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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.

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GCSE Business 2020-2022 OCR - Details



461 questions
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
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