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GCSE Business Studies Unit 1 Revision Notes
Reasons for setting up a business:
For financial reasons – make a lot of money
Personal reasons – Being your own boss, difficulty finding job elsewhere
To help others – For example a charity
Business aims:
Most important – Survival, make enough money to cover costs but maybe not profit
Provide high quality service/goods
Satisfy customers and their needs
Limit the amount of environmental damage done (Ethical)
An entrepreneur is a person who starts a new business
...

Important qualities an entrepreneur should have include:
Ability to think ahead to be able to identify opportunities for the future
Initiative to seek out business opportunities
Determination to turn ideas and thoughts into practice
Networking skills to identify creditors, suppliers, buyers etc
Leadership and persuasion skills to persuade others to support ideas
Ability to plan carefully to minimise the risk of failure
Ability to learn from mistakes to be able to be successful
Advantages - Sole Traders - Disadvantages
Can be your own boss
Hard to generate ideas
No arguments over decisions
Unlimited liability – the government see the
Easy to set up
owner and the business as one, therefore the
You get all the profit
owner’s personal assets may be seized if the
person is in debt
Tend to work long hours without holidays

Advantages – Partnerships – Disadvantages
Can generate a lot of ideas
 Unlimited liability – the government see the
Equal workload
owners and the business as one, therefore the
More capital going into business
owners’ personal assets may be seized if the
company is in debt
Disagreements over decisions

Advantages –Private Limited Companies (LTD) – Disadvantages
Limited Liability – This means that the
 Only friends and family are allowed to buy
government see the shareholders and the
shares, therefore there is a limited number of
company as separate, therefore in the case of
people who would be able to buy shares (Cannot
the company falling into debt, shareholders can
sell shares on the stock market)
only lose what they invested into the business
Expensive due to legal paper work
You know who the shares are going to, so a
Must publish accounts (Competitors are able
takeover cannot occur
to see it)

Franchises:
A franchise is when a company gives people the right to trade and sell under their name
...

Advantages – Franchise (For Franchisee) – Disadvantages
Already an established company/brand,
Have to use the materials, products etc that
therefore there would not need to promote the
the franchise chooses, so you can’t just use a
business
cheaper alternative if you find one
The franchisor provides the training for the
employees

Advantages – Franchise (For Franchisor) – Disadvantages
Increase market share
If one store is known for terrible
quality/service, the reputation of franchise may
become really bad
Not much control over business

Business aims and objectives:
Survival – Most important objective for the short-term
...
These
objectives are then reviewed and the business identifies whether or not they have achieved what
they wanted
...

Examples of internal stakeholders include:
Employees
Owners
Managers
Shareholders
Examples of external stakeholders include:
Local community
Environmental groups (Eg Greenpeace)
Local Council/Government
Suppliers
Customers
Different stakeholders would have different views and opinions
...
They would want to have a good
salary and good working conditions
...

Local community would be affected in different way depending on the business
...

Government is interested in getting the right amount of taxes, more jobs for people
...

This would allow the business to identify what resources and how much start-up capital is needed
...

A good business plan would include:
Personal details of the owner(s) and other important people
Mission statements – Describes the broad aims of the company
Objectives – Specific objectives that the business wants to achieve (SMART)
Product Description – Details of the market and any competitors in the industry
Production Method – Explanation of how they will make goods or provide service
...

Finance – Explanation of money required to start up the business
...
These factors are:
▪
▪
▪
▪
▪
▪

Location of suppliers – If a business is located near its suppliers, it would have lower
transport costs
Labour supply – If a business is located near an area with high unemployment, it would
easily be able to find employees
Transport – If a business is located in an area with good transport links (Eg airport, seaport,
train station), it would be able to get its supplies and customers easily
...


Marketing Mix:
The marketing mix consists of Price, Place, Promotion and Product
...

▪

▪
▪
▪

Price – The price of the product must be suitable
...

Product – The Company must produce a product that people would want to buy
...

Promotion – The products must be advertised so that the customers know about it and can
buy it
...
For
example, a shop selling surfing equipment would be located near a beach
...
A market map would include
information about:
How many customers are in the market
How much money people are spending
Segment the people belong to (Based on age, social class, gender, location, culture, religion)
Which products are popular and which product aren't popular
Competitors selling similar products and where they are being sold

Market Research:
A company needs to ensure that they create a product or provide a service which people would
want
...

Market research is used to see if people want the product, how much they would pay and
competitors’ prices
...

Information is up-to-date, relevant, and
specific
...

New businesses need to be able to consider their target market and resources available to them
...

Price:
As the price of something increases, the demand for it also decreases
...

Promotion & Place:

Advantages

Disadvantages

Local Newspapers
Reaches correct audience as
it’s for people in the local
area
...


Business Cards
Cheap to make and
distribute
...


The Internet
Wide range of people
reached
...

Ignored by most people
...


It is unreliable as people
may give people negative
feedback
...


Business costs:
Revenue is the money which is generated by the business from sales
...

Indirect costs are costs for things needed to make the products:
Raw materials
Machinery
Direct costs are costs needed to run the business itself:
Rent
Bills (Water, Electricity etc)
Salaries
Fixed costs are things which the business pays for no matter what:
Rent
Bills
Salaries
Variable costs are costs which increase as the output of the business increase:
Raw materials
Machinery
Profit = Revenue – Costs
If the revenue is more than the costs, the business has made a profit
...


Sources of finance:
❖ Government grants – Money given to business which locate in certain area of the country
...

Disadvantage: Hard to qualify for
...

Advantage: They have low interest rates
...
Lump sum of money
...
Strict terms
...

Advantage: They have low interest rates
...

Disadvantage: Assets can be seized if the business fails to pay
...

Advantage: No/Little interest required
...
Not much money
available
...

Advantage: Quick cash injection in an emergency
...

Some charities also give help and funding
...
The
charity helps young people thinking about making their own business
...

Cash Flow:
A cash flow forecast shows all the money flowing in and out of a business
...

When a buys machines, pays bills and wages etc, cash flows out
...

Closing balance = Opening balance + Net cash flow
...

A cash flow forecast allows a business to identify when there may be a cash shortfall
...

Credit sales are when customers buy something one day but pay the business later
...

Cash Flow problems:
A poor cash flow is when a business has higher cash outflow than inflow
...

Some creditors may not receive their money back; therefore they may take legal action
...

Reduce the time given to customers for credit sales
...

Take out a loan or overdraft
...


Recruitment:
A business will recruit new people for various reasons:
The business is growing / Increase workload
...

Replacing an employee who is on leave (maternity, paternity etc)
...

A job description explains the job
...

A person specification states the qualification, experience and attitudes the candidate needs to
have
...
Therefore they
will know the business and its customers better
...

Part-time employees are less expensive to employ
...
They
tend to be more motivated as they don’t work too much
...

HR has the responsibility of recruiting new workers
...
They tend to fit in
quite well with the employees
...

Interview – The process whereby candidates are asked many questions and the right person is
chosen
...

1) A CV is a summary of a person’s personal details, qualification, skills, and qualities
...
This is a quick process which
allows the business to find out important information
...
This allows the companies to compare
different candidates and find the most suitable one
...

Interviews are used to assess how confident a candidate is, their social and verbal skills
...

Motivational methods:
Monetary Benefits
Commission
Bonus
Pay rise

Non-monetary (Fringe) Benefits
Company car
Discount
Gym membership
Training
Health insurance
Food allowances

Motivated workers are better for the business because they workers would be happier doing their
job
...
This could
lead to more and better products for customers which could lead to more sales
...
Therefore the company would save money as they
wouldn’t have to pay for training another worker
...

All employees must be given a written contract stating the important things about the job
...

Must be paid the minimum wage for each hour they work depending on their age
...

When recruiting, discrimination must not be based on gender, race, and disability
...

Women must be paid the same amount as men doing the same job in the same business
...

Health and safety clothing + equipment must be provided (eg
...

Satisfactory toilets, washing facilities and fire escape routes must be provided
...

Only incapable or workers who have shown gross misconduct can be dismissed
...

Employees who have been unfairly dismissed or have worked in a firm who have breached the laws
can take the business to a tribunal
...


Methods of production:
Job production – It is making individual products
...
g
...

High quality products made
...

Expensive and time consuming to produce
...

Advantages:
Cheap and quick
...

Variation can occur in different batches
...

Efficiency and quality issues:
Technology can be used by businesses to improve their efficiency and reducing costs
...
Automatic process
...

Computerised stock control: Manage stock levels which reduces wastage
...

The product is of high quality
...

Quality control and assurance:
Quality control is when a product is checked at the end of the production process
...

Quality Control
Advantages

It is cheap
It is quick

Disadvantages

It can result in the product needing to be
made again  Leads to lots of resources
and money wasted

Quality Assurance
It allows products to be changed along the
way
...

It is time consuming
...

Good customer service is need to:
➢ Distinguish the product from the competition
➢ Obtain repeat custom
➢ Gain a good reputation



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