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Business Activity & TheBusiness Activity & TheChanging EnvironmentChanging EnvironmentBusiness Activity & TheBusiness Activity & TheChanging EnvironmentChanging Environment
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Task 1
Write down your name and what
grade you would like to achieve inBusiness & how you expect to getthat grade
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Your activity Write down three things that a
business may aim to do from the
beginning
What do you think their objectives
would be?
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Task 2 Think of 1 business that you arefamiliar with & write down three
things about this business
Why do you think this business is
successful?
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Homework Pick an organisation that you either like or
dislike
Research the company and give yourfindings Headings may include, company history,
products/services, employees, marketshare etc
Please do not copy from internet
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Objectives
W.A.L.T: Distinguish between the different types
of business organisations Explain what these different types of
organisations offerW.I.L.F: You to give your own thoughts& opinions Y
ou to participate You to work as part of a team
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Starter activity
What are the functions of abusiness?
List all the people that are involved ina business
What ways can people raise financefor their business?
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Sole Trader An individual which trades under his/her ownname
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
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Advantages of a SoleTrader
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
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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
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Examples of Sole
Traders Corner shop
Coffee shop
Carpenters
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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
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Partnerships Can have between 2 & 20 partners
Set up under the Partnership Act 1890
A partnership deed can be used to setout the rights of the partners
Aim to make a profit
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Examples of partnerships
Doctors
Accountants
Solicitors
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Advantages of a partnership
More capital is available than for thesole trader because more people arecontributing
Better use of business expertisebecause each partner can concentrate onwhat they are good at
Better decision making because decisionsare made after discussions
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Disadvantages ofPartnerships
Group decision making may cause conflictbetween partners
Like sole traders, partners have unlimitedliability thus they are liable for all the debtsof the business
Decision making can be slower which can lead
to inflexibility Profits must be shared
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Your task Why is it important that a business
has a deed of partnership?
Why do you think partnerships are agood idea?
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Key termsUnlimited liability
The owners are personally responsiblefor paying debts if the business goesbankrupt
Limited liabilityIf the company goes into liquidation, theshareholders of the company are notresponsible for paying the debts of thebusiness
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Business Activity andBusiness Activity andthe changingthe changingenvironmentenvironment
Business Activity andBusiness Activity andthe changingthe changingenvironmentenvironment
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ObjectivesW.A.L.T: Explain the different types of business
organisations Examine the different finance methods
available to businessW.I.L.F:
Your participation Your ideas and opinions Complete tasks
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Starter Activity You have started up your own
business in Nottingham
Make a list of all the things whichare necessary to make this business
successful
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Private Limited Company
A company that is a legal entity in itsown 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
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Public Limited Company Can sell their shares to members of the
public through the stock exchange
Must have at least 7 shareholders withno maximum limit
Must issue a prospective detailing the
history of the company & inviting thepublic to buy shares
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Public Limited Company
Shares are bought & sold on thestock exchange
Accounts must be published andaudited on an annual basis
An annual report must also becompiled each year
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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 stockexchange quotations
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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 theBoard of Directors make the decisions
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Key Terms
Shares
These are long term sources of finance
Sold to people who become shareholders of thecompany
A plc is able to advertise its shares for sale tothe general public
A private limited company must sell theirshares privately
Shareholders
These are people who own part of theBusiness
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Sources of finance
Internal sources of finance
External sources of finance
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Internal sources of
finance Retained profits
Stock reduction
Assets sale
Limiting credit to customers
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External sources of
finance Owners capital
Hire purchase and leasing
Overdrafts and loans
Grants
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Franchises & SourcesFranchises & Sourcesof Financeof Finance
Franchises & SourcesFranchises & Sourcesof Financeof Finance
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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 offinance available to businessesW.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
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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
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What is a franchise?
Involves paying a fee & agreeing toproduce goods exactly in accordance withthe franchise companys policy
Payments are made on a regular basisdepending on profits made
Training & supervision are provided
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Your task
Create a newspaper advert selling afranchise
Example:
Mc Donalds largest restaurant forsale as a going concern to suitablefranchisee(address)
Excellent trading figures, fulltraining provided. Price 375,000
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The Stock marketInternet site
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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 thegovernment for the benefit of the peoplewho run them
h l d
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The public and privatesector
The private sector contains all thebusinesses owned by private individuals
Almost all the businesses you can think ofare in the private sector
Private means that these businesses are
run for the benefit of the people who ownthem
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Strengths of the free market
private sector Employers & employees can create their
own personal wealth through the profitmotive & 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
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Strengths of the planned publicsector
Public services do not depend on theprofit motive & will be supplied even
at a loss
The provision of basic services
available to all regardless of peoplesability to pay them
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ObjectivesW.A.L.T: Outline the various factors of production
Explain how each factor is important to abusiness
W.I.L.F:
You to distinguish between the differentfactors of production You to start working on cash flow and
its importance
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Factors of production
These four factors of production are theresources that are used to produce theeconomys goods & services
Land Labour
Capital
Enterprise
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Factors of production
Land All businesses need
land to createtheir products
They may use theland, build on the
land or extractfrom the land
Labour Businesses need to
employ people to makeand market theirproducts
The UKs labour forceis made up of all themen & women who areavailable to work
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Factors of production
Capital
To make their goodsor to provide theirservices, firms needto invest money inmachinery, buildings,vehicles and othermajor resources
Enterprise
The entrepreneurowns the business
and is prepared totake the chancethat his or herproduct will be a
success
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Cash FlowCash FlowCash FlowCash Flow
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ObjectivesW.A.L.T: Create a cash flow statement D
ifferentiate between fixed & variablecosts & total costs
W.I.L.F:
You to create a cash flow with variousfigures given
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Starter Activity-match the key
word to the meaningSole Trader You must pay back what
you put in & all debt
Entrepreneur You only lose the amountof money put into thebusiness
Limited Liability An individual willing totake risks in setting up a
businessUnlimited Liability Business organisation
that is owned by a singleperson
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Cash Flow
Is the flow of all money into and outof the business
Cash flow is important because ifthere is not enough money flowing inyou dont have enough to pay bills
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Poor cash flow=big
problems Not enough cash to pay daily expenses
Lack of working capital
Staff dont get paid on time
Creditors may not get paid on time
May become bankrupt
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Your task1) What is a cash flow?
2) Why should a business prepare acash flow?
3) Why does a business need to keepan eye on their finances?
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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 bea cash shortage
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The different costs
involvedFixed costs: Costs which have to be paid no matter
what has been sold or producedVariable costs: Costs that vary according to the amount
produced or sold
Total costs: Fixed costs + variable costs
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Tick which source of finance
is necessary for the following Short term Medium
termLong term
Stock forresale
10, 000
Premises 120,000
Machinery 50,000
Vehicles 18,000
Land 60,000
Oil 2000
Wages 1800
Telephone 400
Computers 6000
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ObjectivesW.A.L.T: Distinguish between the various types of
stakeholders Match the type of stakeholder to a various
aimW.I.L.F: Y
ou to relate questions to lessons that wehave completed already
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Stakeholders Internal-owners, managers, directors
Variable costs:
External-local community, bank,suppliers
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Your task Select a business of your choice and
write about the various stakeholders
that would be affected by it
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Match an appropriate aim to
each stakeholder groupGroup Aim
Customers No pollution
Local Community A return on theirinvestment
Lenders Job security
Employees Lower prices
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Judging success-how are
objectives measured? Size
Turnover/market share
Shareholders
Number of employees/staff turnover
Customer satisfaction/number ofcomplaints
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Factors of productionFactors of productionFactors of productionFactors of production
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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 aparticular business scenario
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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)
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Areas to be covered Primary Industry
Secondary Industry
Tertiary Industry
Employment
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The primary industry These are businesses that extractsomething e.g. coal, oil, stone, fishand ore
The location of these businessesusually depends on where the
resources being extracted are found
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The secondary industry Theses are businesses that constructor manufacture something
Their location is influenced by manyfactors such as government supportand the existence of a suitable
labour force
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The Tertiary industry This is the service sector and supports theother two industries
Services include transport, finance,insurance, training and advertising
Their location will be influenced by theservices required by firms in the othertwo industries
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Your taskClassify each of these businesses as eitherprimary, secondary or tertiary:
A specialist distribution firm A builder A building society A forestry plantation
A computer manufacturer
List four major influences on location
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Objectives
W.A.L.T: Distinguish between the different types of
production
Categories different items into the correctproduction method
W.I.L.F: You to distinguish between the different
production methods and give relevant examples
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Starter Activity
Factors of production jumbled up words
Access business studies on line
http://www.businessstudiesonline.co.uk/GcseBusiness/Activities/Module1/Module1Menu.htm#GCSEBusMod1Factors
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Methods of productionJob production:
when a business makes a single one ofproduct
The job is often built by skilled labourworking to the customer requirements
Since only one item is made the businessmay not gain economies of scale
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Methods of production
Batch production:
When there is more than one itemmade
Each batch of products are finished
before the next batch
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Methods of production
Mass production
When identical items are made on a
production line
The product moves from one stage to
the next
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Chose either job, batch
or mass Cans of paint A factory extension Shoes, size 7 Television The channel Tunnel
State one advantage and one disadvantageof mass production
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Starter Activity Refer to hand out sheet
Also grade or no grade quiz
http://www.businessstudiesonline.co.uk/GcseBusiness/Activities/Module4/Module4Menu.htm#GCSEBusMod4ProductionMethods
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Starter Activity
1) Describe what is meant by batchproduction
2) A cost which remains the sameregardless of the level of production is_____ cost
1) A cost which changes according to thelevel of production is a _____ cost
l
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Developments in
production Just in time-only buy stock as you needthem, no need for additional storagefacilities
Cell production-where people make aparticular part of the product and movescontinually
Kaizen-invest in skilled people rather thantechnology ( continuous improvement)
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Lean production Refers to the various ways that are nowused to improve the efficiency ofproduction
Tries to cut development time
Associated with just in time, cellproduction and the Kaizen system
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Your Task Choose an organisation of your choice
and outline what type of production
mostly suits them and give relevantreasons why
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The Government They create various laws and regulationsthat affect businesses
The EU and the UK Government alsosupport firms
The Government want to be paid VAT andtaxes
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The P.E.S.T analysisThe P.E.S.T analysisThe P.E.S.T analysisThe P.E.S.T analysis1515thth October 2007October 2007
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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: Y
ou to relate the p.e.s.t analysis to aparticular business (case study)
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The PEST analysisRefer to the handout
A scan of the external macro-environmentin which the firm operates can beexpressed as;
Political Economic Social Technological
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The steps involved
Environmental Scan
External analysis Internal analysis
Microenvironment Macroenvironment
P.E.S.T
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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
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Economic Factors
Economic factors affect thepurchasing of potential customersand the firms cost of capital
Examples-economic growth, interestrates, exchange rates, inflation rates
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Social Factors These include demographic and cultural
aspects of the external microenvironment
These affect customer needs and the sizeof potential markets
Examples-health consciousness, population
growth rate, age distribution, careerattitudes, emphasis on safety
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Technological Factors These can lower barriers to entry, reduceminimum efficient production levels andinfluences outsourcing decisions
Examples-research and development,automation, technology incentives, rate of
technological change
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Case study
Relate to the p.e.s.t case study
Read through case study and answerquestions based on this case study
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The Business Cycle This shows the regular patterns of upturnsand downturns of the level of output in theeconomy
Goes through stages-boom, slump,recovery
Diagram
The business cycle business studies on linepart
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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
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The E.UThe E.UThe E.UThe E.U
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ObjectivesW.A.L.T:
Understand the purpose of the EuropeanUnion
Determine what has happened since theintroduction of the E.U
W.I.L.F: You to answer the questions based on the
European Union
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What is the E.U? This is a political and economic community
Made up of 27 countries member stateslocated in Europe
In 1957 6 European countries formed theEuropean Economic Community (EEC) bythe Treaty of Rome
What has happened
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What has happened
since then? The EU has grown in size throughnew member states
In 1993, the Maastricht Treatyestablished the base of the current
legal framework
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Advantages of the EU
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Advantages of the EU
Free Trade (no tariffs or quotas) benefits industries as theyhave a larger market to sell their goods to
Greater co-operation between countries should prevent theoutbreak of war between members
Greater cultural understanding results from freedom totravel within the EU
The E.U has a greater influence on world events than theindividual countries could have
European Union regional development funding has improved
conditions in the poorer countries and areas
Disadvantages of the
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Disadvantages of the
E.U Goods cost more to import from non-EUcountries due to tariffs
E.U funded schemes such as the Common
Agricultural Policy, are expensive,inefficient and sometimes corrupt
It reduces the political independence ofeach country-decisions are taken for all
countries by the European Parliament
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Task Two Look at the handout regarding thehistory of the E.U
Draw arrows to link to the correctsequence of events
Discuss with your partner and then drawin the arrows
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The European UnionThe European UnionThe European UnionThe European Union
Introduction of the
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Introduction of the
euro In 1999 the EU introduced the euro
Has been adopted by 13 memberstates
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Your task Name the country
www.businessstudiesonline.com The drag and drop section
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Members of the E.U Czech Republic Poland
France
Albania Sweden
Lativa
Serbia
Belgium
Moldova
Slovakia
Estonia Iceland
U.K
Luxembourg
Romania
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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
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Business and the EU Has helped increase trade betweenmember countries
Businesses has the opportunity to expand
The Eu has tried to protect businesses byimposing custom duties on goods importedinto the EU
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HomeworkEssay (Red tasks)
Why are more countries wanting to jointhe 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, thecountries in the E.U and the purpose ofthe E.U
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Importance of the E.U The European Union contains four ofthe worlds major economic
powers;France, Germany, Italy andthe U.K
The E.U is now the UKs main market
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U.K
imports in 2000UK 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%
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U.K
Exports in 2000UK imports 2000
EURest of Europe
North America
Rest of the world
The EU=54%
Rest of Europe=7%
North America=15%
Rest of the world=24%
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The single market Promoting trade between themember states was a major influencein establishing the EU
Its common market is now a singlemarket consisting of about 400
million people
Purpose of the single
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Purpose of the single
market Free movement of people (labour)
Free movements of goods (no internaltariffs)
Common technical and otherstandards
How the single market hasfl d K b
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influenced UK businesses in
several ways Common standards of quality and safety
Open market encourages competition
Free movement of labour and goodencourages employment and skills
development
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The monetary union Economic and monetary union is closelylinked with the euro and eurozone
The single currency will affect the EU:
Trade will be valued in euros, exchangerate fluctuations will have an impact and
also price difference may cause problems
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Your task In the EU what is the social charter?
What is the difference between theeurozone and the euro?
What does the EUs single market
seek to do?
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Answers A charter protecting the rights ofworkers
Eurozone is the member states who havesigned up to the single currency. The eurois the name of the single currency
Provides free movement of labour andgoods and establish common technicalstandards
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Plenary Test the person beside you regardingthe true and false statements and
see if their answers have changed
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ObjectivesW.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
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Starter List ways that a business may grow
Create a spider diagram to displaythese
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How a business grows There are several methods to
measure an organisations size:
Profits Turnover
Employees
Capital employed
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Profits and turnover Profits-how much the business keepsfrom selling its goods and services
Turnover-the sales that the businessmakes
Employees and capital
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Employees and capital
employed Employees-the number of peopleemployed in the business
Capital employed-the resources thebusiness has invested in it
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Key termsFor a firm, greater size through
growth makes:
Economies of scale possible
Survival more likely
How can firms grow
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w f m g w
internally? They grow organically
Can grow through mergers or takeovers
This usually happens when an organisationsell more of its existing products, startsselling new products and when businesses
enter new markets
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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 ofanother companys voting shares to take
control
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Economies of scale They are the reasons why the average costof production may fall with increasinglevels of output
What is your opinion? Would it be a goodidea for a company to produce in largeamount or do you think they should only
produce as needs be
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Task You own a small business and you want toensure that your business provides thebest possible service to their customers
Create a questionnaire finding out ifcustomers are happy with the service theyare getting from your company
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Starter ActivityMerger The businesses own moneythat is ploughed back in
Takeover If large amounts are made andit reduces the average cost
Turnover When one company buysenough of another companysvoting shares
Retained profits Way of comparing abusinesses size
Economies of scale Takes place between twocompanies through theiragreement
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Externalities All businesses bring benefits to peopleand others outside the business this iscalled externalities
Externalities are costs or benefitsarising from business activity that areexperienced by people or organisations
outside the firm
Example
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Example
A new housing developing is opening up inWitham
They are aimed at people from deprived areas
These people have been involved in crime andsubstance abuse
You must outline the negative and positive
externalities associated with this venture
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Your task Create a spider diagram showing the
positive and negative externalities
Positive Negative
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Year 10 BusinessYear 10 BusinessYear 10 BusinessYear 10 BusinessMondayMonday
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O
bjectivesW.A.L.T: Distinguish between imports and exports Distinguish between visible and invisible
tradeW.I.L.F: You to complete the starter activity You to answer the questions based on
importing and exporting
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S
tarter ActivityHome Trade The export and import ofservices
Importing Selling to other countries
Exporting The import and export ofgoods
Visible Trade Buying or selling topeople in same country
Invisible Buying from othercountries
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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 othercountries outside the home country is
foreign trading
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Importing vs. exporting When businesses buy goods orservices from other countries iscalled importing
When businesses sell goods orservices to another country is called
exporting
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V
isible trade Is the export and import of goods
Dairy produce, livestock, machinery,oil, clothes, shoes are all examples ofvisible trade
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Invisible trade Is the export and import of services
When Americans or other foreigntourists come to the U.K on holidays,it is an example of invisible trade
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Y
our task Outline on a spider diagram thereasons why the U.K imports andexports
Importing Exporting
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Reasons for exporting Easier for the U.K to produce agriculturalproduce because of climate
Businesses need more than the homemarket
Creates extra employment
Foreign currency
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Task Explain the difference between hometrade and foreign trade?
Give three reasons why the U.K importsgoods from other countries
Why do we export to other countries?
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Year 10 BusinessYear 10 BusinessYear 10 BusinessYear 10 BusinessWednesdayWednesday
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O
bjectivesW.A.L.T: Distinguish between the various types of
finance
Distinguish between ordinary andpreference shares
W.I.L.F: You to attempt the starter activity You to complete all the relevant task
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Internal sources of
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finance Retained and using profits
Selling assets
Using trade credit
Investing any surplus cash
Reducing stocks held
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T f h
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Types of shares Two types of shares-ordinary and
preference
Ordinary shares allow holders to vote atcompany meetings
This makes an ordinary shareholder an
owner of the company
P f h
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Preference shares These dont usually give their holders the
right to vote at company meetings
Preference shareholders receive priorityover ordinary shareholders when it comesto paying dividends and repaying capital
Y k
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Your task List three reasons why businesses
need finance
State two differences ordinaryshares and preference shares
Ordinary andf h
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preference sharesOrdinary Preference
Voting rights? Normally one
per share
Usually non-
votingDividendPayment?
Variable Fixed
Capitalrepaid? Paid afterpreference;repaid last
Paid beforeordinary;repaid beforeordinary
Homework
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Homework
Red task-Choose a business of your choiceand explain what source of finance wouldbe most adequate for that business to
grow
Yellow task-Write a letter to a company ofyour choice explaining the difference
between ordinary shares and preferenceshares (you must research)
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