GCSE Business 1.1-1.5

What is a stakeholder?

anyone who has an interest in a business

What is an internal stakeholder?

stakeholders within the business

What is an external stakeholder?

stakeholders outside the business (eg. suppliers, local community, customers, etc.)

How stakeholders are affected by business activity?

businesses can start a new marketing campaign, more tax fore the government and new export laws to adhere to

How stakeholders impact business activity?

• employees can increase reputation and sales by providing good customer services

• Suppliers can decide to stock a business and decide to use trade credit, or raise prices

• Government influences a firm using legislation and taxes

• Customers can decide to buy form their business or competition

• local community can protest against the building of premises

What are different types of technology used by businesses?

• Social media- promoting business online and communicating with customers

• E-commerce- selling products or services through the internet

• Digital communication- communicating with another party digitally

• Digital payment systems- transferring funds from consumers to the business

How is technology used in businesses?

• sales- convenience

• costs- anyone can start business online

• marketing mix- marketing campaigns more impactful; reaches further to more relevant audiences

What are the Pros of using E-commerce?

• process order quicker

• real time order updates to customers

• no need to run retail shop

• easy order process

• can order anytime

What are the Cons of using E-commerce?

• security concerns- fraud, identity theft

• Purchase decision may be based on price rather than brand loyalty

• hard to built customer relations/rapport

• expensive to keep up with technology

What is legislation?

sets of rules and regulations which a business has to comply by.

What is the Consumer rights act (2015)

Goods must be:

• As described

• fit for purpose

• satisfactory quality

What are the principles of the consumer law?

Customers may be entitled to refund, repair or replacement if goods are faulty or broken.

What is the Equality Act (2010)?

no discrimination on age, race, gender, religion to hire employees

What is the National Living Wage?

The amount deemed necessary to live in the UK se by the government

What is the current (2024) National Living Wage?

• £10.42 per hour

• Under 18: £5.28 per hour

What is the National Minimum Wage?

Minimum legal amount paid to workers

What are the Health and Safety requirements for employment?

workers have the right to work in places where risks for health and safety are properly controlled

What is the impact of legislation on business?

A small business will have to meet all of the consumer, employment and recruitment laws. This means:

• training more staff

• protection equipment

• cost of paying National Minimum Wage

What are the consequences of not meeting rules and regulations?

could include fines, imprisonment and disqualification (cannot operate a business anymore)

What is the economy?

how a country or place sis doing producing and making goods ad how much it makes from it.

What is economic acitivity?

The amount a country sells and makes

What does a change in consumer incomes mean?

consumers choose to buy inferior products instead of luxury products as their disposable income goes down and necessities become more expensive.

What are luxury products?

Products with a higher quality and price that are is usually not a necessity

What are inferior products?

Products that consumers have to have in-order to live

What happens to inferior and luxury products when the economy changes?

the gap between inferior and luxuries decrease when economic activity goes down as consumers have less to spend on luxuries.

What is unemployment?

The number of people willing to work and seeking work

What is the unemployment rate?

% of working population out of work

What is the current (2024) unemployment rate?

3.8% (Office of National Statistics)

What are the consequences of unemployment?

• customers may switch luxury goods for cheaper substitutes

• Unemployed workers may set up their own businesses- lower barrier to enter

• More workers available in recruitment pool

• Increased demand for inferior goods

What is redundancy?

Being laid off a company

What is inflation?

general and sustained increase in the price of goods

What is inflation measured in?

CPI- Consumer price index (usually %), measures the change in price of goods before and after a set period of time

What is interest rate?

The cost of borrowing money

What is the current target for inflation?

2% (set by Bank of England)

What is the consumer income impact of inflation?

if the uk inflation rates go up, consumers will feel poorer as their earned money will not buy as much, as goods have risen in price.

What is the Retail Price Index?

An index calculated and published by theUK ONS (office for National Statistics) measuring inflation with other costs, not just goods

What is the impact of high inflation on consumers?

• consumers will have reduced purchasing power as they have less to spend on goods, due to less disposable income.

• Goods costs more than before, decreases value for money

What is the impact of low inflation on consumers?

low inflation, consumers have more purchasing power as they have more disposable income to spend on goods and services

What is Purchasing Power?

the ability/power consumers hold to buy goods and services

What is the impact of inflation on businesses?

• staff wages may increase as they may ask for pay rise to compensate for inflation

• Affect businesses that trade overseas, leads to fall in demand for UK goods

What does a change in interest rates mean?

Consumers would decide to save instead of spend

What is the current (2024) CPI (consumer price index)?

4.2%

What are examples of Government taxation?

• Corporate tax

• Value added tax (VAT)

• Exchange rates

What is corporate taxations?

Tax on company profits, applied to all UK companies

What is the Corporate tax rate?

20% of profits

What is the effect of corporate taxations?

rise in this tax means companies keep less ofd their profits, leading to less company investments and possible loss of jobs

What is VAT?

Value added tax, additional fee added on top of the price of goods

What is the current amount needed for VAT on goods?

If a business earns over £85,000, they musty charge VAT on all goods

What is an exchange rate?

The price of one currency expressed in terms of another currency. The value of a currency is determined y the supply an demand of it.

What is the effect of a change in exchange rate?

Changes in exchange rate could effect the the transportation and sales of goods imported into a country, as well as the price of goods exported abroad from the UK

What is the impact of exchange rates?

Appreciation and depreciation

What are external influences on business?

changes in technology, changes in legislation

What is the effect of changes in technology?

• Businesses need to adapt the way it works

• Businesses can turn those into strengths of the business

• Products can go through R&D faster

• communication across borders

• social media

What can businesses use social media for?

• resolving complaints

• staying relevant

• communicating offers

• Listening to stakeholders

What is the effect of changes in legislations?

• Consumer rights act (2015)- businesses need to ensure their products comply with the law

• Employment laws- businesses have to ensure they are paying employees the legal minimum wage

• regulations- consumer protection from unfair trading regulations means they cannot mislead or harass by having a false and deceptive message, leaving out important information or using aggressive sales techniques

What does arrears mean?

Money owed

unlimited liability

owners of business must pay debts for the business, personal assets are not protected

limited liability

personal assets are protected, owners cannot lose more than invested

liquidate

selling assets of the company

how may a business start up?

as a sole trader or partnership, some may start as an LTD

What is it like being a sole trader?

responsible for business expenses, their own job, full control over what the businesses does, unlimited liability

sole trader

business with only 1 person owning and operating

partnerships

2-20 partners who jointly own the business and make decisions together, with profits shared and unlimited liability

examples of partnerships

doctors, dentists, accountants, solicitors, vets

what is it like to be in a partnership

mostly professional services, shared profits, most have a 'deed of partnership', easy to set up, contribution, mot finance raised, disagreements, limited liability.

Private limited companies (LTD)

made up of people who know each other- family and friends, shares cannot be bought by general public, owners control who buy the shares, expands by selling more shares, giving the business more capital.

franchise

business that operates on a wide scaler, could be national or international. "business in a box", signage and training given, support from a national company

how does a franchise work

established business (Franchisor) sells to other businesses or individuals (franchisee), the rights to use their name, logos, services, etc, in a specific geographical area. usually there is a initial set up fee and a % of turnover paid annually (royalties)

royalties

% of sales turnover paid annually to the franchisor to allow use of name, logo, etc.

marketing mix

promotion, price, place, product

How can a franchise help market a product?

promotion, price, place, product (marketing mix)

examples of sole trader businesses

freelancers, individuals

pros of using a franchise to market a product

global advertising, market research completed for each territory by franchisor, brand reputation and recognition

cons of using a franchise to market a product

less control, royalties

What the franchisor provides

training, equipment, materials, brand

business location factors

proximity to market, startup location, proximity to labour, proximity to materials

proximity to market

if bulky or perishable goods, manufacturers need to be close to customers. consumer goods manufacturers reduce cost of transport, location close to customer traffic, convenience for customers

footfall

area where customers may be

startup location

depends on type of business, could be at home, online, at a market stall, etc. start small, then grow.

proximity to labour

locate where there is an adequate supply of labour with the right skills. many areas have specialisms

areas with specialisms in the UK

Birmingham- cars, Sheffield- aircraft and steel products, Sunderland- shipbuilding and coal mining, Nottingham- clothes and medicine

proximity to materials

the close a business can be to the raw materials it needs for products, the lower the costs of production will be.

product mix

small businesses will need to think carefully about the product mix, should satisfy customer needs. 'cluster concept ', shops with same target market close together so customers can compare price easily

cluster concept

shops with the same target market setting up close together so customers can compare prices easily.

price mix

small business will need to think about the prices it charges for its. products or services. need to be competitive but also make enough profit.

Pricing Strategies

low price or very different products or services

place mix

a small business would need to think about how it will get its products or services to the customers.

places a business could sell its products

sell to wholesalers who then sell to retailers, sell through internets, open a shop or retail premises, sell its goods through retailers and shops

promotion mix

a small business will need to decide how it will attract and persuade its customer to buy

examples of promotion

price, adding value, sales

mass market

targeting the general population, advertised to cater to everyone

niche market

cater and target specific markets within the population

E-commerce

selling products or service online

pros of e-commerce

lower costs, high reach/global reach, flexibility

cons of e-commerce

limited connection with customer, security risks, skipping logistics, quality control

importance of technology on marketin gmix

product- online polls, price- price comparisons, bundle deals, place- wide audience, promotion- advertising in social media

low cost leader

a business that offers the cheapest product in a market

what is a business plan

a document which sets out the future plans of a business, how an entrepreneur will turn an idea to a successful business, used to ask for a loan

roles of a business plan

identify aims and objectives, identify business idea, identify target market (market research), forecast revenue, cost and profit, cash flow forecast

identify aims and objectives

show how a business aims to achieve its goals by using aims and objectives