Upload
brenda-chapman
View
239
Download
2
Embed Size (px)
Citation preview
UNIT 1 - STARTING A BUSINESS
AQA GCSE Business Studies
ENTREPRENEUR
DEFINITIONA person who
has an idea for a new business
and is prepared to take risks to
make the business work.
QUALITIES
REASONS FOR STARTING A BUSINESS
EMPLOYMENT Starting your own business is one way of making sure you are employed and earning a living.
PROFITStarting your own business allows you to keep all
the profits rather than working for owners who keep the profits.
OWN BOSSStarting your own business allows you to make
your own decisions rather than being accountable to someone else.
FLEXIBILITY Starting your own business allows you to choose your own hours of work.
INTEREST Starting your own business allows you to earn a living pursuing a hobby/interest.
GAP IN MARKET
Starting your own business allows you to take advantage of a gap in the market – no other
business like it in the market
REDUCING RISK OF BUSINESS FAILURE
Write a business plan
Choose a limited company
Save rather than borrow
Carry out market research
Start a franchise
Get advise
Find a partner
Help with organisation. Help monitor/evaluation business success.
Limited liability – only lose what you invest if business fails.
Reduces debt and amount of interest paid on loans.
Able to identify gap in market, customer needs/wants and competition.
Established brand, support/training from franchisor and marketing costs shared.
Get advise
Can provide advise, expertise and finance.
BUSINESS ACTIVITY
GOODSItems that can physically seen and touched e.g. car, furniture.
Businesses offer products and
services for sale to consumers.
SERVICESA service is intangible i.e. you
cannot physically touch it.
Some businesses offer both e.g. we
choose a restaurant for the atmosphere and environment (a service) as well as the food (a good).
GAP IN THE MARKET
Business produces a product or identifies a service which is not yet available on the
market for consumers to purchase.
BENEFITS• Charger higher
price for product/service – less competition.
• Increased sales – less competition.
• More customers – selling unique product/service.
DEFINITION
BUSINESS SECTORSPRIMARY SECTOR
Made up of organisations in first stage of production. Extract raw materials. Land is used
to grow items.
SECONDARY SECTORMade up of organisations in the second stage of production. Primary sector resources are used
to manufacture products.
TERTIARY SECTORMade up of organisations that sell products and
provide services.
CHANGING TRENDSPRIMARY SECTOR
Numbers employed has
decreased
Less natural resources to extract. Land taken for housing/business
developments.
SECONDARY SECTOR
Numbers employed has
decreased
Cheaper to manufacture abroad. More machinery/robotics used in production
process.
TERTIARY SECTOR
Numbers employed has
increased
More demand for products and services.
FRANCHISEA franchise occurs when a franchisor sells an
existing business idea to a franchisee. A franchisor is the seller of the franchise. A franchisee is the
buyer of the franchise.
ADVANTAGES DISADVANTAGESGood chance of success – name already
established/well known.Franchisee cannot make many decisions –
must be run according to the rule of the franchisor.
Advise and assistance (e.g. training, marketing) given – franchisor will have
experience.
Franchisee will never feel business is there own – has been established by franchisor.
Reduced marketing costs - franchisor responsible for market research, product development and promoting the business
Costly way to run a business – fees, royalties (% profits) and expensive stock must be paid for
by the franchisee.
Mrs Rae(Franchisee
)
I want to open a
McDonalds franchise
McDonalds(Franchisor)
McDonalds agrees to allow me to use the company’s name and
sell the company’s products
I pay McDonalds £100,000 for the Franchise
BUSINESS OBJECTIVES
DEFINITIONAn objective (or aim) is a target that is set
for a business to achieve.
OBJECTIVES
BUSINESS OBJECTIVES
WHY SET?• Helps with decision making
and establishing priorities.• Helps investors understand
the direction of the business.
• Provides a target so that actual results can be compared with planned results.
• Can motivate everyone connected with the business because they know what they are trying to do.
EFFECTIVENESSTo be effective, an objective must clearly state:•What the target is e.g. increase profit by 20%•When it has to be achieved e.g. within 2 years•Who is to achieve it i.e. who is in charge of making sure the target is hit•How to achieve it i.e. what is and what is not acceptable behaviour
MARKET SHARE
DEFINITIONMarket share is used by
businesses todetermine their
competitive strength ina sector. Market
share is measured bysales revenue or sales
volume (number ofproducts sold).
CALCULATING sale of product x 100
total market sales
Zone4Sports:28 x 100 = 35% market share80
Total sales £m
Zone4Sports 28
Kinetics 20
RyderZee 16
Harringtons 16
Total market sales 80
SOCIAL ENTERPRISEA social enterprise is a business which trades to tackle social problems, improve communities,
people’s lives or the environment. Profits are re-invested to benefit society, instead of keeping it
for private gain.
Eden project in Cornwall – Focuses on environmental concerns
The Big Issue Magazine -Offers homeless people the
opportunity to earn a living by selling it
Fairtrade – As it says in the image above
STAKEHOLDERS
DEFINITIONAre groups of
people that are involved in
business activity either directly (internal) or
indirectly (external).
EXAMPLES
STAKEHOLDER INTEREST
STAKEHOLDER INTEREST
OWNERS Wants to make maximum profit from the business.
CUSTOMERS Wants a business to sell quality products and provide good customer service.
EMPLOYEES Wants the business to do well so there is job security, chance for promotion and to earn a good wage.
LOCAL COMMUNITY Wants the business to behave responsibly e.g. employ local people, reduce noise and traffic congestion.
GOVERNMENT Wants business to succeed. Successful businesses will employ more people and pay more tax.
SUPPLIERS Wants to be paid on time.
STAKEHOLDER CONFLICTMANAGER
Wants to raise selling prices to maximise profits
CUSTOMERWill not want to pay more
for their goods
OWNERWants to re-invest profits
into the business
SHAREHOLDERWill want the profits shared
out to them
OWNERWants to pay lower wages
to their employees to maximise profits
TRADE UNIONTrade unions who represent the employees will not be
happy with this
OWNERWants to buy stock from
suppliers at minimum prices
SUPPLIERWill want to make maximum profits.
Conflict
BUSINESS PLAN
DEFINITIONA document setting
out what the business does at
present, plus what it intends to achieve in the future and how this will be accomplished.
SECTIONS
BUSINESS PLAN
BENEFITS• Helps a business get a
bank loan.• Helps keep a business
organised.• Allows success to be
monitored and improvements made.
• A business can plan contingencies.
DIFFICULTIES• Lack of experience –
people starting a business may not have required skills to plan ahead.
• Uncertainty – not always easy to look ahead and predict what is going to happen in the market.
LEGAL STRUCTURES
SOLE TRADERBusiness
owned and managed by one person.
PARTNERSHIP
Business owned and run
by 2 to 20 people.
LTDOwned by
shareholders. Shareholders
tend to be family
members or friends.
SOLE TRADER
HOW TO SET UP
ADVANTAGES DISADVANTAGESQuick and easy to set up – no complicated forms or procedures
to follow.
Unlimited liability – if the business fails may have to sell personal possessions to cover
debts.
Decisions can be made quickly – do not have to get agreement from anyone else.
Difficult to raise money to expand – seen more of a risk by
lenders.
Keep all the profits – no one else to share them with.
Lack of continuity – if sole trader dies the business ends as
well.
There are no legal requirement to set up
a sole trader business.
PARTNERSHIP
HOW TO SET UP
ADVANTAGES DISADVANTAGESEasy to raise extra capital – all partners can contribute.
Partners have unlimited liability – see earlier definition.
More expertise – individual partners can specialise in different areas.
Decisions can take longer – partners may disagree about the running of the business.
Less pressure for each partner – problems and ideas can be shared.
Profits must be shared – this can cause resentment if one partner feels they have contributed more to the business.
Partners must draw up a Deed of Partnership. Outlines who is part of the
partnership, how much capital each partner has put in, how profits are
shared, duties of each partner and how can join and leave the partnership.
LTD
HOW TO SET UP
ADVANTAGES DISADVANTAGESLimited liability – if the business fails shareholders will only lose the amount they invest. Personal possessions will not be at risk.
Difficult and more expensive to set up – complicated paperwork.
Business can continue if a shareholder dies – shareholders shares can be transferred to someone else.
Cannot sell shares on the Stock Market – limits the amount of capital can be raised.
Easy to raise extra capital to expand – more shares can be sold in the company.
Accounts must be checked by an independent accountant – expensive.
Memorandum of Association: sets out the name of the company, purpose, where it is
registered and statement of firms activities. Articles of Association: sets out voting rights
of shareholders, how profits are distributed, how directors are elected and duties/powers of
directors.
FACTORS INFLUENCING LOCATION
RETAIL MANUFACTORING• Water and power supply• Climate (if needed for
growing)• Availability of government
grants• Transport and
communication links• Closeness to raw materials• Availability of land and
labour• Closeness to other
manufactures/suppliers
• Cost of rent• Available premises• Crime/security• Customer parking• Competition• Transport links• Communication links
(internet access)• Type and number of
shoppers• Availability of labour