Business Activity & The
Changing Environment
Task 1
• Write down your name and what
grade you would like to achieve in
Business & how you expect to get
that grade
What is business?
• A place where a firm buys and sells
things in exchange for money
• They aim to make a profit
• What ways do you think they could
make a profit/
Your activity
• Write down three things that a
business may aim to do from the
beginning
• What do you think their objectives
would be?
Task 2
• Think of 1 business that you are
familiar with & write down three
things about this business
• Why do you think this business is
successful?
Homework
• Pick an organisation that you either like or
dislike
• Research the company and give your
findings
• Headings may include, company history,
products/services, employees, market
share etc
• Please do not copy from internet
Year 10 Business
Business activity &
the changing
environment
Objectives
W.A.L.T:
 Distinguish between the different types
of business organisations
 Explain what these different types of
organisations offer
W.I.L.F:
 You to give your own thoughts& opinions
 You to participate
 You to work as part of a team
Starter activity
• What are the functions of a
business?
• List all the people that are involved in
a business
• What ways can people raise finance
for their business?
Types of businesses
• Sole Trade
• Partnerships
• Private Limited
Company (LTD)
• Public Limited
Company (PLC)
• Co-operatives
• Franchises
Sole Trader
• An individual which trades under his/her own
name
• Is totally independent
• Makes all the important decisions
• Responsible for paying all of the debts
• Few formalities in setting up
• Can employ as many people as he/she wishes
Advantages of a Sole
Trader
• Decisions can be made quickly
• Leads to greater interest & more dedicated &
hard working owner
• Profits are kept by the sole trader
• Paperwork is minimal
• Easy to start trading as the sole trader
• Has close contact with employees and
customers
• Problems are easier to solve
Disadvantages of a Sole
Trader
• Personally liable for all debts that it occurs
(unlimited liability)
• Less capital available for expansion
• Taxed at a higher rate than a private company
• May have difficulty in managing all business
functions
• When the sole trader dies so does the business
• Raising capital could be difficult for one person
Examples of Sole
Traders
• Corner shop
• Coffee shop
• Carpenters
Your task
• Suggest two advantages & two
disadvantages of a person setting up
as a sole trader
• List two objectives that a sole trader
may have
Partnerships
• Can have between 2 & 20 partners
• Set up under the Partnership Act 1890
• A partnership deed can be used to set
out the rights of the partners
• Aim to make a profit
Examples of partnerships
• Doctors
• Accountants
• Solicitors
Advantages of a partnership
• More capital is available than for the
sole trader because more people are
contributing
• Better use of business expertise
because each partner can concentrate on
what they are good at
• Better decision making because decisions
are made after discussions
Disadvantages of
Partnerships
• Group decision making may cause conflict
between partners
• Like sole traders, partners have unlimited
liability thus they are liable for all the debts
of the business
• Decision making can be slower which can lead
to inflexibility
• Profits must be shared
Your task
• Why is it important that a business
has a deed of partnership?
• Why do you think partnerships are a
good idea?
Key terms
Unlimited liability
The owners are personally responsible
for paying debts if the business goes
bankrupt
Limited liability
If the company goes into liquidation, the
shareholders of the company are not
responsible for paying the debts of the
business
Business Activity and
the changing
environment
Objectives
W.A.L.T:
• Explain the different types of business
organisations
• Examine the different finance methods
available to business
W.I.L.F:
• Your participation
• Your ideas and opinions
• Complete tasks
Starter Activity
• You have started up your own
business in Nottingham
• Make a list of all the things which
are necessary to make this business
successful
Private Limited Company
• A company that is a legal entity in its
own right
• It can be sued and can sue
• Shareholders own the business
• A group of between 2 & 50 people who
buy the shares are called the
shareholders
• Cannot sell shares to the public
Public Limited Company
• Can sell their shares to members of the
public through the stock exchange
• Must have at least 7 shareholders with
no maximum limit
• Must issue a prospective detailing the
history of the company & inviting the
public to buy shares
Public Limited Company
• Shares are bought & sold on the
stock exchange
• Accounts must be published and
audited on an annual basis
• An annual report must also be
compiled each year
Advantages of a public
limited company
• Limited liability
• Easier than private limited company to
raise capital
• Attract top management because of
public image
• Continuity of existence
• Lots of publicity based on stock
exchange quotations
Disadvantages of a
public limited company
• High formation costs
• Accounts have to be published
• Profits must be distributed to shareholders
• Ownership & control are separated because
although the shareholders own the company the
Board of Directors make the decisions
Key Terms
Shares
• These are long term sources of finance
• Sold to people who become shareholders of the
company
• A plc is able to advertise its shares for sale to
the general public
• A private limited company must sell their
shares privately
Shareholders
•
These are people who own part of the
Business
Sources of finance
• Internal sources of finance
• External sources of finance
Internal sources of
finance
• Retained profits
• Stock reduction
• Assets sale
• Limiting credit to customers
External sources of
finance
• Owners capital
• Hire purchase and leasing
• Overdrafts and loans
• Grants
Franchises & Sources
of Finance
Objectives
W.A.L.T:
 Evaluate the idea of owing a franchise&
determining what advantages &
disadvantages there are associated with it
 Distinguish between the various sources of
finance available to businesses
W.I.L.F:
 You to create a suitable advert for the
sale of a franchise
 You to answer multiple choice questions
and exam style questions
Starter Activity
• What are the various businesses organisations
that we have done?
• What is an entrepreneur?
• What are the characteristics of an entrepreneur?
• What are the two sources of finance called?
• List three finance methods associated with each
What is a franchise?
• Involves paying a fee & agreeing to
produce goods exactly in accordance with
the franchise company’s policy
• Payments are made on a regular basis
depending on profits made
• Training & supervision are provided
Your task
• Create a newspaper advert selling a
franchise
• Example:
Mc Donald’s largest restaurant for
sale as a going concern to suitable
franchisee(address)
Excellent trading figures, full
training provided. Price £375,000
The Stock market
Internet site
The public and private
sector
• The public sector includes everything that
is owned by the government
• Examples-army, police force, schools &
hospitals
• Public means that they are owned by the
government for the benefit of the people
who run them
The public and private
sector
• The private sector contains all the
businesses owned by private individuals
• Almost all the businesses you can think of
are in the private sector
• Private means that these businesses are
run for the benefit of the people who own
them
Strengths of the free market
private sector
• Employers & employees can create their
own personal wealth through the profit
motive & hard work
• A greater range of products are supplied
• People have greater freedom to choose &
but what they want
• Competition helps keep prices down &
encourages new ideas
Strengths of the planned public
sector
• Public services do not depend on the
profit motive & will be supplied even
at a loss
• The provision of basic services
available to all regardless of people’s
ability to pay them
Objectives
W.A.L.T:
 Outline the various factors of production
 Explain how each factor is important to a
business
W.I.L.F:
 You to distinguish between the different
factors of production

You to start working on cash flow and
its importance
Factors of production
• These four factors of production are the
resources that are used to produce the
economy’s goods & services
• Land
• Labour
• Capital
• Enterprise
Factors of production
Land
 All businesses need
land to create
their products
Labour
 Businesses need to
employ people to make
and market their
products
 They may use the
land, build on the
land or extract
from the land
 The UK’s labour force
is made up of all the
men & women who are
available to work
Factors of production
Capital
Enterprise
 To make their goods
or to provide their
services, firms need
to invest money in
machinery, buildings,
vehicles and other
major resources
 The entrepreneur
owns the business
and is prepared to
take the chance
that his or her
product will be a
success
Cash Flow
Objectives
W.A.L.T:
 Create a cash flow statement
 Differentiate between fixed & variable
costs & total costs
W.I.L.F:
 You to create a cash flow with various
figures given
Starter Activity-match the key
word to the meaning
Sole Trader
You must pay back what
you put in & all debt
Entrepreneur
You only lose the amount
of money put into the
business
An individual willing to
take risks in setting up a
business
Limited Liability
Unlimited Liability
Business organisation
that is owned by a single
person
Cash Flow
• Is the flow of all money into and out
of the business
• Cash flow is important because if
there is not enough money flowing in
you don’t have enough to pay bills
Poor cash flow=big
problems
• Not enough cash to pay daily expenses
• Lack of working capital
• Staff don’t get paid on time
• Creditors may not get paid on time
• May become bankrupt
Your task
1) What is a cash flow?
2) Why should a business prepare a
cash flow?
3) Why does a business need to keep
an eye on their finances?
Reasons for preparing a
cash flow
• Lets a business know if they will have
enough money to meet payments due
• Indicates which months there will be
a cash shortage
How to prepare a cash
flow
• Estimate money coming in
• Estimate money going out
• Subtract payments from receipts
• The closing balance will be the opening
balance for the following month
The different costs
involved
Fixed costs:
 Costs which have to be paid no matter
what has been sold or produced
Variable costs:
 Costs that vary according to the amount
produced or sold
Total costs:
 Fixed costs + variable costs
Tick which source of finance
is necessary for the following
£
Stock for
resale
10, 000
Premises
120,000
Machinery
50,000
Vehicles
18,000
Land
60,000
Oil
2000
Wages
1800
Telephone
400
Computers
6000
Short term Medium
term
Long term
Objectives
W.A.L.T:
 Distinguish between the various types of
stakeholders
 Match the type of stakeholder to a various
aim
W.I.L.F:
 You to relate questions to lessons that we
have completed already
Starter Activity
1.
Customers are an example of a firm’s -----------(12)
1.
Business objectives are set by the ------(6)
1.
An example of an internal stakeholder group is --------(9)
1.
Public sector organisations have objectives
based on -------(7)
Stakeholders
• Internal-owners, managers, directors
Variable costs:
• External-local community, bank,
suppliers
Your task
• Select a business of your choice and
write about the various stakeholders
that would be affected by it
Match an appropriate aim to
each stakeholder group
Group
Aim
Customers
No pollution
Local Community
Lenders
A return on their
investment
Job security
Employees
Lower prices
Judging success-how are
objectives measured?
• Size
• Turnover/market share
• Shareholders
• Number of employees/staff turnover
•
Customer satisfaction/number of
complaints
Factors of production
Objectives
W.A.L.T:
 Examine the different factors of
production and how they affect a business
 Relate the factors of production to a
particular business situation
W.I.L.F:
 Your thoughts and opinions based on these
topics and how they would relate them to a
particular business scenario
Starter Activity
• What are the four factors of production?
• Explain what is meant by each of those
factors
Fill in the blanks:
 Employees earn -----(w)
 The owners of capital receive --------(I)
 Entrepreneurs make -------(p)
 The owners of land receive ----(R)
Areas to be covered
• Primary Industry
• Secondary Industry
• Tertiary Industry
• Employment
The primary industry
• These are businesses that extract
something e.g. coal, oil, stone, fish
and ore
• The location of these businesses
usually depends on where the
resources being extracted are found
The secondary industry
• Theses are businesses that construct
or manufacture something
• Their location is influenced by many
factors such as government support
and the existence of a suitable
labour force
The Tertiary industry
• This is the service sector and supports the
other two industries
• Services include transport, finance,
insurance, training and advertising
• Their location will be influenced by the
services required by firms in the other
two industries
Your task





Classify each of these businesses as either
primary, secondary or tertiary:
A specialist distribution firm
A builder
A building society
A forestry plantation
A computer manufacturer
List four major influences on location
Objectives
W.A.L.T:
• Distinguish between the different types of
production
• Categories different items into the correct
production method
W.I.L.F:
• You to distinguish between the different
production methods and give relevant examples
Starter Activity
• Factors of production –jumbled up words
• Access business studies on line
• http://www.businessstudiesonline.co.uk/Gc
seBusiness/Activities/Module1/Module1Me
nu.htm#GCSEBusMod1Factors
Methods of production
Job production:
• when a business makes a single one of
product
• The job is often built by skilled labour
working to the customer requirements
• Since only one item is made the business
may not gain economies of scale
Methods of production
Batch production:
 When there is more than one item
made
 Each batch of products are finished
before the next batch
Methods of production
Mass production
• When identical items are made on a
production line
• The product moves from one stage to
the next
Chose either job, batch
or mass
•
•
•
•
•
Cans of paint
A factory extension
Shoes, size 7
Television
The channel Tunnel
State one advantage and one disadvantage
of mass production
Starter Activity
• Refer to hand out sheet
• Also grade or no grade quiz
• http://www.businessstudiesonline.co.uk/Gc
seBusiness/Activities/Module4/Module4M
enu.htm#GCSEBusMod4ProductionMethod
s
Factors of location &
PEST analysis
Starter Activity
1) Describe what is meant by batch
production
2) A cost which remains the same
regardless of the level of production is
_____ cost
1) A cost which changes according to the
level of production is a _____ cost
Developments in
production
• Just in time-only buy stock as you need
them, no need for additional storage
facilities
• Cell production-where people make a
particular part of the product and moves
continually
• Kaizen-invest in skilled people rather than
technology ( continuous improvement)
Lean production
• Refers to the various ways that are now
used to improve the efficiency of
production
• Tries to cut development time
• Associated with just in time, cell
production and the Kaizen system
Your Task
• Choose an organisation of your choice
and outline what type of production
mostly suits them and give relevant
reasons why
The Government
• They create various laws and regulations
that affect businesses
• The EU and the UK Government also
support firms
• The Government want to be paid VAT and
taxes
The P.E.S.T analysis
15th October 2007
Objectives
W.A.L.T:
 The importance of the p.e.s.t analysis on a
business
 Distinguish the difference between
P.E.S.T
W.I.L.F:
 You to relate the p.e.s.t analysis to a
particular business (case study)
The PEST analysis
Refer to the handout
 A scan of the external macro-environment
in which the firm operates can be
expressed as;




Political
Economic
Social
Technological
The steps involved
Environmental Scan
External analysis
Microenvironment
P.E.S.T
Internal analysis
Ma
croenvironment
Political Factors
• These include government regulations &
legal issues
• Defines both formal & informal rules
• Examples-tax policy, employment laws,
environmental regulations, trade
restrictions and tariffs, political stability
Economic Factors
• Economic factors affect the
purchasing of potential customers
and the firms cost of capital
• Examples-economic growth, interest
rates, exchange rates, inflation rates
Social Factors
• These include demographic and cultural
aspects of the external microenvironment
• These affect customer needs and the size
of potential markets
• Examples-health consciousness, population
growth rate, age distribution, career
attitudes, emphasis on safety
Technological Factors
• These can lower barriers to entry, reduce
minimum efficient production levels and
influences outsourcing decisions
• Examples-research and development,
automation, technology incentives, rate of
technological change
Case study
• Relate to the p.e.s.t case study
• Read through case study and answer
questions based on this case study
The Business Cycle
• This shows the regular patterns of upturns
and downturns of the level of output in the
economy
• Goes through stages-boom, slump,
recovery
• Diagram
• The business cycle business studies on line
part
The phases
• Boom-is the part of the business cycle in
which output rises
• Slump-is a severe form of recession
• Recovery-is the part of the business cycle
when output begins to grow again after a
slump
Your task
• Look at the shops, offices or
factories in Witham. Have any of
them opened or closed recently?
• Are there other reasons or is it a
result of the business cycle
The E.U
Objectives
W.A.L.T:
 Understand the purpose of the European
Union
 Determine what has happened since the
introduction of the E.U
W.I.L.F:
 You to answer the questions based on the
European Union
Starter Activity
• The face off quiz on
www.businessstudiesonline.com where
you answer a series of questions
based on the E.U
What is the E.U?
• This is a political and economic community
• Made up of 27 countries member states
located in Europe
• In 1957 6 European countries formed the
European Economic Community (EEC) by
the Treaty of Rome
What has happened
since then?
• The EU has grown in size through
new member states
• In 1993, the Maastricht Treaty
established the base of the current
legal framework
Task 1
• Write down three things that you
know about the E.U already
• One
• Two
• Three
• Compare answers and then list on
board
The purpose of the E.U
• The EU created a single market which
seeks to guarantee the freedom of
movement of people, goods, services and
capital between member states
• It maintains a common trade policy,
agricultural and fisheries policies and a
regional development policy
Advantages of the EU
• Free Trade (no tariffs or quotas) benefits industries as they
have a larger market to sell their goods to
• Greater co-operation between countries should prevent the
outbreak of war between members
• Greater cultural understanding results from freedom to
travel within the EU
• The E.U has a greater influence on world events than the
individual countries could have
• European Union regional development funding has improved
conditions in the poorer countries and areas
Disadvantages of the
E.U
• Goods cost more to import from non-EU
countries due to tariffs
• E.U funded schemes such as the Common
Agricultural Policy, are expensive,
inefficient and sometimes corrupt
• It reduces the political independence of
each country-decisions are taken for all
countries by the European Parliament
Task Two
• Look at the handout regarding the
history of the E.U
• Draw arrows to link to the correct
sequence of events
• Discuss with your partner and then draw
in the arrows
The European Union
Introduction of the
euro
• In 1999 the EU introduced the euro
• Has been adopted by 13 member
states
Your task
• Name the country
• www.businessstudiesonline.com
• The drag and drop section
Members of the E.U
•
•
•
•
•
•
•
•
Czech Republic
Poland
France
Albania
Sweden
Lativa
Serbia
Belgium
•
•
•
•
•
•
•
Moldova
Slovakia
Estonia
Iceland
U.K
Luxembourg
Romania
Members of the E.U
•
•
•
•
•
•
•
•
•
•
Bulgaria
Switzerland
Greece
Finland
Ukraine
Spain
Ireland
Hungary
Austria
Italy
•
•
•
•
•
•
•
•
•
•
•
Lithuania
Montenegro
Slovenia
Denmark
Malta
Belarus
Netherlands
Cyprus
Norway
Germany
Potugal
Business and the EU
• Has helped increase trade between
member countries
• Businesses has the opportunity to expand
• The Eu has tried to protect businesses by
imposing custom duties on goods imported
into the EU
Homework
Essay (Red tasks)
Why are more countries wanting to join
the European Union/ What might their
concerns be?
Yellow tasks
• Create a poster about the European union.
On the poster include a small map of the
E.U, information about the E.U, the
countries in the E.U and the purpose of
the E.U
Importance of the E.U
• The European Union contains four of
the world’s major economic
powers;France, Germany, Italy and
the U.K
• The E.U is now the UK’s main market
U.K imports in 2000
UK imports 2000
EU
Rest of Europe
North America
Rest of the world
The EU=58%
Rest of Europe=6%
North America=15%
Rest of the world=21%
U.K Exports in 2000
UK imports 2000
EU
Rest of Europe
North America
Rest of the world
The EU=54%
Rest of Europe=7%
North America=15%
Rest of the world=24%
The single market
• Promoting trade between the
member states was a major influence
in establishing the EU
• Its common market is now a single
market consisting of about 400
million people
Purpose of the single
market
• Free movement of people (labour)
• Free movements of goods (no internal
tariffs)
• Common technical and other
standards
How the single market has
influenced UK businesses in
several ways
• Common standards of quality and safety
• Open market encourages competition
• Free movement of labour and good
encourages employment and skills
development
The monetary union
• Economic and monetary union is closely
linked with the euro and eurozone
• The single currency will affect the EU:
• Trade will be valued in euros, exchange
rate fluctuations will have an impact and
also price difference may cause problems
Your task
• In the EU what is the social charter?
• What is the difference between the
eurozone and the euro?
• What does the EU’s single market
seek to do?
Answers
• A charter protecting the rights of
workers
• Eurozone is the member states who have
signed up to the single currency. The euro
is the name of the single currency
• Provides free movement of labour and
goods and establish common technical
standards
Plenary
• Test the person beside you regarding
the true and false statements and
see if their answers have changed
Objectives
W.A.L.T:
 Determine how businesses grow
 Discuss how businesses grow internally
W.I.L.F:
 You to create a spider diagram outlining
how businesses grow
 You to participate and engage fully in
lesson
Starter
• List ways that a business may grow
• Create a spider diagram to display
these
How a business grows
• There are several methods to
measure an organisation’s size:
• Profits
• Turnover
• Employees
• Capital employed
Profits and turnover
• Profits-how much the business keeps
from selling its goods and services
• Turnover-the sales that the business
makes
Employees and capital
employed
• Employees-the number of people
employed in the business
• Capital employed-the resources the
business has invested in it
Key terms
For a firm, greater size through
growth makes:
• Economies of scale possible
• Survival more likely
How can firms grow
internally?
• They grow organically
• Can grow through mergers or takeovers
• This usually happens when an organisation
sell more of its existing products, starts
selling new products and when businesses
enter new markets
Integration
• In a merger two companies agree to join
• This external growth is the quickest way
for organisations to grow
• In a takeover one company buys enough of
another company’s voting shares to take
control
Economies of scale
• They are the reasons why the average cost
of production may fall with increasing
levels of output
• What is your opinion? Would it be a good
idea for a company to produce in large
amount or do you think they should only
produce as needs be
Task
• You own a small business and you want to
ensure that your business provides the
best possible service to their customers
• Create a questionnaire finding out if
customers are happy with the service they
are getting from your company
Starter Activity
Merger
The businesses own money
that is ploughed back in
Takeover
If large amounts are made and
it reduces the average cost
Turnover
When one company buys
enough of another company’s
voting shares
Retained profits
Way of comparing a
businesses size
Economies of scale
Takes place between two
companies through their
agreement
Externalities
• All businesses bring benefits to people
and others outside the business this is
called externalities
• Externalities are costs or benefits
arising from business activity that are
experienced by people or organisations
outside the firm
Example
• A new housing developing is opening up in
Witham
• They are aimed at people from deprived areas
• These people have been involved in crime and
substance abuse
• You must outline the negative and positive
externalities associated with this venture
Your task
• Create a spider diagram showing the
positive and negative externalities
Positive
Negative
Year 10 Business
Monday
Objectives
W.A.L.T:
 Distinguish between imports and exports
 Distinguish between visible and invisible
trade
W.I.L.F:
 You to complete the starter activity
 You to answer the questions based on
importing and exporting
Starter Activity
Home Trade
Importing
Exporting
Visible Trade
Invisible
The export and import of
services
Selling to other countries
The import and export of
goods
Buying or selling to
people in same country
Buying from other
countries
Trading
• Is the buying and selling
• Home trade is when businesses buy or sell
goods to people in the same country
• When businesses buy or sell from other
countries outside the home country is
foreign trading
Importing vs. exporting
• When businesses buy goods or
services from other countries is
called importing
• When businesses sell goods or
services to another country is called
exporting
Visible trade
• Is the export and import of goods
• Dairy produce, livestock, machinery,
oil, clothes, shoes are all examples of
visible trade
Invisible trade
• Is the export and import of services
• When Americans or other foreign
tourists come to the U.K on holidays,
it is an example of invisible trade
Your task
• Outline on a spider diagram the
reasons why the U.K imports and
exports
Importing
Exporting
Reasons for importing
• Climate is not suitable to produce all crops
• Lack natural resources
• Needs to import certain raw materials
• Wider choice
Reasons for exporting
• Easier for the U.K to produce agricultural
produce because of climate
• Businesses need more than the home
market
• Creates extra employment
• Foreign currency
Task
• Explain the difference between home
trade and foreign trade?
• Give three reasons why the U.K imports
goods from other countries
• Why do we export to other countries?
Task-tick the correct
answer
Exports
U.K tourists going
to Italy
U.K computer
parts sold to
France
An U.K business
buying parts from
China
Imports
Year 10 Business
Wednesday
Objectives
W.A.L.T:
 Distinguish between the various types of
finance
 Distinguish between ordinary and
preference shares
W.I.L.F:
 You to attempt the starter activity
 You to complete all the relevant task
Starter Activity
• Why do businesses need finance?
• Give two examples of sources of
finance
• Give two examples of each of the two
finance types
Internal sources of
finance
• Retained and using profits
• Selling assets
• Using trade credit
• Investing any surplus cash
• Reducing stocks held
External sources of
finance
• Personal savings
• Borrowings
• Issuing shares
• Loans and mortgages
• Overdrafts
• Factoring debts
Types of shares
• Two types of shares-ordinary and
preference
• Ordinary shares allow holders to vote at
company meetings
• This makes an ordinary shareholder an
owner of the company
Preference shares
• These don’t usually give their holders the
right to vote at company meetings
• Preference shareholders receive priority
over ordinary shareholders when it comes
to paying dividends and repaying capital
Your task
• List three reasons why businesses
need finance
• State two differences ordinary
shares and preference shares
Ordinary and
preference shares
Ordinary
Voting rights? Normally one
per share
Dividend
Variable
Payment?
Capital
Paid after
repaid?
preference;re
paid last
Preference
Usually nonvoting
Fixed
Paid before
ordinary;repai
d before
ordinary
Homework
• Red task-Choose a business of your choice
and explain what source of finance would
be most adequate for that business to
grow
• Yellow task-Write a letter to a company of
your choice explaining the difference
between ordinary shares and preference
shares (you must research)