AQA Business GCSE - paper 1

•Businesses produce goods or supply a service.

Explain, using an example, what a service is.

A service is an intangible product. eg) financial advice or a yoga lesson

•What is the difference between a customer and a consumer?

A customer is someone who buys the product from the business

A consumer is someone who uses goods and services produced by businesses

•Give three objectives of entrepreneurs

(1) They want to be their own boss and make their own decisions

(2)They want to keep all the profits for themselves - they earn more money than of they were employed by someone else

(3)They are unhappy with their present job and want to do something different

•What is land, labour, capital and enterprise known as?

Factors of Production

opportunity cost

The sacrifice we make whenever we decide to do anything

Primary Sector

it's the first stage or production and uses raw materials - FARMS, OIL EXPLORATION OR FISHING FLEETS

State characteristics of entrepreneurs.

- Innovative

- Risk Taking

- Hard Working and determined

- Organised

State three examples of businesses in the tertiary sector

hospital, banks, shop selling clothes

Give two changes in technology that can affect a business

New ways of producing products

New products themselves - self driving cars

Give two changes in economy that can affect a business

A sudden increase in prices of raw materials

falling levels of unemployment making it easier for people to find jobs

State two reasons as to why an entrepreneur might want to become a sole trader.

- you are your own boss

- easy to set up

disadvantages of a sole trader

- Unlimited liability

- May lack finance

- Heavy workload

- May not have all the skills required

- Difficult to take a holiday

limited liability

A form of business ownership in which the owners are liable only up to the amount of their individual investments.

unlimited liability

The owner is personally and fully responsible for all losses and debts of the business

what is the main difference between unlimited and limited liability?

level of risk that a business is willing to take

Two advantages of a partnership compared to being a sole trader

- Share skills

- More sources of finance than a sole trader

Partnership

a business owned by two or more people

Disadvantages of Partnership

- May disagree with other partners

- Liable for the actions of the other partners and share profits

Deed of partnership

a legal document drawn up by a solicitor/lawyer setting up rules for the partnership

Why might someone buy shares of a business?

Buying shares gives the buyer part ownership of the business and therefore certain rights, such as the right to vote on changes to the business.

Private limited company

Owned and run by shareholders who are family and friends

public limited company

Owned by shareholders who are members of the general public

Shares are bought and sold on the stock exchange

Advantages of a private limited company

- Shareholders have limited liability

- Capital can be raised by selling shares

- They do not have to disclose most of the information that public limited companies have to provide

- Ownership is not lost to outsiders as all shareholders are known

Advantages of a public limited company

-Limited Liability

-Greater Public Profile

-No selling shares restrictions

-Raise higher level of funds

Disadvantages of private limited company

- Profits have to be split with shareholders by issuing dividends

- Legal process required to set up the company

- Shares cannot be sold publicly on the Stock Exchange, so there is a limited source of capital available

- Financial accounts can't be kept private as they must be shared with the Companies House and are therefore made publicly available

- Larger companies are more difficult to manage effectively

disadvantages of public limited company

-Certain financial information must be available- for everyone to see including competitors and customers

-Shareholders expect dividends

-Expensive+ complicated to set up

aim

A general goal of a business

objective

A specific target that contributes to a business achieving its aims. It is usually SMART

SMART

Specific, Measurable, Attainable, Realistic, Timely

What is the purpose of setting objectives?

1. It gives a target to aim to, therefore all efforts will be focused on attaining the objective instead of being inefficiently used

2. Gives participants a sense of direction, a glimpse of where they're going to

3. Motivates the staff, a reward could be given once the team successfully completed a project

4. You can measure whether the objective has been a success.

objectives for a business

Survival

Earning a Profit

Customer Satisfaction

Market share

State two reasons as to why a business might want to change its objectives

It may want to grow in order to get more sales and profits

It may also involve expanding overseas to target new customers

profit

financial gain

ICT (information and communication technology)

The computing and communications systems that a business might use to exchange information with stakeholders.

Give two examples of information that a business might exchange with its customers using ICT

Prices of a product

Product Details

Explain one reason why a business might decide to use software robots as a form of business technology

They can be designed to respond to customer enquiries and other stakeholders

The act of buying or selling a product using an electronic system such as the internet

E-commerce

The act of buying or selling a products through wireless handheld devices such as smartphones

M-commerce

State two reasons why increasing numbers of retailers are using e-commerce

It helps smaller business to target national or even global markets with their products

The business will be able to advertise its products widely without spending large sums of money on advertising

Digital Communication

This is the transmission of information electronically between computing devices.

Why business might use social media websites to communicate with its customers

- attract customers, get customer feedback and build customer loyalty.

- increase your market reach, including international markets.

- do market research and reduce marketing costs.

- increase revenue by building customer networks and advertising.

- develop your brand.

State two reasons why a large company might decide to hold meetings with shareholders online.

It improves the companies' communications.

More shareholders can attend as they do not have to travel

Ethics

the principles of right and wrong that guide an individual in making decisions

State two reasons that might be asked to decide whether a business is ethical or not

Are suppliers paid on time, or is the payment delayed?

Are employees treated fairly?Are they Paid well?Is child labour used in overseas factories?

Explain one way in which a business could engage in ethical marketing

Donating significant amounts of profits to charities

environment

is the natural world in which we live- landscapes, its natural features ie.seas, rivers, forests and mountains

Sustainable Production

Occurs when the supply of a product does not impose costs on future generations by for example, depleting non-renewable resources

Give two examples of environmentally responsible decisions that consumers can take

Recycling

Disposing of waste

economic climate

The overall health of the economic systems within which a firm operates.

Give an example of a sign that is improving economic climate.

A rise in the number of people in employment

Interest rates

The cost of borrowing money or the reward for saving money, expressed as a percentage

overdraft

A flexible loan which businesses can use, whenever necessary, up to an agreed limit

One possible effect on falling interest rate

Consumers will be more willing to spend money on much more expensive items such as a house or a car.This is because lower interest rates will reduce the initial price of the item.

consumer spending

The value of goods and services bought by consumers over a time period, usually a month or a year

legislation

a law or set of laws

Employees rights

Give Maternity pay and paid holidays, allow employees to join a trade union, provide a safe working environment, provide suitable training, allow employees time off for certain reasons, pay employees as stated in contract of employment

health and safety at work act

supply adjustable furniture so that workers can achieve a safe and comfortable keying position

Data Protection Act

This law regulates how personal information is used and protects against misuse of personal details.

Market

a group of buyers and sellers of a particular good or service

How do firms in markets with a small number of rivals compete?

- Price competition

- Competing by developing new products

- Competing through advertising

A monopoly exists in ...

a single business selling a product in a market NO COMPETITION

risk

possibility of something going wrong

uncertainty

occurs when there is a lack of information about a situation and therefore makes the outcome unpredictable

internal risk

Employee's may refuse to work

External risks

business maybe faced by a new competitor or natural

disaster

How can businesses reduce risks?

By making a business plan

Entrepreneur

A person who organises, manages, and takes on the risks of a business.

Job production

Producing a one-off item specially designed for the customer

Advantage of job production

Can charge higher prices

Workers are well motivated

Flexibility

High levels of customer loyalty

Excellent customer service

Disadvantages of job production

need highly skilled staff--costs more

high cost method

larger firms can offer equivalent products at a much lower price due to the economies of scale

highly competitive

if customer doesn't collect or pay

Flow production

Producing items in a continually moving process - also known as line production

Advantages of flow production

don't need as much skilled workers --costs less

unit cost is low

able to produce large quantities

high levels of manufacturing/producing which reduces numbers of workers needed

specialisation on certain tasks

improves competitiveness

disadvantages of flow production

not as well motivated

high risk due to large investment

if demand is not high, there will be large stockpile

workers on line can find work boring

difficult to make changes to the line

kaizen

continuous improvement

Lean production

a approach of production that aims to minimise waste

just in time

little stock as possible.Items are ordered just in time to be used

Just in case (JIC)

A situation where a company keeps a small stock of components (or complete items) or ones that take a long time to make, just in case of a rush order.

procurement

the buying and reselling of goods that have already been produced

quality

how good or bad something is

Total Quality Management (TQM)

An approach to quality that aims to involve all employees in the quality improvement process and the prevention of errors

Why might employees resist the introduction of TQM?

because this means they have to monitor their own work and be prepared to send work to people who passed it on to them to see if it is not good enough.

Business might measure the quality of a product by..

inspection and checking ie.quality control

customer service

Activities and benefits provided by a business to meet it's customers need and wants to create goodwill and customer satisfaction

State two ways in which a business might offer good customer service

Customer engagement

Good product information

Customer Engagement

The relationship between the business and the customer that puts the customer's requirements at the centre of the operation to build brand loyalty.

Post-sales service

Service after the customer has purchased a product. E.g. A free service for a car or complaints procedures.

benefits of customer service

makes the business more competitive - making themselves distinctive and compete successfully with their rivals

increases customer satisfaction - builds a good reputation and customer loyalty

M-commerce

the ability of using a wireless hand-held device for the purpose of buying or selling goods or services

Dangers of poor customer service

Dissatisfied customers - not return to the business

problems with attracting new customers- due to bad reputation

e-commerce

the buying and selling of goods over the internet

Organisational structure

Refers to the levels of management and division of responsibilities within an organisation

span of control

the number of subordinates who report directly to a manager

Delegation

passing authority down the organisational hierarchy

Decentralization

allows employees working in all areas of the business to take descisions

Delayering

The removal of one or more of the levels of hierarchy from an organisational structure

Flat Organizational Structure

wide span of control and fewer levels of hierarchy (short chain of command)

Tall organisational structure

An organisational structure with a narrow span of control and many levels of hierarchy (a long chain of command).

Advantages of Decentralization

Can reduce pressure on the senior managers

can motivate the employees

may lead to better ideas/decisions

can allow faster decision making

Two challenges that might be faced by a business that is decentralising

Training may be needed- if employees are asked to take on a new role, they may not have the right skills or knowledge- the business will need to invest in necessary training which may in fact be costly.

all the business' employees must understand its aims and goals- help ensure that make decisions in the best interest for the whole business and not just their branch

recruitment

the process through which the organisation seeks applicants for potential employment