business activity changing environment

8/9/2019 Business Activity Changing Environment

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Business Activity & TheBusiness Activity & TheChanging EnvironmentChanging EnvironmentBusiness Activity & TheBusiness Activity & TheChanging EnvironmentChanging Environment


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Task 1

Write down your name and what

grade you would like to achieve inBusiness & how you expect to getthat grade


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Your activity Write down three things that a

business may aim to do from the

beginning

What do you think their objectives

would be?


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Task 2 Think of 1 business that you arefamiliar with & write down three

things about this business

Why do you think this business is

successful?


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Homework Pick an organisation that you either like or

dislike

Research the company and give yourfindings Headings may include, company history,

products/services, employees, marketshare etc

Please do not copy from internet


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Objectives

W.A.L.T: Distinguish between the different types

of business organisations Explain what these different types of

organisations offerW.I.L.F: You to give your own thoughts& opinions Y

ou to participate You to work as part of a team


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Starter activity

What are the functions of abusiness?

List all the people that are involved ina business

What ways can people raise financefor their business?


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Sole Trader An individual which trades under his/her ownname

Is totally independent

Makes all the important decisions

Responsible for paying all of the debts

Few formalities in setting up

Can employ as many people as he/she wishes


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Advantages of a SoleTrader

Decisions can be made quickly Leads to greater interest & more dedicated &

hard working owner

Profits are kept by the sole trader Paperwork is minimal Easy to start trading as the sole trader Has close contact with employees and

customers Problems are easier to solve


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Disadvantages of a Sole

Trader Personally liable for all debts that it occurs

(unlimited liability)

Less capital available for expansion

Taxed at a higher rate than a private company

May have difficulty in managing all business

functions

When the sole trader dies so does the business

Raising capital could be difficult for one person


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Examples of Sole

Traders Corner shop

Coffee shop

Carpenters


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Your task Suggest two advantages & two

disadvantages of a person setting up

as a sole trader

List two objectives that a sole trader

may have


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Partnerships Can have between 2 & 20 partners

Set up under the Partnership Act 1890

A partnership deed can be used to setout the rights of the partners

Aim to make a profit


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Examples of partnerships

Doctors

Accountants

Solicitors


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Advantages of a partnership

More capital is available than for thesole trader because more people arecontributing

Better use of business expertisebecause each partner can concentrate onwhat they are good at

Better decision making because decisionsare made after discussions


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Disadvantages ofPartnerships

Group decision making may cause conflictbetween partners

Like sole traders, partners have unlimitedliability thus they are liable for all the debtsof the business

Decision making can be slower which can lead

to inflexibility Profits must be shared


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Your task Why is it important that a business

has a deed of partnership?

Why do you think partnerships are agood idea?


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Key termsUnlimited liability

The owners are personally responsiblefor paying debts if the business goesbankrupt

Limited liabilityIf the company goes into liquidation, theshareholders of the company are notresponsible for paying the debts of thebusiness


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Business Activity andBusiness Activity andthe changingthe changingenvironmentenvironment

Business Activity andBusiness Activity andthe changingthe changingenvironmentenvironment


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ObjectivesW.A.L.T: Explain the different types of business

organisations Examine the different finance methods

available to businessW.I.L.F:

Your participation Your ideas and opinions Complete tasks


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Starter Activity You have started up your own

business in Nottingham

Make a list of all the things whichare necessary to make this business

successful


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Private Limited Company

A company that is a legal entity in itsown right

It can be sued and can sue

Shareholders own the business A group of between 2 & 50 people who

buy the shares are called the

shareholders Cannot sell shares to the public


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Public Limited Company Can sell their shares to members of the

public through the stock exchange

Must have at least 7 shareholders withno maximum limit

Must issue a prospective detailing the

history of the company & inviting thepublic to buy shares


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Public Limited Company

Shares are bought & sold on thestock exchange

Accounts must be published andaudited on an annual basis

An annual report must also becompiled each year


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Advantages of a public

limited company Limited liability Easier than private limited company to

raise capital Attract top management because of

public image Continuity of existence

Lots of publicity based on stockexchange quotations


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Disadvantages of a

public limited company High formation costs

Accounts have to be published

Profits must be distributed to shareholders

Ownership & control are separated because

although the shareholders own the company theBoard of Directors make the decisions


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Key Terms

Shares

These are long term sources of finance

Sold to people who become shareholders of thecompany

A plc is able to advertise its shares for sale tothe general public

A private limited company must sell theirshares privately

Shareholders

These are people who own part of theBusiness


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Sources of finance

Internal sources of finance

External sources of finance


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Internal sources of

finance Retained profits

Stock reduction

Assets sale

Limiting credit to customers


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External sources of

finance Owners capital

Hire purchase and leasing

Overdrafts and loans

Grants


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Franchises & SourcesFranchises & Sourcesof Financeof Finance

Franchises & SourcesFranchises & Sourcesof Financeof Finance


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Objectives

W.A.L.T: Evaluate the idea of owing a franchise&

determining what advantages &disadvantages there are associated with it

Distinguish between the various sources offinance available to businessesW.I.L.F: You to create a suitable advert for the

sale of a franchise You to answer multiple choice questions

and exam style questions


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Starter Activity What are the various businesses organisations

that we have done?

What is an entrepreneur?

What are the characteristics of an entrepreneur?

What are the two sources of finance called?

List three finance methods associated with each


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What is a franchise?

Involves paying a fee & agreeing toproduce goods exactly in accordance withthe franchise companys policy

Payments are made on a regular basisdepending on profits made

Training & supervision are provided


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Your task

Create a newspaper advert selling afranchise

Example:

Mc Donalds largest restaurant forsale as a going concern to suitablefranchisee(address)

Excellent trading figures, fulltraining provided. Price 375,000


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The Stock marketInternet site


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The public and private

sector The public sector includes everything that

is owned by the government

Examples-army, police force, schools &hospitals

Public means that they are owned by thegovernment for the benefit of the peoplewho run them

h l d


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The public and privatesector

The private sector contains all thebusinesses owned by private individuals

Almost all the businesses you can think ofare in the private sector

Private means that these businesses are

run for the benefit of the people who ownthem


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Strengths of the free market

private sector Employers & employees can create their

own personal wealth through the profitmotive & hard work

A greater range of products are supplied

People have greater freedom to choose &but what they want

Competition helps keep prices down &

encourages new ideas


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Strengths of the planned publicsector

Public services do not depend on theprofit motive & will be supplied even

at a loss

The provision of basic services

available to all regardless of peoplesability to pay them


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ObjectivesW.A.L.T: Outline the various factors of production

Explain how each factor is important to abusiness

W.I.L.F:

You to distinguish between the differentfactors of production You to start working on cash flow and

its importance


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Factors of production

These four factors of production are theresources that are used to produce theeconomys goods & services

Land Labour

Capital

Enterprise


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Land All businesses need

land to createtheir products

They may use theland, build on the

land or extractfrom the land

Labour Businesses need to

employ people to makeand market theirproducts

The UKs labour forceis made up of all themen & women who areavailable to work


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Capital

To make their goodsor to provide theirservices, firms needto invest money inmachinery, buildings,vehicles and othermajor resources

Enterprise

The entrepreneurowns the business

and is prepared totake the chancethat his or herproduct will be a

success


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Cash FlowCash FlowCash FlowCash Flow


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ObjectivesW.A.L.T: Create a cash flow statement D

ifferentiate between fixed & variablecosts & total costs

W.I.L.F:

You to create a cash flow with variousfigures given


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Starter Activity-match the key

word to the meaningSole Trader You must pay back what

you put in & all debt

Entrepreneur You only lose the amountof money put into thebusiness

Limited Liability An individual willing totake risks in setting up a

businessUnlimited Liability Business organisation

that is owned by a singleperson


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Cash Flow

Is the flow of all money into and outof the business

Cash flow is important because ifthere is not enough money flowing inyou dont have enough to pay bills


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Poor cash flow=big

problems Not enough cash to pay daily expenses

Lack of working capital

Staff dont get paid on time

Creditors may not get paid on time

May become bankrupt


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Your task1) What is a cash flow?

2) Why should a business prepare acash flow?

3) Why does a business need to keepan eye on their finances?


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Reasons for preparing a

cash flow Lets a business know if they will have

enough money to meet payments due

Indicates which months there will bea cash shortage


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The different costs

involvedFixed costs: Costs which have to be paid no matter

what has been sold or producedVariable costs: Costs that vary according to the amount

produced or sold

Total costs: Fixed costs + variable costs


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Tick which source of finance

is necessary for the following Short term Medium

termLong term

Stock forresale

10, 000

Premises 120,000

Machinery 50,000

Vehicles 18,000

Land 60,000

Oil 2000

Wages 1800

Telephone 400

Computers 6000


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ObjectivesW.A.L.T: Distinguish between the various types of

stakeholders Match the type of stakeholder to a various

aimW.I.L.F: Y

ou to relate questions to lessons that wehave completed already


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Stakeholders Internal-owners, managers, directors

Variable costs:

External-local community, bank,suppliers


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Your task Select a business of your choice and

write about the various stakeholders

that would be affected by it


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Match an appropriate aim to

each stakeholder groupGroup Aim

Customers No pollution

Local Community A return on theirinvestment

Lenders Job security

Employees Lower prices


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Judging success-how are

objectives measured? Size

Turnover/market share

Shareholders

Number of employees/staff turnover

Customer satisfaction/number ofcomplaints


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Factors of productionFactors of productionFactors of productionFactors of production


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Objectives

W.A.L.T: Examine the different factors of

production and how they affect a business Relate the factors of production to a

particular business situation

W.I.L.F: Your thoughts and opinions based on these

topics and how they would relate them to aparticular business scenario


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Starter Activity What are the four factors of production? Explain what is meant by each of those

factors

Fill in the blanks: Employees earn -----(w)

The owners of capital receive --------(I) Entrepreneurs make -------(p) The owners of land receive ----(R)


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Areas to be covered Primary Industry

Secondary Industry

Tertiary Industry

Employment


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The primary industry These are businesses that extractsomething e.g. coal, oil, stone, fishand ore

The location of these businessesusually depends on where the

resources being extracted are found


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The secondary industry Theses are businesses that constructor manufacture something

Their location is influenced by manyfactors such as government supportand the existence of a suitable

labour force


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The Tertiary industry This is the service sector and supports theother two industries

Services include transport, finance,insurance, training and advertising

Their location will be influenced by theservices required by firms in the othertwo industries


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Your taskClassify each of these businesses as eitherprimary, secondary or tertiary:

A specialist distribution firm A builder A building society A forestry plantation

A computer manufacturer

List four major influences on location


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Objectives

W.A.L.T: Distinguish between the different types of

production

Categories different items into the correctproduction method

W.I.L.F: You to distinguish between the different

production methods and give relevant examples


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Starter Activity

Factors of production jumbled up words

Access business studies on line

http://www.businessstudiesonline.co.uk/GcseBusiness/Activities/Module1/Module1Menu.htm#GCSEBusMod1Factors


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Methods of productionJob production:

when a business makes a single one ofproduct

The job is often built by skilled labourworking to the customer requirements

Since only one item is made the businessmay not gain economies of scale


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Methods of production

Batch production:

When there is more than one itemmade

Each batch of products are finished

before the next batch


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Methods of production

Mass production

When identical items are made on a

production line

The product moves from one stage to

the next


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Chose either job, batch

or mass Cans of paint A factory extension Shoes, size 7 Television The channel Tunnel

State one advantage and one disadvantageof mass production


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Starter Activity Refer to hand out sheet

Also grade or no grade quiz

http://www.businessstudiesonline.co.uk/GcseBusiness/Activities/Module4/Module4Menu.htm#GCSEBusMod4ProductionMethods


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Starter Activity

1) Describe what is meant by batchproduction

2) A cost which remains the sameregardless of the level of production is_____ cost

1) A cost which changes according to thelevel of production is a _____ cost

l


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Developments in

production Just in time-only buy stock as you needthem, no need for additional storagefacilities

Cell production-where people make aparticular part of the product and movescontinually

Kaizen-invest in skilled people rather thantechnology ( continuous improvement)


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Lean production Refers to the various ways that are nowused to improve the efficiency ofproduction

Tries to cut development time

Associated with just in time, cellproduction and the Kaizen system


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Your Task Choose an organisation of your choice

and outline what type of production

mostly suits them and give relevantreasons why


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The Government They create various laws and regulationsthat affect businesses

The EU and the UK Government alsosupport firms

The Government want to be paid VAT andtaxes


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The P.E.S.T analysisThe P.E.S.T analysisThe P.E.S.T analysisThe P.E.S.T analysis1515thth October 2007October 2007


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Objectives

W.A.L.T: The importance of the p.e.s.t analysis on a

business Distinguish the difference between

P.E.S.T

W.I.L.F: Y

ou to relate the p.e.s.t analysis to aparticular business (case study)


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The PEST analysisRefer to the handout

A scan of the external macro-environmentin which the firm operates can beexpressed as;

Political Economic Social Technological


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The steps involved

Environmental Scan

External analysis Internal analysis

Microenvironment Macroenvironment

P.E.S.T


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Political Factors These include government regulations &

legal issues

Defines both formal & informal rules

Examples-tax policy, employment laws,environmental regulations, trade

restrictions and tariffs, political stability


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Economic Factors

Economic factors affect thepurchasing of potential customersand the firms cost of capital

Examples-economic growth, interestrates, exchange rates, inflation rates


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Social Factors These include demographic and cultural

aspects of the external microenvironment

These affect customer needs and the sizeof potential markets

Examples-health consciousness, population

growth rate, age distribution, careerattitudes, emphasis on safety


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Technological Factors These can lower barriers to entry, reduceminimum efficient production levels andinfluences outsourcing decisions

Examples-research and development,automation, technology incentives, rate of

technological change


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Case study

Relate to the p.e.s.t case study

Read through case study and answerquestions based on this case study


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The Business Cycle This shows the regular patterns of upturnsand downturns of the level of output in theeconomy

Goes through stages-boom, slump,recovery

Diagram

The business cycle business studies on linepart


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Your task Look at the shops, offices or

factories in Witham. Have any of

them opened or closed recently?

Are there other reasons or is it a

result of the business cycle


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The E.UThe E.UThe E.UThe E.U


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ObjectivesW.A.L.T:

Understand the purpose of the EuropeanUnion

Determine what has happened since theintroduction of the E.U

W.I.L.F: You to answer the questions based on the

European Union


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What is the E.U? This is a political and economic community

Made up of 27 countries member stateslocated in Europe

In 1957 6 European countries formed theEuropean Economic Community (EEC) bythe Treaty of Rome

What has happened


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What has happened

since then? The EU has grown in size throughnew member states

In 1993, the Maastricht Treatyestablished the base of the current

legal framework


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Advantages of the EU


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Advantages of the EU

Free Trade (no tariffs or quotas) benefits industries as theyhave a larger market to sell their goods to

Greater co-operation between countries should prevent theoutbreak of war between members

Greater cultural understanding results from freedom totravel within the EU

The E.U has a greater influence on world events than theindividual countries could have

European Union regional development funding has improved

conditions in the poorer countries and areas

Disadvantages of the


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Disadvantages of the

E.U Goods cost more to import from non-EUcountries due to tariffs

E.U funded schemes such as the Common

Agricultural Policy, are expensive,inefficient and sometimes corrupt

It reduces the political independence ofeach country-decisions are taken for all

countries by the European Parliament


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Task Two Look at the handout regarding thehistory of the E.U

Draw arrows to link to the correctsequence of events

Discuss with your partner and then drawin the arrows


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The European UnionThe European UnionThe European UnionThe European Union

Introduction of the


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Introduction of the

euro In 1999 the EU introduced the euro

Has been adopted by 13 memberstates


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Your task Name the country

www.businessstudiesonline.com The drag and drop section


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Members of the E.U Czech Republic Poland

France

Albania Sweden

Lativa

Serbia

Belgium

Moldova

Slovakia

Estonia Iceland

U.K

Luxembourg

Romania


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Members of the E.U Bulgaria Switzerland Greece

Finland Ukraine Spain Ireland

Hungary Austria Italy

Lithuania Montenegro Slovenia

Denmark Malta Belarus Netherlands

Cyprus Norway Germany Potugal


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Business and the EU Has helped increase trade betweenmember countries

Businesses has the opportunity to expand

The Eu has tried to protect businesses byimposing custom duties on goods importedinto the EU


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HomeworkEssay (Red tasks)

Why are more countries wanting to jointhe European Union/ What might their

concerns be?Yellow tasks Create a poster about the European union.

On the poster include a small map of the

E.U, information about the E.U, thecountries in the E.U and the purpose ofthe E.U


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Importance of the E.U The European Union contains four ofthe worlds major economic

powers;France, Germany, Italy andthe U.K

The E.U is now the UKs main market


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U.K

imports in 2000UK imports 2000

EU

Rest of Europe

North America

Rest of the world

The EU=58%

Rest of Europe=6%

North America=15%

Rest of the world=21%


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U.K

Exports in 2000UK imports 2000

EURest of Europe

North America

Rest of the world

The EU=54%

Rest of Europe=7%

North America=15%

Rest of the world=24%


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The single market Promoting trade between themember states was a major influencein establishing the EU

Its common market is now a singlemarket consisting of about 400

million people

Purpose of the single


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Purpose of the single

market Free movement of people (labour)

Free movements of goods (no internaltariffs)

Common technical and otherstandards

How the single market hasfl d K b


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influenced UK businesses in

several ways Common standards of quality and safety

Open market encourages competition

Free movement of labour and goodencourages employment and skills

development


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The monetary union Economic and monetary union is closelylinked with the euro and eurozone

The single currency will affect the EU:

Trade will be valued in euros, exchangerate fluctuations will have an impact and

also price difference may cause problems


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Your task In the EU what is the social charter?

What is the difference between theeurozone and the euro?

What does the EUs single market

seek to do?


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Answers A charter protecting the rights ofworkers

Eurozone is the member states who havesigned up to the single currency. The eurois the name of the single currency

Provides free movement of labour andgoods and establish common technicalstandards


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Plenary Test the person beside you regardingthe true and false statements and

see if their answers have changed


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ObjectivesW.A.L.T:

Determine how businesses grow Discuss how businesses grow internally

W.I.L.F: You to create a spider diagram outlining

how businesses grow You to participate and engage fully in

lesson


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Starter List ways that a business may grow

Create a spider diagram to displaythese


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How a business grows There are several methods to

measure an organisations size:

Profits Turnover

Employees

Capital employed


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Profits and turnover Profits-how much the business keepsfrom selling its goods and services

Turnover-the sales that the businessmakes

Employees and capital


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Employees and capital

employed Employees-the number of peopleemployed in the business

Capital employed-the resources thebusiness has invested in it


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Key termsFor a firm, greater size through

growth makes:

Economies of scale possible

Survival more likely

How can firms grow


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w f m g w

internally? They grow organically

Can grow through mergers or takeovers

This usually happens when an organisationsell more of its existing products, startsselling new products and when businesses

enter new markets


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Integration In a merger two companies agree to join

This external growth is the quickest way

for organisations to grow

In a takeover one company buys enough ofanother companys voting shares to take

control


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Economies of scale They are the reasons why the average costof production may fall with increasinglevels of output

What is your opinion? Would it be a goodidea for a company to produce in largeamount or do you think they should only

produce as needs be


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Task You own a small business and you want toensure that your business provides thebest possible service to their customers

Create a questionnaire finding out ifcustomers are happy with the service theyare getting from your company


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Starter ActivityMerger The businesses own moneythat is ploughed back in

Takeover If large amounts are made andit reduces the average cost

Turnover When one company buysenough of another companysvoting shares

Retained profits Way of comparing abusinesses size

Economies of scale Takes place between twocompanies through theiragreement


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Externalities All businesses bring benefits to peopleand others outside the business this iscalled externalities

Externalities are costs or benefitsarising from business activity that areexperienced by people or organisations

outside the firm

Example


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Example

A new housing developing is opening up inWitham

They are aimed at people from deprived areas

These people have been involved in crime andsubstance abuse

You must outline the negative and positive

externalities associated with this venture


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Your task Create a spider diagram showing the

positive and negative externalities

Positive Negative


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Year 10 BusinessYear 10 BusinessYear 10 BusinessYear 10 BusinessMondayMonday


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O

bjectivesW.A.L.T: Distinguish between imports and exports Distinguish between visible and invisible

tradeW.I.L.F: You to complete the starter activity You to answer the questions based on

importing and exporting


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S

tarter ActivityHome Trade The export and import ofservices

Importing Selling to other countries

Exporting The import and export ofgoods

Visible Trade Buying or selling topeople in same country

Invisible Buying from othercountries


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Trading Is the buying and selling

Home trade is when businesses buy or sell

goods to people in the same country

When businesses buy or sell from othercountries outside the home country is

foreign trading


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Importing vs. exporting When businesses buy goods orservices from other countries iscalled importing

When businesses sell goods orservices to another country is called

exporting


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V

isible trade Is the export and import of goods

Dairy produce, livestock, machinery,oil, clothes, shoes are all examples ofvisible trade


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Invisible trade Is the export and import of services

When Americans or other foreigntourists come to the U.K on holidays,it is an example of invisible trade


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Y

our task Outline on a spider diagram thereasons why the U.K imports andexports

Importing Exporting


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Reasons for exporting Easier for the U.K to produce agriculturalproduce because of climate

Businesses need more than the homemarket

Creates extra employment

Foreign currency


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Task Explain the difference between hometrade and foreign trade?

Give three reasons why the U.K importsgoods from other countries

Why do we export to other countries?


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Year 10 BusinessYear 10 BusinessYear 10 BusinessYear 10 BusinessWednesdayWednesday


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O

bjectivesW.A.L.T: Distinguish between the various types of

finance

Distinguish between ordinary andpreference shares

W.I.L.F: You to attempt the starter activity You to complete all the relevant task


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Internal sources of


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finance Retained and using profits

Selling assets

Using trade credit

Investing any surplus cash

Reducing stocks held


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T f h


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Types of shares Two types of shares-ordinary and

preference

Ordinary shares allow holders to vote atcompany meetings

This makes an ordinary shareholder an

owner of the company

P f h


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Preference shares These dont usually give their holders the

right to vote at company meetings

Preference shareholders receive priorityover ordinary shareholders when it comesto paying dividends and repaying capital

Y k


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Your task List three reasons why businesses

need finance

State two differences ordinaryshares and preference shares

Ordinary andf h


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preference sharesOrdinary Preference

Voting rights? Normally one

per share

Usually non-

votingDividendPayment?

Variable Fixed

Capitalrepaid? Paid afterpreference;repaid last

Paid beforeordinary;repaid beforeordinary

Homework


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Homework

Red task-Choose a business of your choiceand explain what source of finance wouldbe most adequate for that business to

grow

Yellow task-Write a letter to a company ofyour choice explaining the difference

between ordinary shares and preferenceshares (you must research)

business activity changing environment

Documents