Notesale: Turn your study into money

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Business Studies
Revision
Pack 1 - What is a business?
Any organisation that works to fulfil a common purpose
Four factors of production
Land - Plot where the business may be located, natural resources; such as coal, diamonds, forests, rivers, and fertile
soil
...

Renewable - Fish, forests and water - which nature replaces
...

Labour - Workforce of a business
...

They’re paid wages of salaries for their services
...

Capital - The tools, machinery and equipment which businesses use
...

Enterprise - A mixture of the above
...


Functions of a business
Production / Operations - involves changing natural resources into a product or the supply of a service e
...
the operations of a business
Marketing - this function is concerned with identifying consumer needs and satisfying them
Human Resources - involves the management of the people employed by the organisation
...

Aims and objectives of a business
To enable organisations to fulfil a common purpose it is important they specify the aims and objectives they wish to
achieve
...


Business Studies
Revision
Pack 2 - Goods and Services
Goods
Conversion of raw materials into finished goods
Physical, tangible objects that are bought and sold
They can either be durable, non-durable, consumer or capital
• Consumer goods - durable
Goods that are sold to the general public
- Can be used for several months/years
- Of relatively high value
- Used repeatedly before worn out or disposed of
- E
...
televisions
• Consumer goods - consumable
- Used up in a single act of consumption
- E
...
g
...

Services
Services are activities performed in return for payment
Commercial services
- Provided to the industry
- E
...
transportation, banking, cleaning & accounting
Personal
- Provided to the public
- E
...
fitness trainers & wedding planners

Goods

Services

Tangible (can be touched) e
...
a pen

Tertiary Sector (highest employment in the UK)

Some exceptions intangible e
...
software/downloads

e
...
wedding planners, NHS, teachers, fitness trainers

e
...
car, washing machine vs food, drink
Secondary sector

Business Studies
Revision
Pack 3 - Needs, Wants, Scarcity and Opportunity Cost
Needs
Human requirements which must be satisfied for survival
...

- Change over time
- Differ between cultures/countries
- E
...
food, water, shelter
Wants
Human desires that are not essential for survival, these are unlimited
...
g better housing, luxury holidays
Scarcity
The basic economic problem of Limited resources + Unlimited Wants = Scarcity
- Unlimited wants + limited resources = scarcity
- Basic economic problem
- Can’t satisfy all of our wants
- Caused by ever growing numbers of products
- Leads to choices having to be made
Opportunity Cost
The benefit of the next best alternative foregone when making a choice between a number of alternatives
- Caused by having to make a choice
- E
...
If a business has £10,000 and has the option of buying a new vehicle or a new piece of machinery; the opportunity cost of choosing the vehicle is the benefits lost from not choosing machinery
...

Imports
Goods produced abroad and sold in Britain
Factors that have led to a more ‘global economy’
• Transportation improvements
- faster
- cheaper
- more of them
- increase containerisation
• Technology developments
- internet transactions
- data transfer
- communication - quicker, easier, cheaper
• -Deregulation of trade - e
...
EU
-e
...
trade barriers
-Increased levels of production
Multinationals
Firms operating in a number of countries
British firms operating in the global economy
Advantages

Disadvantages

Larger market - more people interested - brand
awareness - larger amount of sales - increase market
share - increase competitive advanage

Exchange rate fluctuations

Spreading risk - as operating in more than one economy if
there is an economic downturn in one you have still got
sales from another market to rely on

New markets means trading with different cultures and
tastes

Economies of scale - As output increased to meet
demands of new markets, unit cost should decrease

Distribution networks have to be established

New markets bring new sales opportunities

Competition may not be understood

Opportunities of tie-ups with overseas firms

Legislation differences

Access to new technologies and method of working

Increased costs - distribution/transportation, research,
network, marketing cost

Cheap labour

Language barriers

Multinationals based in the UK
Advantages

Disadvantages

Provide employment

May have negative environmental impacts, such as
pollution and destruction of the environment

Investment leads to infrastructure development

They use and deplete natural resources

Pay taxes to the government

Jobs can be low skilled and low paid

Introduce new technology and working methods

Could send profits abroad

Increase customer choice

Harm local/smaller businesses

Increase growth in the UK economy

Business Studies
Revision
Pack 5 - Public Sector/Private Sector
Business activity that is owned or run by the government for the benefit of everyone
...

Privatisation
The transfer of public sector resources to the private sector
...
g
...
g
...

To be a public good it must have two features:
-Non-rivalry - consumption of the good by one individual does not reduce the amount available for others
...

e
...
street lights, police, defence
Merit goods
Goods provided by both the public & private sector; would be under consumed if left solely to the private sector
...

-The benefit of merit goods can be greater for society than the individual recipient
e
...
health, education
Positive externality
The positive externality of merit goods is the benefit to society as a whole
...
They have unlimited liability
...


Minimal set up costs

Risk -if unsuccessful

Keep all profit

Continuity problems - can i be passed on when the owner
dies?

Independence (full control of all decision making)

Limited Capital

Flexibility hours/holidays

Difficult to raise finance (borrowing) - banks are often
reluctant to lend large sums to small sole trader start-ups
because they’re too risky

Personal service to customers

Unincorporated - The owner can be sued in the event of
dispute

Own boss

Lack of specialisation - the owner has to do everything
(finance, marketing…) unlikely to employ specialists
Workload/pressure - unable to share decision making/
work load
...
They have unlimited liability
...

Advantages

Disadvantages

More capital

Shared profit

More ideas

Compromises may cause conflict

More skills > more areas of expertise

Unlimited liability

Spread risk

Not as much freedom

Ability to specialise > meet more customer needs

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Business Studies
Revision
Pack 6 - Private Sector/Types of Organisation cont
...
g
...

Franchisor
The owner who licenses the right to use their brand name, products and training style to the franchisee
...
g
...


Reduces the risk of failure - the cost would be borne by
the franchise

Franchisee
An individual or firm who buys or leases the right to use the brand name, products and trading style developed
by the franchisor
...
g
...


Franchises are not necessarily 100% safe - there is still a
risk of failure
...

Enterprises
- they’re like other businesses directly involved in producing goods or providing services to a market
...

- Aims are clearly laid out
...

Profits are reinvested
- To achieve their social objectives
- Profits may be distributed as profit sharing to a much wider range of stakeholders than just owners and workers
- Profits can be used to benefit the community or returned to customers, or suppliers
...


Worker Co-operative
A business that is jointly owned by its employees
...

-Prevents non-workers from holding voting shares, and so keeps control of the firm within the workforce, preventing
takeovers and outside influence
...

-Skill and seniority determine wage rates
...
(Responding to research/feedback/ratings)
• The basic function of marketing is the attract and retain customers at a profit
...

Price
- Pricing strategy
Place
- How the product gets from producer to consumer?
- Distribution Channels / Intermediaries
Promotion
- Above/Below the line promotion
• Each element must integrate and complement each other
...

• It puts most of its effort into developing and making products which it believes consumers want and which will sell well
...
g
...

e
...
Pharmaceuticals > new products
e
...
Dyson > roller hoovers
...

Disadvantages
- Changes in market structure will not be responded to
- Fashion and taste are not accounted for in product mix
- Technology applied can be left behind
Market Orientation - A business that continually identifies, reviews and analyses customer needs
...

e
...
Topshop
e
...
Walkers
To be market orientated firms should:
Consult the consumer consciously > by doing research
Design the product according to the wises of the consumer
Distribute the product according to the buying habits and delivery requirements of the consumer
Set the price of the product at a level that the consumer is prepared to pay > based on 4Ps
...

- It will be in a stronger position to meet the challenge of new competition entering the market > because they know
latest trend as they already have customer knowledge
...

- It will be more confident that the launch of a new product will be a success > because already knows needs of the
market as market research has been done
Disadvantages
- Market is always changing > continuously researching > expensive
- Unpredictability of future trends
- Abandonment of early product investment
Asset-Led Marketing - Is responsive to the needs of the market but equally it takes into account its own strengths and
weaknesses when producing a good or a service
...
g
...
g
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g
...

The degree of competition (How much)
As it gets more competitive > more likely to be market-led

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