GCSE Business 2020-2022 OCR
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| What is the Public and Private Sector in Business? | Public Sector are organisations ran by the Government. This includes Hospitals and Schools Private Sector are businesses ran by indivudals, not the government. They still go by the rules however. |
| Evaluate Sole Traders | Businesses owned by 1 person [can employ others] The owner is called the Sole Proprietor. |
| Whats good about a Sole Trader | -Not many legal regulations to worry about -You are the Boss. You control the Business. -You can have freedom over your holidays, hours of work, prices to be charged and who to employ -You have close connections with customers which leads to responding quickly to the needs and demands. -The profit the business makes, goes to you! This gives motivation to carry on -Your information about the business is kept secret [excluding the Tax Office] |
| Whats bad about a Sole Trader | -You can't discuss your business problems to anyone really -You have Unlimited Liability. Your business and personal accounts are not seperated -Hard to raise money to expand. Also having to rely on savings and profits via the business. Also bank loans -You can't be good at everything! Its quite expensive to get a specialist workers -Small businesses can't exactly take Economies of Scale -If you receive an illness, no one can take over |
| Whats Unlimited Liability? | This is when the owners of the business is connected to the debts of the Business. IF the Business shuts, the debts are going to be against your personal account. |
| Whats Limited Liability? | This is when the debts of a Company does not affect the Shareholders [owners] If it does shut down, the money put in the Company will only be lost. The Company is a 'Separate Legal Entity' |
| What is a Partnership? | A Partnership is when 2-20 people open a Business together. They each have a say to the Business and they share the Profits. |
| How are Partnerships made? | They are easy. Using a Partnership Agreement or Deed of Partnership is a common way. This helps the present and any conflicts about shares of profit [for example] |
| What does the Partnership Agreement include? | -Nature of Partnership -Location of Business -Partnership Name -Capital -Shares of Profits and Losses -Drawings -Duties of Partners -Termination of Partnership -Arbitration [sorts out disputes] -Signature of the Entrepreneurs |
| Advantages of Partnerships | -Quite easy to set-up -More Capital [investment money] brought in. -Multiple Owners can bring new skills and features -Decision making is easier. More brains -Responsibility is shared along with Duties |
| Dis advantages of Partnerships | -Disagreements makes Problems -Capital will eventually be limited, making it harder to expand -No Continuity [someone dies or bankrupts, goodbye business] However it can be reformed -Unlimited Liability [its split to what the Partnerships Agreement says] |
| What is a Limited Company? How is it formed? | -Companies are formed when a Business sets up a separate legal identity -The Company's finance is now not connected to the Personal Wealth of now the Shareholders [Owners] -Shareholders receive a share [percentage] of the profits -The Business is now ran by a Board of Directors. They are made up by people who were chosen by the Shareholders. Shareholders also can be part of the Board of Directors. -The Board of Directors now 'runs' the company for you |
| Do Companies have Limited Liability? | Yes. Since the Company is now a separate legal identity, its Finance is also too separate, meaning personal wealth isn't affected if the Company has Debts. |
| What are Private Limited Companies? | -Private Limited Companies can get funds via investors that are friends and family of the Owners. The shares however, aren't public. -Examples are River Island, Clarks and Wilkinson |
| Advantages of Private Limited Companies? | -Limited Liability -Can sell shares equalling finance -Stable form. Companies can still exist even if the Shareholders change -Previous owners still have control |
| Disadvantages of Private Limited Companies? | -Shareholders need to agree how the profit is divided -Administration costs more then setting up a Sole Trader -Finance is limited to Family and Friends -Not that much privacy. Public can still see some company information -Directors legal duties are stricter |
| What is a Public Limited Company? | -Very complicated and expensive to start up, but has its shares on thje Stock Exchange. |
| Advantages of a Public Limited Company? | -Limited Liability -Large amounts of money can be generated via the Stock Exchange -Stable form. Business can still continue with a change of Shareholders -Firm is more Prestigious |
| Disadvantages of a Public Limited Company? | -Shareholders have to agree who gets what [profits] -Finance limited to the Stock Market Valuation -Public can easily see company Information and accounts -Risk of company being taken over [someone who gets 50% of shares can challenge the Owner] -Gap between Ownership and Control |
| What factors in choosing the Right suitable legal Structure for a Business? | -Size of Business; Sole Traders are the most common start up's , as they're easier and quicker -Type of Business; Skilled jobs like Doctors or Vets usually go into Partnerships. If risks are present, Ltd's [Private Limited Company -Lender Requirements; Banks may want Sole Traders and Partnerships, as they are more confident it will be handed back -Investment protection; Limited Company may be the pathway if you concern mostly about your Personal Wealth -Control; Sole Trader Owners, or Shareholders holding most of the shares has control over the Business -Growth; Plc's allow greater sums of Finance to be raised. |
| What is Marketing? | This is when you select, predict and satisfy the needs of your Customers, with Profit. More Advanced: -Meeting the needs and wants of Customers -Marketing is understanding customers, and to find ways to give out Goods and Services, which the customers Demand for. |
| Anticipating; What happens here? [Predicting] | -Look at the data collected via the Manager Skills to see the potential changes that might happen in the Markets -Are the Products good enough, or do they need to be changed, updated or adapted? |
| Satisfying; What happens here? | -Making sure the Customer is happy with that they have purchased/buying. -Ensure no Complains will come through |
| Profitably; What happens here? | -Adding additional value to the Product -When sold, the Price of the Product is bigger then the Cost of the Inputs |
| Why is it important for the Business to identify the Customer Needs? | -If done successfully, the Business can provide Goods and Services that customers will buy more off. -Profit can be made, Lots of Profit -Also, identifying the Customer Needs lowers the chance of launching an Unsuccessful Product, which won't make Profit but could lose Money |
| What does a Business need to know about its Customers? | -Right Price -Provide more Choice -Convenience -Quality -Right good/service |
| What does Quality mean really? [Marketing] | -Customers want the good/service to be what they want and expect -This doesn't mean High Quality, just a good enough Quality that the Customers are happy with |
| Price, what does that really mean [Marketing] | -Customers want to pay a fair-enough price for their Goods/Services -Prices are affected by Quality, Timing, Delivery arrangements and the Popularity. -Train Tickets [eg] can change during the Day [Rush hour, etc..] |
| Choice, what does that really mean? [Marketing] | -Customers might want a wide spectrum of Features/Options in a Good/Service -This can be Different Brands, Price, and Quality. |
| Convenience, what does that really mean? [Marketing] | -Customers want life to be Easier -Most Businesses have websites and e-sales options that meet the expectations of the Customers |
| Why is it important for the Business to understand the Market they want to enter? | -Not enough understanding uppers the chance of failure -Knowing the Market can help generate sales, ensuring the safety of the Business BUT New businesses can find getting useful information being hard -The challenge is focusing on information that Business planning process requires |
| What information does the Business need to know and Understand? [Marketing] | -Size of Market? [Sales, Volumes etc..] -How fast is the Market growing? What's the future like? -Who are the Competitors currently, what market shares do they have? -How can the Market be Segmented [split into different categories; low price, high quality etc...] |
| What are Human Resources | -Describes the People who work in the Business -This is used to describe the Department that overview the Recruitment, Training, Selection and Administration of Employees |
| Why is Human Resources Important? | -For Services, People are the most important Resource. The Quality and Customer Service has to be Detailed -Competitiveness needs the Business to be Efficient and Productive. This means the Workforce has to be Well Motivated, Good Skills and Better Organised -Organisation Structure are changing. Flatter Organisation Structures are the New Trend, meaning the Communication is Changing |
| What tools do the HR department use? | HR uses different tools to meet the Needs of the Business -Workforce Planning -Recruitment and Selection -Training and Development -Communication -Rewarding and Motivating Staff -Roles and Responsibilities. |
| How is the HR Department affected with Size of the Business | -Large Business-Medium Businesses have a HR Department Inside the Business -Small Businesses have the Owner as the HR |
| What are Aims, Mission Statements and Objectives | Aims: States the long term goal for the Business. The purpose Mission Statement: Describes the aims of the Business Objectives: Specific and measurable targets to help achieve the Aim |
| Some examples of Objectives? | -Survival. Entrepreneurs may struggle their idea wasn't as good, or the market was too tough making it hard to make profit. -Profit Maximisation. Profit is usually the main objective as well its a reward for the Owners for putting time and effort in. -Market Shares/Sales Maximisation. Businesses may focus on increasing their market share, or even becoming the market leader -Growth. Again a majority of businesses want to grow. This can increase Profits and the Value of the Business. Growth can be local, national or international. -Social/Ethical Responsibility. Businesses are aware of their impact or responsibilities on Society, and change to it -Customer Satisfaction. Businesses ride on the train to provide quality serives/goods to their customers -Shareholder Value. The Shareholders notice how their dividend pay will be. Or the Share Price |
| What does objectives do to the Business? | -Direction; Clear objectives equals a direction the business should go on. eg should it expand or not? -Focus for Employees; Make sure all employees focus the objective. This increases efficiency as well they know what they are doing -Allows Planning; The Business Plan will be created via the Business Objectives. -Measurements of Success; Objectives equals, is it going good. If its following it then yes it is |
| What can affect the Objectives? | -Size of the Business; 1/2 businesses that are created fail in the first 5 years. Survival and Customer Satisfaction is critical -Level of Competition; If there is not that much competition, it can focus on Profits or maintaining its Market Share -Type of Businesses; Non-Profit Organisations may focus more on Ethnic or Social Objectives. Sole-Traders may focus on Survival. |
| Why do Objectives change overtime? [Internal] | -Business has finished one Objective [eg Survive for a decade] and now wants to change up on Profit -Change in Views via owners/shareholders, or the Board of Directors. [e.g they want to become more Green] |
| What do Objectives change overtime? [External] | -New competitor may challenge the Business. It switches to Survival -The Economic Environment could change. It could be the perfect/horrible time to expand -Technology changes. If a rival business brings out a new piece before you do -The Environment is being focused more and more, bringing pressure to some businesses [car businesses, oil businesses etc] |
| Whats a Business Plan? | A document that contains the Business, the Objectives, the Strategies, the starting market and the Financial Forecasts. |
| What are the advantages of a Business Plan? | -Can be a final result to if the future will be profitable -Can be used as a guide for the business. It tells it what to do and when -See its progress, and make adjustments if needed -Secure finance. Banks will see you as more organised, increasing the change of a loan -Market research lowers the risk of failing |
| What are the advantages of a Business Plan? | -Can be a final result to if the future will be profitable -Can be used as a guide for the business. It tells it what to do and when -See its progress, and make adjustments if needed -Secure finance. Banks will see you as more organised, increasing the change of a loan -Market research lowers the risk of failing |
| What are the advantages of a Business Plan? | -Can be a final result to if the future will be profitable -Can be used as a guide for the business. It tells it what to do and when -See its progress, and make adjustments if needed -Secure finance. Banks will see you as more organised, increasing the change of a loan -Market research lowers the risk of failing |
| Why is a Business Plan important | -Gives a focus on the Business idea. Is it good, why? -It can exam the Financial viability of the idea. Can the Business sustain itself with cash and expectations? -It gives encouragement to the Owners, too see what the Business is about. -Making a document can help spot gaps and deal with thoughts. -Helps in getting finance from outside providers. e.g the Bank -The Plan makes a Logical structure that is thinking about the business. It organises the Business -The Plan says something. This can be used to measure actual Performance |
| What should be on a Business Plan? | -The Idea; a description of the business [idea] -Where it came from, and why its good [idea] -Objectives and key Targets for the Business [sales, profit, growth and a sense of Direction. This is for the next 3-4 years] -Finance needed. How much from Owners, and how much to be loaned -Market overview; the summary of Market Research, Segments, Size, Growth, Shares and Competitors. [known] -How it will operate [location, premises, staff, distribution methods] -Cash flow forecast. -Forecast revenue. Costs and Profits |
| What are the advantages of a Business Plan? | -Can be a final result to if the future will be profitable -Can be used as a guide for the business. It tells it what to do and when -See its progress, and make adjustments if needed -Secure finance. Banks will see you as more organised, increasing the change of a loan -Market research lowers the risk of failing |
| What are the Dis-advantages of a Business Plan? | -Poor plan [from experience] equals poor performance. -Plans has to be continually updated, as the internal and external environment will change -Time and Effort is used on making and reviewing a plan. This can be expensive for small businesses -New Opportunities could be missed out if not on the Plan |
| Businesses exist to produce what? | Goods and services on a commercial basis |
| What exactly are Goods and Services? | Goods: Actual objects, They can be felt, touched and held, They are made and consumed Services: Activities. Provided for you via other people or Businesses |
| What are Needs and Wants? | Needs: Goods and Services that we need to use in order to live. Some examples may be Food, Shelter and Water. Wants: Goods and Services that we would like, but are not essential. Some examples are Holidays, Smartphones, Cricket Bats. |
| What does Enterprise mean? | -Another name for a Business -The actions of someone who takes a risk by setting, investing and running a business |
| What is a Entrepreneur? | This is someone who takes a calculated risk through starting a business. They: -Take time and understanding to calculate the risks -Invest, their own money, to start the business -Goes ahead, knowing the risk that is could fail |
| What are some reasons to start a Business? | -Making Profit -Investing money -Work-Life balance -Skills and Interests -Being a Boss |
| What are some of the features that make a Good Entrepreneur? | -Determined -Risk Taking -Hard Working -Organised -Confident -Leadership skills -Creative |
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| Limited Company, what is it? | A business owned by the Shareholders, who have shares invested in the Company. Directors run the business. The Company also has a separate legal identity. |
| Who essential controls the Company? | Shareholders elect the Directors, who overview the Managers. |
| Evaluate a Public Limited Company | -Must have PLC after the Name -Is on the Stock Exchange -50,000 pounds minimum Capital -Shareholders can sell their shares anytime and whoever -Minimum of Shareholders is 7 -Usually massive companies |
| Evaluate a Private Limited Company | -Must have LTD after the Name -Restrictions can be on the Sale of Shares -Not on the Stock Exchange -Not allowed to advertise its Shares -Minimum number of Shareholders is 2 -Usually are smaller companies |
| Describe the process of Forming a Company | -First register via the Registrar of Companies at Companies House -Make a Memorandum of Association -Make a Articles of Association -Get given a Certificate of Incorporation from the Companies Registrar -Company can begin trading |
| What does the Memorandum of Association include? | -Name of Company -Location of registered office -Company Objectives -Amount of Capital a Company has, and the amount of Shares |
| What does the Articles of Association include? | -Name of Directors -Rights and jobs of the Directors -Rights of Shareholders -Types of Shares -How profits are shared -How electing the Director works |
| What is a Stakeholder? | Someone, who has a Interest in the Business and can/be affected by it. |
| Name examples of Stakeholders | -Shareholders -Managers and Employees -Customers -Suppliers -Banks -Trade Unions -Government -Media -Competitors -Local Community |
| Who are the Internal Stakeholders? | -Shareholders -Employees/Owners -Managers |
| Who are the External Stakeholders? | -Competitors -Government -Society -Banks many more... |
| Who are the Connected Stakeholders | [This is Stakeholders who have a relationships based on a Contract] -Customers -Suppliers -Creditors |
| What are the Different types of Stakeholders Objectives | -Shareholders; Return on investment and profits. Can also be growth and the true running of the Business -Managers and Employees; A Salary, Job security, Good working conditions, Promotion opportunities, Job satisfaction, etc... -Customers; Value for money along with Product quality and Customer Service -Suppliers; A stable and long trade with the Business and Financial stability. Can the Business pay the bills? -Banks; Wants the loans payed back at a Interest, Cash flow of the Business and Growth of the Profits [in the Business] -Government; Taxes, Growth of the Business for Jobs and making sure it follows the Rules -Local Community; Success of the Business, to create Jobs and make sure it abides by the Local Laws [Noise regulations etc] |
| What are the Conflicts of Different Stakeholders? | -Cut jobs = less costs; Shareholders and Banks support, while Employees and the Local Community don't -More shifts to increase the Factory Capacity; Management, Customers and Suppliers support this, while the Local Community doesn't -Better machinery to replace human jobs; Customers and Shareholders support this, Employees don't -Higher selling prices, to get more Profit; Shareholders and the Management support, Customers don't |
| What Influence do Stakeholders have? | -Strike; kind of a last resort, but can work -Negotiation; Suppliers [eg] may try to gain better terms and conditions -Voting; Shareholders [eg] may vote on Business Decisions -Refuse to Co-operate; Employees [eg] may not work correctly and ignore the rules if the changes was horrible |
| What's Business Growth? | The process of a Frim getting Bigger |
| Name ways of Growth | Internal: -Gaining new Customers -Making new Products -Opening new Stores -Increasing existing Products [Output] -Increase Market Share External: -Merger -Takeover/Acquisition |
| How is Organic Growth [Internal] achieved? Detail two Organic Growth ways | The Business sells more of its Products. -Opening new Stores allows +Market Share, Sales and awareness -Introducing New Products allows New Customers, More sales and more Awarenesss |
| How is External Growth [Integration] achieved? Detail two External Growth ways | Joining with another Business -Merger is when two+ firms join, to create a New Business. Some benefits are Reduced Costs, and Increased Revenues -Takeover is when 1 business buys another business. This gives new access to Markets, Suppliers and Technology |
| What are the Types of Integration? | -Horizontal; Business joins with another Business, at the same stage of the Production process [a bakery buys another bakery] -Backwards Vertical is when a Business joins its Supplier -Forwards Vertical is when a Business joins its Distributors -Diversification is when a Business joins another Business in a separate Market [bakery buys a games shop] |
| What are the Factors that affect Growth? | -Size of the Business -The Product itself -Position in Market -Financial position of the Business -Regulation |
| What are the Advantages of Growth? | -More range of Retailers/Outlets -More awareness -Less likely to Takeover -More rewards for Staff -Diversify/spread the Risk |
| What are the Disadvantages of Growth? | -Slower Decisions -Communication breaks down -Employees may feel de-motivated -Co-ordination can be more harder -More Costs |
| What is Market Research | -Gathering Information to give Businesses well information in its Decisions. -This reduces the failure chance |
| What is the Purpose of Market Research? | -Reducing the Risks of Failure -Spotting gaps in the Market to Exploit -Understanding and seeing Customer Needs -Informs the Business's Decisions |
| What can be Provided by Market Research? | -Market size, structure and trends -Competitors; who, market share, USP -Customers; who, needs, wants, expects -Market Segments; existing or new splits in the Market |
| How can Market Research be split up? | -Primary Research; Data collected First-handed for a x purpose -Secondary Research; Data already collected by someone else for another purpose |
| Advantages of Primary Research? | -Its Directly focusing on Research Objects -its Private, unless you share it out -More detailed usually. Especially in Customer Views |
| Dis-advantages of Primary Research? | -Can take a long time, and expensive to complete -Can be Bias -Samples may not represent whole population |
| Advantages of Secondary Research? | -Free, and easy to get -Good locator of Market Insights -Quick to gain access |
| Dis-advantages of Secondary Reserach? | -Can become out of Date -Not tailored to Business Needs -Reports can be expensive [Specialist] |
| What are the Methods of Market Research? | -Trialling -Questionnaires -Focus Groups -Interviews -Websites -Newspaper and Magazines -Internal Data -Census |
| Questionnaires; What's good and bad about it? | Questionnaires are Primary Research -Can be achieved via Telephones, post or Face to face -Given to connected and potential customers -Is usually Cheap and can show good Quality Data [if a certain size is reached] -Data is usually Quantitative, making it easy to see Bad; -Has to be well-made, otherwise the information won't be reliable -Reply rates are low, noticeable on Telephones and Post -Could be expensive and takes lot of time to gain a true sum of the majority's views |
| Interviews; What's good and bad about it? | Interviews; people are asked Questions. This is Primary Research -Done via Face-Face or Telephone -Given to existing or Potential Customers -Interviewers can explain further to maybe complex questions -Can target specific customers, to gain views Bad; -Money and time consuming, for a large enough sample to come through to represent the population -Customers may rush and answer in-accurate to questions, making unreliable information |
| Focus Groups; What's Good and Bad about it? | Focus Groups are simply just small groups representing the Target Market for a Product. They are given Information and asked Questions [Primary Resarch -Can be a great way of gaining detailed information about Customers tastes and Preferences; can also be Opinions Bad; -Can be expensive and time consuming, to perfect and perform. -The Information gathered may still not represent the Whole Target Market |
| Trialling; What's good and bad about it? | Trialling; testing wherever customers will buy it or not [Primary Research] -Puts an Opportunity up for the Business to see if a product on a small scale will get Demand. If it does, then it makes a Opportunity turn into a Money Generator Bad; -Can be Expensive -Area has to be Target Market related, otherwise the data will be reduent |
| Census; What is it? | -Gives information about the Economy -Population data is also provided |
| Competitor Websites, What is it? | -Information on the Marketing Activities of Competitors -This could be: Products, Prices and Promotional Activities |
| Customer Reviews; What is it? | -Data from Product Reviews who Rate and Feedback on a Particular Product -This can be Independent Sites, like TripAdvisor, or Businesses, like Amazon |
| Trade associations, trade press and Magazines; What's is it? | -Industry, have an Industry Association. They have a good amount of Market Analysis. -This is great for New Businesses, who don't have much/any experience of the Market |
| Newspapers; What is it? | -Financial and Economic Information is given on a Daily Base. -This Information ranges from Local, to International -They also give Case Studies or other Local Businesses |