Homework 4:Pages 14-27 to Be Handed in the Week Before the Easter Holidays

Homework 3:Pages 1-13 to be handed in the week before February half term

Homework 4:Pages 14-27 to be handed in the week before the Easter holidays

GCSE

Business Studies

Unit 1

Examination, 45 Minutes

25% of Final Grade

Revision Workbook

Topic 1.1 – Spotting a Business Opportunity

Goods and Services

Businesses make goods and services.

Goods – are physical products

Services – are non-physical products

Tick the correct column in the table below. The first two are done for you.

Good / Service
Bicycle / √
Bicycle repair / √
Providing a meal in a restaurant
TV
Computer
Installing a central heating system
Teaching someone to drive
Mobile phone
Washing machine

Market Research

Customer needs are central to starting a business. Finding this out is done by market research. There are two types of market research primary and secondary. Primary or Field research is research that no one has collected before.

Secondary or Desk research is information that already exists.

Tick the correct column in the table below. The first one is done for you.

Primary Research / Secondary Research
Survey / √
Internet
Questionnaire
Focus Group
Government Publications
Observations
Local Newspapers
Market reports

Market Mapping

Business analyse the market by considering:Who will the potential customers be?What sort of products will they buy? What sort of prices will customers be willing to pay?When would they want to use the business?How frequently would they use the business?

The potential market can be segmented (split up) into many different categories: Age, Gender, Income, Area, Ethnicity and Socio-economic group.

Place the following businesses on the Market Map below to showthe position of the business in the fashion retailing market. One is done for you.

PrimarkNextMarks & Spencer

Karen MillenHugo BossMatalan

RiverIslandMonsoon

Added Value

Added Value is the increased worth that a business creates for a product – it is the difference between what a business pays its suppliers and the price which they are able to charge for the product/service.

Examples of adding value are:

• Buying wood, nails and glue and manufacturing a table
• Producing a high quality meal using high quality ingredients
• Running a fast food restaurant and guaranteeing that it will be served within under two minutes
• Creating a strong brand name which customers want to buy (eg Nike)

The most successful businesses are those that create the most added value. If a chocolate manufacturer spends £8 making some chocolates and then sells them for £20, they have made £12 in added value.

Multiple Choice Questions:

1. Jacob Simms is a solo singer who tours the country appearing at concerts and revues. The added value of his singing business is:

a)The total costs of putting on the concerts minus the revenue earned from selling tickets to his concerts.

b)What he makes in fees minus his costs such as petrol and hotels

c)The total costs of the concerts at which he appears minus what he has to pay to concert hall owners

d)The wage he pays himself minus what he spends

1. Which TWO of the following might be a source of added value for a farming business?

a)The quality of products grown on the farm

b)The wages of the farm workers

c)The profit earned by the farmer

d)The speed of delivery from harvesting to delivery to the customer

e)The receipts from sales of farm produce

Franchising

Franchise - the right given by a business to another to sell goods/services using its name e.g. McDonalds, KFC

Franchisor – people who gives franchisee’s the right to sell product/service under their name. They take a fixed amount of money from the franchisee.

Franchisee – a business that sells a branded product/service under another business name

Place these numbered statements into the correct column below. The first is done for you.

1. The franchise name (eg KFC) is already well known by customers.

1. The initial investment may be quite high.

1. The franchisee may be restricted as to what they can and can’t do.

1. The franchisee is supported during the start-up stages.

1. The franchisee will have suppliers and materials provided by the franchisor.

1. A share of the profit goes to the franchisor.

1. The franchisor can cancel the agreement at any time.

1. The business is advertised which brings in more customers.

1. Training is provided by the franchisor.

1. The business has a well known brand name which customers recognise.

Advantages of a franchise / Disadvantages of a franchise
1

Topic 1.2:Showing Enterprise

What is an entrepreneur?

An entrepreneur has the following three enterprise skills:

• Beingwilling to take a risk
• Showing initiative
• A willingness to undertake new ventures

Match these three skills to the following activities:

Activity: / Enterprise skill being shown:
James works for a plumber’s merchants selling bathroom suites. He decided that he wanted to change his career and set up his own business as a plumber.
James used nearly all of his own savings to set up his new business.
James carried out some market research and found out that customers want plumbers to work in the evening. He therefore decided to change his working hours to meet his customers’ needs.

Entrepreneurs have to think creatively by coming up with ideas about goods and services they can sell. Entrepreneurs use deliberate creativity to stimulate their thinking:

• Lateral thinking
• Blue skies thinking
• Six Thinking Hats

Match these three methods above to the situations below:

Activity: / Creativity method being shown:
Using coloured hats to help you organise your thinking
Think of an idea and then write down every idea or word that comes into your mind
Thinking “outside the box” by coming up with a completely different idea to the norm

Questions to be asked before setting up a business

Before deciding to set up a business, an entrepreneur needs to consider whether or not the idea will work in practice. Think of some questions entrepreneurs might ask themselves and put them in the boxes below. The first is done for you.

Question they might ask about where to start up a business / Where should I locate my business and will I need planning permission?
Question they might ask about finance
Question they might ask about employees
Question they might ask about producing the product
Question they might ask about marketing the idea
Write down the name of a person or business that has come up with a new invention and then transformed it into a product that customers will buy (innovation). Explain what the product is and why it is successful:

Inventions and innovations are very risky. Many ideas fail and there is always the danger that your ideas will be copied. This is why inventors protect their ideas.

Write down the names of the correct terms in the boxes below:

Definition / Term
A person or business can protect their product idea so that no-one can copy the idea with permission. Anyone copying this idea can be sued in court. James Dyson successfully sued Hoover using this protection.
Anyone who creates films, music or books can protect their ideas through this.
Businesses can also protect their business name or logo by using this. Nike is an example of this.

Risks and Rewards

Before setting up a business, an entrepreneur must asses the risk involved in setting up the business. They will therefore assess the upsides and downsides of an idea before making a decision.

Downsides - things that could go wrong with a venture. They are the risks involved in setting up a business.

Upsides - things that might go well with a venture. They are the rewards involved in setting up a business.

Insert the word “upside” or “downside” against each of the following statements. The first is done for you:

I might sell large numbers of products and make a lot of money / Upside
I might not get enough customers
Someone might copy my idea
I could get financial help from my family to help me get started
I might not make enough profit
It might cost me too much to set up
I could buy in bulk from my suppliers and get a discount
I might need to train my staff and this will cost money
There may be legal implications of my business start-up and this may increase my running costs
I know someone who runs their own business and they will be able to give me advice
I will be able to work for myself and make my own decisions

Topic 1.3 – Putting a Business idea into Practice

Objectives when starting up a business

Entrepreneurs always have business objectives – something they want to achieve. Put the following objectives in the correct column. The first is done for you.

Personal satisfaction

Profit and income

Independence and control of the business

Wealth

Being able to help others

Financial security

Challenge

Financial Objectives / Non-financial Objectives
Personal Satisfaction

The Qualities shown by an Entrepreneur

On the spider diagram below, identify EIGHT qualities needed to be a successful entrepreneur. One is done for you.

Estimating revenues, costs and profits

Revenue is the income a business receives when it sells a product or service. What will be the revenue in each of the following situations?

1. A business sells 20 cakes at £5 each.

1. A computer manufacturer sells 1,000 computers at £500 each.

1. A hairdresser provides the following services during a week. What is the total revenue for the week?

10 Perms at £50 each

20 trims at £10 each

30 cut and blow dries at £20 each

1. A supermarket receives £20,000 every month for their bread sales. What would be the total revenue for the year if they received this amount every month?

A business has fixed costs (eg wages) and variable costs (eg raw materials). What will be the total costs for ONE WEEK in the following situations?

1. A business pays £500 a week in wages, £200 a week in raw materials, £50 a week in rent and £10 in insurance.

1. A business pays £1,000 in wages, £20 a day in raw materials, £200 a week in rent and £5 a day in petrol.

Cash flow forecast

Enter the details below onto the cash flow forecast and calculate the net cash flow and closing balance each month.

Jan / Feb / March / April / May
RECEIPTS
Sales revenue / 200
Other income / 50
TOTAL CASH INFLOW / 250
PAYMENTS
Wages / 100
Raw materials / 100
Machinery repairs / 0
Advertising / 80
TOTAL PAYMENTS / 280
Net Cash Flow
(Total Cash Inflow – Total Payments) / (30)
Opening Balance / £0 / (30)
Closing Balance
(Opening balance + net cash flow) / (30)

JanFebMarAprilMay

Sales Revenue£200£200£300£400£400

Other income£500000

Wages£100£100£100£100£100

Raw materials£100£40£20£20£10

Machinery repairs0000£30

Advertising£80£6000£30

The Business Plan

Purpose of a Business plan – This is a document which puts together all the information showing how a business might survive in the competitive world.

List EIGHT items you would find in a business plan. The first is done for you.
1. The name of the business
2.
3.
4.
5.
6.
7.
8.
Name THREE groups of people who might want to look at a business plan and say why they would want to see it. The first is done for you.
1. The owner – to help them plan how they will overcome any problems that might occur or to help them plan what to do in the future.
2.
3.

Obtaining Finance

Put the following sources of finance into the correct column. The first is done for you.

• Grants – Some businesses can be eligible for a grant. These can be from charities such as Princes Trust; they can also come from the government.
• Trade Credit – suppliers usually will allow a period of time before the supplies have to paid for
• Share Capital – investors who buy shares in the business
• Bank Overdraft – The businesses can use more money that is in their bank account. This has to be arranged with the bank and paid back.
• Retained Profit – Once the business is up and running profit will be made and this is put back into the business
• Leasing – Some businesses use equipment or vehicles that can be rented from another business. The leasing company pay form servicing and repairs.
• Loans – theses can be obtained form the bank, they are secure and need to be paid back with interest

• Factoring – A factor is a financial service company like a bank. They pay invoices for businesses and then charge interest. This is not suitable for every company.

Short Term Sources of Finance / Long Term Sources of Finance
Grants

Topic 1.4: Making the Start-up Effective

A business can only survive if it has customers. To be successful, a business must:

• Identify customer needs
• Anticipate needs
• Meeting customer needs

Match the terms above to the statements below:

Activity / Term
A fashion retailer such as Next will predict what fashions will be popular in the next season
A fashion retailer such as Next will design and manufacture clothing that they think their customers will buy
A fashion retailer such as Next will carry out market research to find out what customers like and dislike

The Marketing Mix

The marketing mix is the combination of factors that a business must consider when launching a new product or service. There are four elements to the marketing mix: Product, Price, Place and Promotion.

Think of a new product you could launchand then fill in the details in the boxes below:

PRODUCT
Explanation of my product idea: / PRICE
Price I will charge my customers:
PLACE
Where I will sell my new product: / PROMOTION
How I will advertise my new product idea:

Here are some ideas to help:

Place: Retailers, wholesalers (eg Macro), the internet, market stalls, mail order catalogues

Promotion: TV, Newspapers, Magazines, Billboards, Leaflets, Buy one get one free (BOGOF), Discount vouchers, Sponsorship

Business Ownership

Read the statements below and put the numbers in the correct column. The first three are done for you. Some statements may go in TWO columns.

Sole trader / Partnerships / Private Limited Company
1 / 2 / 3

1. A business owned by one person.
2. A business that has 2-20 partners.
3. A business owned by shareholders.
4. The share of the profit is called a dividend.
5. Decisions are made by the owners.
6. The profit is kept by the owners.
7. Shareholders receive their share of the profit each year.
8. The owners have unlimited liability.
9. The owners have limited liability.
10. The business is run by a Board of Directors
11. The personal possessions of the partners could be used to pay the business debts.
12. The personal possessions of the one owner could be used to pay the business debts.
13. Shareholders do not run the company.
14. The business has to have an Annual General Meeting (AGM) every year.
15. The owners usually use their own savings and a bank loan to start up the business.
16. The business is more risky to set up because the owners have unlimited liability.
17. The business is less risky to set up because the owners have limited liability.

Start-up and Legal Issues

It is essential that businesses keep very careful records of all the business transactions because taxes must be paid to HMRC (Her Majesty’s Revenue and Customs). The following taxes must be paid by individuals and businesses:

• Income tax
• VAT (Value Added Tax)
• National Insurance Contributions (NICs)
• Corporation Tax

Using the four terms above, in the boxes below write down who pays which taxes:

Which TWO taxes are deducted from an employee’s wage or salary?
Which ONE tax is paid by companies – it is a tax on their profits?
Which ONE tax is added on the price of products and services?
Which ONE tax is used to pay for the benefits system (eg Job Seekers’ Allowance, child benefit)
Which THREE taxes are used to pay for the public sector services (eg education, the Health Service)
Which ONE tax is deducted automatically from an employee’s wage under the PAYE (Pay as You Earn) scheme?

Customer Satisfaction

The experience the customer has in dealing with a business is called customer service. If the experience is positive, the customer is more likely to return and use the business again. Customer service covers many areas:

• How a customer is greeted and how the business deals with customers
• Services provided for customers
• Fulfilling customer orders accurately and on time
• The quality of products
• The knowledge of staff
• How a business deals with complaints
• After sales service

List EIGHT services that a supermarket such as Tesco provides for the customers to make their shopping experience more pleasant. The first one is done for you.

They provide mother and baby parking

Recruitment

When a firm wants to recruit a new employee, documents are used to make the process easier. Match the following documents to the definition:

Job description Job advertisement Curriculum Vitae

Person specificationApplication Form

Describes the tasks the employee will do on a day-to-day basis
Advertises the job to possible applicants
Document produced by the applicant which provides the personal details, work experience and qualifications of the person
Document produced by the business where applicants provide their personal details and work experience
Document that lists the characteristics and qualifications required to do the job

The Recruitment Process

Sort the following activities into the correct order to show the recruitment process. Put the statements into the flow diagram below.

• Inform the unsuccessful applicants
• Produce job description and person specification
• Ask for references
• Advertise the post
• Short list
• Offer the post
• Identify the job
• Interview