ Increasing sales
○ Increasing profit
Why do firm want to grow?

1. Lower Costs
a. They may be able to negotiate better
deals
b. This will mean higher profits for firms
2. Wider range of products
a. This increases security since they are
not relying on once product.
Why businesses understand its break even 3. Ensure suppliers and outlets
point? a. This gives them control over the
● .... because the contribution from every unit sold availability of products.
above the break - even point adds to profit. 4. To prevent competitors gaining an advantage
● The break - even point provides a focus for the a. Gaining more control of a market will
business ; give a firm an advantage over their
competitors.
38
a. When a business sells off fixed and
How can firms grow? current assets which it no longer needs
in order to raise finance for new
The type of integration that firms use will depend on their
projects.
situation. There are 3 ways it can be done :
b. Fixed assets : buildings, land &
1. Internal Expansion - Expand by opening more
equipment.
outlets or employing more staff.
c. Current assets : Cash, stock & money
2. Mergers - Two businesses joining together to
owed.
form a new or larger company.
3. Owners Capital or Savings
3. Takeovers - Where one business buys at least
a. When the owner uses his or her own
15% of another business to control it.
savings to invest in the business.
Usually a sole trader will part finance a
Financing Growth
new business with their own savings.
Getting bigger requires investment.
This can come from 2 main sources: External Sources of finance
1.Share capital
Internal External - The monetary value of a company -
a. Shareholders invest in a company ( they
Money that is obtained Money obtained from have part ownership of it ) .
from within the business outside the business b. An entrepreneur may use their personal
E.g : E.g : savings ( e.g : £5,000 ) as their share
● Past profits ● Borrowing and they get others to invest as well.
● Selling Assets ● Share Capital c. Only Public Limited Companies ( PLC’S
● Owner’s Funds ● Venture Capital ) can sell shares on the stock market.
2. Venture Capitalists
Sources of finance a. A person or company who buys shares
in a business that they hope will grow
fast. In the long term, they will sell the
Internal External shares at a profit and often reinvest in
other companies.
● Personal Savings ● Ordinary shares
3. Loans
● Retained profit ● Debentures (
● Working capital secure loans ) & a. An amount of money is borrowed from
● Sales of assets other loans. the bank and then repaid with interest
● Overdrafts over a set of period of time. The loan
● Hire purchase period can range from 1 year to 10
● Trade Credit
● Grants years. Look for the APR amount - the
● Venture capital higher the APR the more interest is
paid.
Internal Sources of finance An
a nnual percentage rate (APR) is the annual rate
charged for borrowing or earned through an investment,
1. Retained profit
and is expressed as a percentage that represents the
a. A business makes profit and keeps it
actual yearly cost of funds over the term of a loan.
rather than spending it , it is called :
4. Grants
RETAINED PROFIT.
a. Some businesses may get grants to
b. The retained profit is available to use
help them start up ( especially small
within the business, for developing the
businesses ) .
business or for a ‘rainy day’
2. Selling Assets
39
b.
Organisations such as the Princes Trust
give business start up grants to young Short Term Effects - Air, Noise, Smell and
people up to the age of 30. Water Pollution
c. Grants are also available from the
government…… European Union. ● Computers work on electricity, electricity
d. Grants DO NOT have to be repaid !!!! generation contributes to air pollution.
5. Bank Overdrafts ● Vans that deliver goods to consumers cause
a. An overdraft facility is where you can noise pollution to local residents.
use more money than you actually have ● Businesses creates water waste that has to be
in an account. An overdraft of £2,000 treated if is not pollute the environment.
would let you go £2000 in the red which ● Some businesses give off odours (smells) as part
may help a business in the short term. of their production process.
b. Personal overdraft tend to be between
£100-£1000 Long Term Effects - Climate Change
6. Trade Credit ● Climate change is caused by too many
a. It is when a supplier allows you a period greenhouse gases such as CO2 ( carbon dioxide
of time ( such as 30 days ) to pay for ) and methane gas.
goods and services. ● The increase of greenhouse gases has been
b. However, your customers may also caused by industrial activity across the world.
expect TRADE CREDIT so the ● Burning fossil fuels creates greenhouse gases.
advantages of this can be cancelled out! These trap the warmth coming in from the earth
7. Factoring and act as a blanket, this leads to increase
a. Is where a business is able to receive temperatures, rising sea levels, where crops can
cash immediately for the invoices it has be grown etc..
issued from a FACTOR such as a bank
( instead of waiting the typical 30 days Long Term Effects - Resource Depletion
to be paid )
● Refers to the use of resources in production
b. A FACTOR is a financial service
which reduces the amount of resources available.
company like a bank and they charge a
● Renewable resources - reused in the future e.g.
fee for this service.
planting of more trees
● Non - renewable resources - resources that
Unit 3.5 The wider world affecting business cannot be replaced once used up e.g. coal, oil,
gas.
49. Environmental Issues
Environment - Recycling
Short Term Effects - Traffic Congestion ● Most businesses are affected by laws and
● Traffic congestion means increased travel time regulation in waste management and recycling.
for everybody using the roads. Vehicles operate ● In law, waste is anything that is discarded by
less efficiently on roads that are congested. They households, businesses or government
use up more fuel per mile travelled. Takes a organisations. Waste management is about
longer period of time to get from A to B. reducing the amount of waste generated in the
● Growth of internet sales has meant the growth in first place. It is also about recycling. Many types
the number of miles travelled y delivery vans. of waste can be reused. E.g: Glass, paper,
plastic, etc can be recycled.
● Recycling does not come without a cost.
Converting waste product into something can be
used again also takes up resources and costs
money.
40
● Increasingly, manufactures are being forced to
design their products in a way which will allow Average Income
them to be recycled.
● High income countries spend far more on import
than low income countries.
How can a business minimise its impact on the ● Low income countries like Ethiopia will spend
environment? next to nothing on imported products as they
1. Use renewable energy. cannot afford it.
2. Replenish and conserve natural resources. ● For UK businesses this means that they are likely
3. Biodegradable packaging. to sell their products to countries in the EU or
4. Reduce food miles. North America, rather than India and China.
5. Social Enterprise
Wages and Prices
50. Economic Issues Affecting International ● Uk businesses are consumers can take
Trade. advantage of the low wages that are paid to
workers in developing countries.
● Imports - These are the goods / services that are
● Companies like Primark can charge such low
sold in this country but are produced in a different
prices as they buy from suppliers in developing
country. The UK buyer would have to convert £
countries.
into the seller’s currency to complete the
purchase.
Quality and technology of products
● Exports - These are goods / services that are
manufactured in this country but sold to other ● Many products that are made in developing
countries. The foreign buyer. countries are not technologically advanced
● Protectionist Policies - designed to reduce the enough to be sold in developed countries.
number of foreign goods coming into a country ● Developing countries tend to buy high quality
but to also give incentive to British businesses to products form developed countries.
sell at home or export products. ● TATA example
● Tariffs or Customs Duties - Taxes that are put on
imported products which makes them more Import Protection - Tariffs or customs duties
expensive for buyers.
● This is designed to reduce the number of imports
● Quotas - A limit that is placed on the number of
coming in from other countries.
physical products that can be imported over a
● Tariffs or customs duties - Taxes on imported
period of time.
goods, for example, in India there is a 60% tariff
● Export Subsidies - Governments give businesses
on all imported cars.
money that export goods. This helps them reduce
● If Vauxhall sells an Astra to an Indian consumers
costs.
for £10,000 it will cost £16,000 to import.
Developed and Developing Countries Quotas and Safety Standard

● The level of development of a country’s economy
● Quotas - This is a limit on the number of physical
will impact the number of imports and exports it
products that can be imported over a period of
has.
time, e.g a year.
○ Average Incomes
● Safety Standards - can also be used as a hidden
○ Wages and Prices
form of import protection - for example a
○ Quality and technology of products
government may have safety standards that are
unique to that country, this deters businesses
from selling to such countries as they would have
to produce special products - increasing costs.
41
Export Subsidies Customers

● The government of a country will give businesses ● Businesses need customers to survive therefore,
that export products money ( a subsidy ) in order they should be listened to and made to feel like
to make production cheaper. they have a voice.
● As a result this reduces the price of the product ● All businesses have varying attitudes :
when sold abroad. ○ Mark and Spencer - environmental plan
● Governments do this so that their producers / ○ Co - Op bank - arms manufacturers
manufactures are more competitive than that of /dealers
other countries. ○ Exporting to Burma
51. Ethics Products

● A business has to decide about the ethics behind
Ethics in a business their product - this goes much further than
● Businesses have to make ethical choices - they producing the product but also when the product
have to decide whether an action is morally right is used by customers.
or wrong. ● Examples
● It is becoming more of an important issue for ○ Is it ethical for a shop to sell replica
businesses today. guns
● Covers a range of issues such as; suppliers, ○ Should newsagents sell adult
workers, customers, environment, competitors, magazines where children shops?
products and local communities. ○ Should fast food and chewing gum
companies be responsible for cleaning
Production the waste left behind.
○ M & S make clothes that wash at low
● Businesses have to choose a method of
temperatures ( environment )
production that minimises waste - negative
○ Some supermarkets do not sell GM
impact on the environment.
foods ( environment ).
● However, financially, it should choose the
cheapest option - but this might not be the most
Environment
environmentally friendly option.
● All businesses impact the environment - in
Suppliers today’s world most businesses will have waste
minimisations as a major objective.
● Financially, a business should pay its suppliers
● Examples:
as little as possible in order to maximise profits.
○ Recycling more
● However, this may not be seen as ‘fair’.
○ Using local suppliers to minimise travel (
pollution )
Workers ○ Allow workers to work from home to
● A business has to decide whether to pay their reduce congestion and pollution.
workers the minimum legal amount in order to
maximise profits or do they go above and Local Communities
beyond.
● Some businesses choose to involve themselves
● Examples :
with the local community.
○ Mark and Spencer is committed to
● This can include:
reducing workplace accidents and has
○ Sponsoring a local charity
health schemes in place for those with
○ Donations to schools
physical and mental health problems.
○ Sponsoring a sports club
42
○ If they put up a new building they ensure
it is visually pleasing. What EU means for each country?
● Some decisions that used to be made on a
Possible trade offs national level are now made at EU level
● Acting ethically raises costs e.g fairtrade ● Such decisions include;
● Some use ethical practises in their marketing. ○ EU tariffs and quotas on imports
● Improving working conditions or supporting a ○ EU tariffs safety regulations on certain
charity raises costs. products, such as cars.
● Motivation for workers - who will work harder and ○ EU level regulations that impact
this will reduce unit costs. businesses and employees.
Disadvantages of being ethical Single or Common Market

● The cost of being ethical is considerable - ● The EU has helped to create a Single or
therefore Total Costs rise and profit can fall. Common market.
● Makes it difficult for a business to remain price ● This means that good can be trade freely
competitive. between countries - no tariffs or quotas (so if you
● Target Market for ethical products is smaller - a produce in London it should be just as easy to
lot of customers to do not value them. produce and sell in Paris)
● Customers not willing to pay the increased ● Also, if a UK company wanted to employ
prices. someone from a different member state this
should be just as easy as employing some
Pressure Groups British.
● These are organisations that support causes

such as; workers’ rights, the environment, animal
Taxation
welfare and world poverty. ● Tax rates are still set at a national level and each
● They put pressure on businesses to act ethically. EU state will have different rates of taxation
● How businesses can respond: ● Taxes will affect both businesses and
○ Do nothing consumers;
○ Act against the pressure group ○ Taxes reduce the amount that
○ Work alongside the pressure group businesses and consumers have to
● In 2006 4 animals rights activists were jailed for spend - tax on profits means that
waging a hate campaign against a family run businesses have less to reinvest in their
business that bred guinea pigs for testing. business; Income tax means consumers
● The rail pressure group Passenger Focus are have less to spend on goods/ services.
currently protesting the rise in the train fares. ● Taxes will affect both businesses and
consumers;
52. Impact of Government and the EU on ○ Taxes on employing workers ( National
Insurance Contributions ) discourages
business.
businesses from employing people.
○ Taxes on cigarettes stops consumers
The UK government and the EU being able to afford them.
● The Eu was founded in 1957 ○ Some businesses move to Ireland to
● The number of member countries has grown over take advantage of lower tax rates on
time - currently there are 28 member states. profits.
○ Some businesses have moved from
Germany to Eastern Europe as they
43
have lower tax rates on employing For example, in the UK a 30 hour working week would
workers. bring in an average monthly payment of £1000 - Slovakia
is was £250
Regulation Business pressure groups argue that NMW are too high
and shouldn’t rise - whilst Trade Unions side with
● This is sometimes called ‘ red tape ‘ - because it
employees to get higher NMW ’s.
ties everything up is difficult to unravel.
● Regulations that impact business can include;
○ Declaring all financial accounts are
Maternity and Paternity Rights
records to Companies House ● EU regulation gives all working mothers a
○ Disposing of waste in accordance with minimum of 14 weeks paid maternity leave -
regulations national governments have the right to add their
○ All vehicles must be insured own regulations on to this.
○ Producing products in line with the ● No EU equivalent for paternity rights ( fathers )
Trade Description Act Business pressure groups argue that less maternity and
○ Businesses can only locate their offices paternity rights should be given as it increases costs and
in areas decided by the Local Authority disrupts work - Trade Unions argue that women should not
Meeting all these regulations increases costs - businesses be penalised for having a child.
in developing countries do not have as strict regulations,
this is sometimes considered an unfair competitive Health and Safety Regulations
advantage.
● All EU countries have health and safety
regulations - these set down minimum standards
Minimum Wages for the working environment
● The level that the minimum wage is set at is ● Can include;
different to each member state. ○ How long employees are made to work
● The average wage of a country is a good without a break
indicator of how high the National Minimum ○ Storage of dangerous chemicals
Wage is … the higher the average wage, the ○ Ventilation in a factory
higher the NMW is likely to be ● These impose costs on a business - business
● This can be an opportunity for businesses to pressure groups argue that they are excessive
locate their production in countries with a low and they have little impact on workers.
NMW - reduces costs. ● Trade Unions argue that businesses ignore the
● On the other hand, it is a threat for businesses health and safety of their employees.
competing against other businesses that do ● These regulation are difficult to enforce - not
produce in these countries. possible for every business to be inspected.
44
Do not forget Toni - Denis Tanase has helped you with your revision; this could mean even your whole
life because he has contribute to your grade. So just give him a hug in 10 years from now and maybe a
percentage of your [ … ]
45

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GCSE BUSINESS REVISION NOTES

Toni - Denis Tanase >>> Ducan Vinci

1.1 Introduction to Small business Page

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23. Customer Satisfaction

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45. Improving cash flow

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1.1 Introduction to small business

Primary Research Market Map

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Added Value Training provides Royalty Payments

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15.Business objective 16. Cost,revenue, profits

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Internal and External Sources

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A. Sole Trader Identify Customer needs :

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These tools should be used to put across the Physical Evidence

Promoting for the long term rather than

● Advice and Sales support

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25. Ownership comparison table

Sole Trader Partnership Private limited Public Limited Franchise

Liability? Unlimited Unlimited Limited Limited

Who is Owner Parteners Founder CEO and Franchisee

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26. Start-up legal and tax issues Corporation Tax

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Skills employers look for - the 10 key

Teamwork Team player with ability to What should the ad say?

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● This is also called Public Relations (PR) -

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● This is when workers ( manual or blue collar

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