business unit 1 aqa AS

AS business; unit 1; AQA 

  • Created by: mehwisch
  • Created on: 03-01-12 14:42

Advantages of owning a business

- the posibility of financial rewards because a firm makes more money then it spends.

- you are your own boss; and are able to make your own decisions without having to answer anybody.

- setting up your own business gives you the oppertunity to do a job you're really interested in.

- you could potentially earn more with your own business then you could working as an employee of another company.

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objectives and aims of a business

- most business aim to make a profit by selling a product or service. 

- businesses have to break even or make a profit in order to survive

- some business are non-profitable business; there to provide for community e.g. army, hospitals, state schools.

- some want to offer the highest quality of good and service possible

- businesses may also want to grow by increasinf their market share, merging, or taking over other businesses.

- try to limit their impact on the enviroment

- survivng is essential for a newbusiness, especially in a weak economy or competitive markets. 

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business departments; roles; functions

PRODUCTION: businesses turn raw material into finished goods. Monitor the quality of production.

FIANACE: business must keep detailed and accurate financial records. A business must try to get the best value for money for every pound it spends.

HRM: (human resources management) business must make sure they have the right number of employees of the right quality in the right place at the right time.

MARKETING: businesses have to identify what customers want or need to figure out how best to sell it to them. 

ADMIN: businesses have to run their own affairs as eficciciently as possible.

R&D: (research and development) business may need to discover new ideas for products that might be wanted in the future, and get them readt to be launched in the market.

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Practice questions

give three benefits of owning your own business

what objectives might a private sector business have?

give five examples of departments that you might find in a business

nme atleast four essential things that a business needs to produce goods


suggest why anna, a fashion designer, might want to leave her job designing for a high street store and set up her own business? (6marks)

discuss the idea that businesses exist to make a profit (10marks)

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adding value

selling price - costs = added value

- value added is a surplus the business uses it to pay for other costs like wages, rent etc, the left over is profit

- the greater the value added the higher the profits are going to be - businesses want the added value to be as high as possible to increase profit

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raw material to finished goods = transformation; example:

cotton suppliers supply cotton to denim factory --- denim manufacturers makes cotton in to denim --- clothing manufacturers make the jeans --- retailer buys them --- consumer buys them

a- ll businesses are depandant on their suppliers and consumers

- value is added on each stage

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Stages of production

PRIMARY SECTOR: industries that extract raw materials from natural resources. this sector covers the farming, fising, mining industry

SECONDARY SECTOR:processes the raw materials into finished goods. this sector covers manufacturing induestry,

TERTIARY SECTOR: this is the service sector, it provides services to businesses in the primary and secondary sector.

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Practice questions

give two examples of products with value added

what is the transformation chain?


prawnfree LTD sell salmon fish cakes, analyse the effect that a drop in salmon supplies might have on their supply chain (10marks)

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- An entrepreneur is somebody who takes the risk and initative to star their own business

- successful entrepreneurs tend to be creative, original, innovators, able to see the gap in the market. They're good organisers and planners

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The government and enterprise

- The government encourages enterprise because it benefits the economy - it creates new jobs

- The government has set up organisations to provide advice and support.

- The government also provides grants for some entrepreneurs to set up businesses.

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Why businesses fail

- because of lack of experience

- insufficient funds

- inaccurate and unrealistic planning leads to failure.

- the location can be wrong 

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Practice Questions

 why does the government encourage entrepreneurs to start their own businesses?

give three personal characteristics of an entrepreneur. 

why isit important to get the price of the product right?

give three reasons why a business might fail.


johan moller has invented a new tin opener, and he's setting up his own business to make and sell it.

a) discuss where johan might get help with setting up his business

b) outline two possible strengths and two possible weaknesses of Johan's idea

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Niche or mass markets

- Niche market is a small more specific group of consumers

- small businesses can be more successful if they focus on a niche market - this means they don't have to compete with big companies

- niche markets have high profit of margins because their is a big difference between the cost and selling price.

- small niche markets suit small manufacturers, a small manufacturer can meet the demands of a small segment of the market.

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Protecting businesses and ideas

-PATENT: is a way of regestring and protecting new inventions, no one else can copy you unless you give them the license to - and you can charge for the licence.

-TRADEMARKS: protects logos, slogans and business names so that nobody else can use it.

-COPYRIGHT: gives protection to written work and music, it's illegal to reproduce other people's work without their permission, authors and musicians receive royalties every time their work is published or played in the radio.

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Franchising Advantages to the franchisee

- agreements which allow one business to use the business idea, name and reputation of another business

-the franchisee gets a well known name,

-a successful and proven business idea,

-less risk of a franchise failing, 

-marketing, advertising and promotions are done nationally by the franchisor- this can keep costs down

-banks are more willing to lend money so easier to franchise 

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Franchising disadvantages to franchisee

- the franchisor has to be paid so their name can be used

- they have to pay the franchisor parts of the profits or an agreed sum

-they haver to run the business according to the franchisors rules

- it's difficult to sell the franchise- they can only sell it to the person the franchisor approves off.

-the reputation of franchise also depends on the reputation of other franchises so if theirs fail their is a likely chance of lack of sales through out.

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Advantages to the franchisor

- someone else runs parts of their business for them and saves them wages costs.

-they get paid to allow others to use their name and get a share of the profits.

-the more franchises their are the faster the name can spread

-the risk involved in opening up a franchise in a new store is limited because the franchisor takes up some of the risk.

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Disadvantages to the franchisor

-they have to help the franchisee set up a new franchise

-the provide a good business concept, but have to share the rewards with the franchisee

-if their franchisees don't have good standards, the franchisor's brand could get a bad reputation.

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Practice questions

- what's the difference between a mass market and a niche market?

- how can entrepreneurs legally protect new inventions?

-what's the purpose of copyright?

- what's meant by the term franchisee and franchisor?


evaluate the advantages and disadvantages of franchising for for franchisor and franchisee

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Protecting ideas and inventions

a patent is a way of registering and protecting new inventions, if you have a patent for your product nobody can copy it unless you give them a licence and you can charge for the licence

trademarks is a way of protecting business names, slogans, logos so nobody else can copy them because it promotes a certain brand image

copyright gives the protection to written work and music so its illegal to reproduce other people's work without their permission. Musicians and writes get paid every time their work is published or played.

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