Understanding Business

Question 1

Describe the features of the Public Sector

Answer 1

Owned by the Government

Controlled by PMs, First Ministers, MPs

Financed by Taxes

Main aim is to provide a service for tax payers

Question 2

Describe the features of the Private Sector

Answer 2

Owned by Private Individuals

Controlled by shareholders or owners

Financed by Share issues, bank loans

Main aim is to make a profit

Question 3

State internal factors within a business

Answer 3

Finance

Employees

Management

Existing technology

Decision making

Question 4

Describe the impact of a lack of finance within a business (internal factor)

Answer 4

There might not be enough finance to make new purchases. This might mean that raw materials cannot be purchased and production stops. If production stops orders might be delayed and customers become unhappy. A lack of finance might also mean that objectives eg growth, cannot be met.

New technology cannot be bought/ new premises for expansion etc

Question 5

Describe the effect of managers on a business (internal factor)

Answer 5

Managers might not have enough experience or skill in decision making. This could result in poor decisions being made that impact upon the whole organisation eg. Fewer sales

~ decisions may be slowed due to lack of knowledge leading to delayed responses to market change reducing sales

Question 6

Discuss the impact of the political influence as an external factor

Answer 6

•change in/introduction of new law

+ May reduce restrictions on trade; bar opening hours, greater sales
- policies and procedures may be changed; costly in terms of money and time as staff may need to be retrained

• change in tax

+ income tax reduced; consumers have more disposable income
Increase may benefit public sector; providing them with extra funding
- increased consumers have less disposable income
Increase in tax for any business will reduce profit/ dividend to shareholders

Question 7

Discuss the economic influences on a business

Answer 7

• unemployment rates
+ if High; business will have large number of people to recruit for job vacancies
If low; people will have more disposable income
- high; people will be more cautious when spending money

• changes in interest rates
+ low; cheaper to borrow money
- high; more expensive to borrow money

• changes to economic policies by government
+ increase consumer buying power; increasing demand
- restrict ability of banks to lend money; cause cash flow problem

Question 8

Discuss social influences on a business

Answer 8

• changes in fashion and trend
+ take adv. of new opportunities by producing products customers demand
- need to invest money into market research

• changes in demographics
+ business may be easier to locate for individuals
- costly to set up new branches

• increase in the number of family-friendly arrangements employers need to offer

Question 9

Discuss the technological influence on a business

Answer 9

• new technology advancements
+ tasks completed quicker; frees up time to be spent on other tasks
- can be expensive
Employees may require training; expensive and time consuming

• growth of e-commerce
+ increase number of customers that can be accessed
Updates can be made quickly to social media; I stand communication
- procedures and processes will be required to manage orders via internet; time consuming to create and implement
May require training

Question 10

Discuss environmental influences on businesses

Answer 10

• changes in the weather
+ certain temperature may increase produce demand
- certain temperatures may reduce the quantity of a product that can be supplied (eg wet summer reduced strawberries available to be sold)
Weather might mean that orders cannot be delivered in time

• Increased pressure to Recycle
+ business seen as socially responsible and can use this as part of marketing campaign to enhance image
- cost money to provide recycling facilities

Question 11

Discuss Competition Influences on a Business

Answer 11

• New competition

+ good for consumers; encourage businesses to provide loyalty schemes and reduce prices
- May have to provide discounts to retain loyalty and this can be costly

• Competitor introducing new Product

+ customers have a wide range of products
Might give a business an idea that they can develop
- Cost money to carry out market research and try and stay ahead of what competitors are doing which might not be successful