DUCAN MARKET

Toni - Denis Tanase

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 1.1 Introduction to Small business Page
1. Customer needs
a. Market Research :Primary and Secondary Research
b. Quantitative and Qualitative data
c. Interpreting the data………………………………………………………………….8
2. Market Mapping
a. Analysing the Customer
b. Market Segments
c. Market Map
d. Gaps in the Market…………………………………………………………………….8
3.Competition
a. Analysing the competition
b. Competitive advantage………………………………………………………………8-9
4. Added Value
a. Added Value
b. Importance of value added…………………………………………………………...9
5. Franchising
a. What would a Franchisor get out of it.
b. Franchisor, Franchisee
c. Royalty………………………………………………………………………………….9
1.2 I do not know what this is but I think is about giving the skills and qualities for start.
6. Showing Entreprise
a. Taking risks
b. Showing Initiative
c. Willingness for new venture
d. Thinking creatively
e. Deliberate creativity…………………………………………………………………….9
7. Lateral Thinking
a. Lateral thinking techniques - Blue Skies………………………………………..…...10
8.Thinking Creatively
a. Deliberate creativity
b. De Bono Thinking Hats-Six thinking hats.
c. Why is it important……………………………………………………………...……...10
9. Questions to be asked
a. The questions in order………………………………………………………………...10
10. Invention and Innovation
a. Meaning of them
b. How do new business ideas come about………………………………………..10-11
11. Copyright, Patents and Trademarks
a. Meaning
b. Examples
c. Time to last in uk………………………………………………………………….……11

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 12.Calculated Risk
a. Upsides
b. Downsides……………………………………………………………………….……..11
13.Skills of Entrepreneurs
a. The qualities shown by Entrepreneurs
b. Leadership skills
c. Meaning of them……………………………………………………………………….11
1.2 Puting business idea into action
14. The business plan
a. Advantages of writing a business plan
b. How to, and what to include…………………………………………………………..11
15. Business objective
a. Financial and Non-Financial Objectives
b. Business objective SMART…………………………………………………..…...11-12
16. Cost, Revenue, Profits
a. Estimated costs
b. Fixed and variable costs and Total costs
c. Revenue - Turnover - Sales Revenue - Total Receipts
d. Total Revenue
e. Profit/ Loss ……………………………………………………………………………..12
17. The role cash in a business
a. Importance of cash
b. Three problems when managing cash
c. Ways to manage cash…………………………………………………………….…..13
18. Cash Flow Forecasts
a. Cash Flow Forecasts - The key Terms
b. Cash Flow Insolvency………………………………………………………………....13
19. Obtaining Finance
a. Long and Short Term Source
b. Internal and External Sources +Advantages and Disadvantages……..…………13
20. Type of ownership
a. Sole trader
b. Private Limited Company
c. Public Limited Company………………………………………………………………14
21. Customer Focus
a. The importance of staff
b. Identify Customer needs
c. Anticipating Customer needs
d. Meeting Customer needs……………………………………………………....……..14

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 21. The Marketing Mix
a. Product
b. Price
c. Place
d. Promotion
e. People
f. Process
g. Physical Evidence………………………………………………………………....14-16
1.4 Making an effective start-up

22. Customer Satisfaction

a. Customer Service
b. Repeat Business / Repeat Purchase
c. Write a customer service policy………………………………………………….…..16
23. Ownership and Limited Liability
a. Sole trader
b. Private Limited Company
c. Public Limited Company
d. Partnership
e. Franchise…………………………………………………………………………...16-18
24. Ownership comparison table………………………………………………………….….18
26. Start-up legal and tax issues
a. Business name
b. HM Revenue & Customs
c. VAT - value Added Tax
d. Income Tax
e. National Insurance Contributions ( NIC )
f. Corporation Tax……………………………………….…………………………..18-19
27. Recruiting & Training Staff
a. Recruitment and Selection
b. Retention
c. The recruitment process
d. Documents in the recruitment process
e. Skills employers look for -the 10 key attributes
f. Advertising the job - Where?..........................................................................19-20
g. Selection
h. How do firm Select?
i. Selection
j. References
k. What happens next?
l. The Contract of Employment
m. Skills versus attitude
n. Motivation

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 o. Training
p. Key Employment Legislations
q. Induction…………………………………………………………………………….20-22
28. The Law
a. Appointment and training of staff
b. Protection at work
c. Leaving Work
d. Other rights…………………………………………………………………………….22
Unit 3 - Marketing and Customer Needs
29. Marketing
a. What is marketing?
b. The need for Market Research?
c. Stage of Market Research
d. Survey
e. Sampelning
f. Decisions…………………………………………………………………………...22-23
30. Product Life Cycle
a. The Development Stage
b. Launching The product
c. Product Maturity
d. Extension strategy
e. Saturation and Decline…………………………..………………………………..23-24
31. Cash Flow Through the Phase
a. Development Phase
b. Launch Phase
c. Growth Phase
d. Maturity Phase……………………………………………………………………..….24
32. Product Portfolio Analysis
a. Product Portfolio or Product Mix
b. The Boston Matrix………………………………………………………………….24-25
33. Product Trial and Repeat Purchase
a. Product trial
b. Free Publicity
c. Viral Marketing
d. Repeat Purchase and Customer Loyalty…………………………………………....25
34. Branding and Differentiation
a. Branding
b. Product Differentiation……………………………………………………………..25-26
35. Managing Stock
a. Stock
b. Stock Control - JUST IN CASE
c. Uncertainty
d. Just in time stock control……………………………………………………………...26

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 36. Quality
a. Traditional Quality Control
b. Quality Assurance
c. The process of Quality Assurance
d. Quality Standards……………………………………………………………………...27
Economic Context
37. Demand and Supply
a. Demand
b. Supply
c. Difference between Markets………………………………………………….…..27-28
38. The impact of change in Exchange Rates
a. Exchange Rates
b. Calculating the cost of Foreign Exchange
c. Fluctuating Exchange Rates and Prices
d. Impact of a fall in the value of the pound on small businesses
e. Impact of a rise in the value of the pound on small businesses…………………..28
39. The impact of interest rates
a. Credit
b. The cost of borrowing for small businesses
c. Research……………………………………………………………………………28-29
40. The impact of the Business Cycle
a. The Economy
b. Economic Growth
c. The Business Cycle
d. Boom
e. Slowdown / Downturn
f. Recovery……………………………………………………………………………….29

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1.1 Introduction to small business
1.Customer Needs
● The want and desires of customers that Market Segments
purchase your product.
● Is a part of the market that contains groups of
buyers that have similar characteristics.
Market research
● A business can target more than one segment.
● Gathering informations about customers,
competitors and trends in the market. ○ E.g: Gender, Job, Hobbies, Income,
● Collected through primary and secondary data. Class, Age, Ethnicity, Religion, Area.

Primary Research Market Map

● This is when a business collects market research
for themselves. ● A diagram t​hat shows where products/business
○ E.g : Focus group activity are in comparison to competitors​ base on two
○ Surveys - asking questions of particular things- those can be anything.
respondents, called questionnaire.
○ Observation - see the reaction of
customer to products.
○ Experiments - building products and trial
them on customers.

Secondary Research
● Collecting research that has already carried out.
● Could come from inside the business or outside
of the business.
● This could help to analyse sales and to see how
well your business is doing in comparison to
competitors.
Qualitative data​: This involves collecting data about
people’s thoughts and opinions - it gives in depth details.
Quantitative data​: This involves collecting data that can be Gaps in the Market
displayed in a numerical way, for example percentages.
● This should highlight whether there are any gaps
Interpreting the Data in the market.
● This occurs when no other business is offering
● Once the data is collected you have to analyse it. the CURRENTLY needs of wcustomers.
● Finding out what your research is telling you.
● Following this a business will make changes to 3.Competition
their products/services base on the researcher
thinking. Terms to know: 1. Product offering - this is the different
individual products that a business sells.
2.Market Mapping 2. Product range - this is the products
that a business makes that are similar.
● Going after your customer.
Analysing the Competition
Analysing the Customer
● Analysing the strengths and weakness of the
● Before opening a business, the owner must competition and then offering something that they
analyse their potential customer. do not offer to the customers needs “ known as
filling the gap.

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 ○ Eg: Product range, Quality, After Sales
Service, Design, Selling Experience,
Price, Brand Image, Suppliers.
Competitive Advantage
● When a business does something that stand out
from their competitors and it is difficult for
competitors to copy or replicate what that
business is doing.
4.Added Value
● Adding something to your product/service to have
something more than the competitor. Strong Brand image
Added Value
● Increased worth that a business ​creates for a
product.
● Difference between what a business pays its
sulier and the price that it is able to charge for the
product/service.
○ E.g: Quality, Design and Formula,
Speed and quality of Service, Branding,
USP.
Importance of value added
● Successful businesses are the ones that can
create​ the most added value for their particular
product.
5.Franchising
● This is an option for starting a new business that
already exists.
● A well established business will sell the right for
other people to open a business under their
name and trademark.
○ E.g: McDonalds, Subway etc..
Franchisor:​ The company selling the franchise.
Franchisee​: The person buying the franchise.
What would a Franchisor get out of it?
Once a Franchisee has bought a Franchisor continue to Thinking Creatively
pay them money for : Selling their rights (Logo,name…),
from supling the products and also gets a % of the money
earned. Why is creative thinking important?
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Royalty
● A Franchisee will have to pay the Franchisor a
share of the money that they make​ - this is like
paying for the right to continue using the
Franchise brand. The share of the money is
know as ROYALTY.
● It will be a fixed percentage of the earning and
will usually be paid at the end of the financial
year.
Advantages Disadvantages
Can never have 100%
control
Training provides Royalty Payments
Control day to day running Costs
6. Showing Enterprise
● Enterprise is when entrepreneurs : Take risk,
Show initiative, Undertake new venture.
Taking risks
● Things may go wrong not according to plan. If the
risks has been taken in consideration before and
planned then it is easier to overtake. You should
take a calculated risks.
Showing Initiative
● This is setting entrepreneur away from the
regular business people.​ ​Thinking creatively,
outside the box and the first step is always to get
things done.
Willingness for new ventures
● Being on the look for new ventures and ideas.
This does not guarantee always success but will
show they are able to quit unsuccessful​ venture
and start new one.
● This is coming up with ideas that do not exist
currently​. ​Thinking outside the box.
● Competitive advantage.
● Challenges Entrepreneurs.
● Helps keep a business “fresh” and up to date.
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 ● Creates a buzz around that particular business.
● Motivates employees​.
9.​Questions to be asked
Deliberate creativity
● Sort of issues, explore alternatives and plan for
● This involes using a range of thinking methods to the future.
come up with new idea​. ● Identify what is working and should stay the
● Naturally, new ideas will emerge and can be same and what is not and need to change.
developed. ● CONTINUALLY EVALUATE THEIR ACTIVITY.
○ E.g. Mind Map; Discussions; Blue Skies The Questions in kind a order :
thinking and Lateral thinking.
1. Why?
2. Why not?
7.Lateral Thinking 3. What?
Lateral Thinking allows a business to come up with an 4. How?
idea that competitors have overlooked ​-This creates a 5. Where?
competitive advantage. 6. When?

Lateral thinking techniques - Blue Skies 10. Invention and Innovation

● This is when people are encouraged to think ​of
as many ideas or problems as they can.
● Brainstorming, mindmapping many different
ideas
● Group discussion.
8. Thinking Creatively
● Coming up with an idea that didn’t exist before.
● Thinking outside of the box.
Why is creative thinking important?
1.Helps gain a competitive advantage.
2.Keeps businesses ‘fresh’.
3.Challenges entrepreneurs.
4.Creates excitement and a buzz.
5. Motivates and stimulates.
Deliberate Creativity
● Involves using a range of ​thinking methods​ that
help us create new ideas. ​By going through
different processes, new ideas.
○ E.g: Discussions, mind maps, lateral
thinking and blue skies thinking.
Two lateral thinking techniques.
1.Blue skies thinking (up).
2. De Bono’s Thinking hats.- Six thinking hats.
Invention:​ The discovery of new processes and potential
new products, typically after a period of research.
Innovation:​ The process of transformation inventions into
products that can be sold to customers.
How do new business ideas come about?
● People using products.
● Ideas developed by people who already have a
good understanding of the market.
● Research department.
11. Copyright, Patents and Trademarks
1. Patents: Right of ownership of an invention that is
registered with government​. ----Uk patents ​are for
20 years. International Patents are more
expensive.
2. Copyright: Legal ownership of material. Given for
IPR such as films, books and music.​ Gives the
right to copy, produce and control material.
Copyright protection is longer than patents. E.g:
Books for lifetime +70 years after death.
3. T​rademarks: The symbols, signs or features of a
product protected in law.​ E.g: Coca Cola, Lego,
BBC, Scrabble.
a. Logos:Mcdonalds
b. Picture or drawing: Pink Pantera
c. Combination of letter and a design: IBM
d. Slogans: I’m loving’ it
e. Product shape: Coca cola.
f. Colours : Red-Coca cola.

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12. Calculated Risk
Is about putting a numerical value or probability on the
risk.​ It is the chance of something negative happening.
Upsides
● It is what can go right in a business.
● Something that is positive.
● The advantage of a course of actions, including
what can go right.
○ E.g: potential money, gaining machinery
or materials for less.
Downsides
● It is what can go wrong in a business
● The disadvantages of a course of action including
what can go wrong.
○ E.g: machine or goods being bought
being faulty, money that could be lost of
customers.
13.Skills of Entrepreneurs
The qualities shown by Entrepreneurs
A. Determination-​About not giving up.
B. Initiative-​Making the first move.
C. Taking risks​-Being a E is riskier.
D. Decision making-​Listen, take information
E. Ability to plan-​ Expecting and exceeding
F. Persuade-​ Believe your beliefs.
G. Business plan- ​Advisor,investors, bank.
H. Leadership-Leadership skills.
a. Having a vision
b. Leading by Example
c. Self confident and belief
d. Excellent Communicator
e. Delegation skills
f. People management skills
g. Motivation
h. Humour
i. Reliable and Trustworthy.
I. Being Lucky-​ No luck , perseverance is key.
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1.3 Puting business idea into action.
14.The business plan
It is detailed development plan for a business.​ It includes
information about the company’s:
● Location
● Ownership
● Product/Service
● Resources
● Production Methods
● Marketing
● Financial Details
● It is usually Completed on a 2-5 year basis
Advantages of writing a business plan
● Clarify your vision​ and decide whether or not to
go ahead with an idea.
● Determine if your product and/or service has a
sufficient market to support it​ and whether or not
it will be profitable.
● Estimate your​ start-up costs​ and ​how much you’l​l
need to invest or ​finance​.
● Convince investors​ and lenders to fund your
business.
● Define your ​Target Market.
● Establish who your competitors will be.
● Define corporate​ objectives and how to achieve
those objectives.
● Help your business​ makes money​ from the start
by developing effective operational strategies.
● Understand the risks​ involved and ​anticipating
potential problems so that you can solve them.
● Set value on a business​ for sale or for legal
purposes.
15.Business objective
● Business objectives are the stated, measurable
targets of how to achieve business aims.
● Setting your goal:financial or non financially etc..
This could help to have a clearly define vision
and target. Then plan are made to achieve this.
Two types of objectives
Objective could be split into financial or non-financial
objectives.
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 ○ E.g : rent, salaries, insurance,
A.Financial administrations costs.

● To survive in the market

● Break even
B. Variable Costs
● Improve image ● Costs that change directly with the level of
● Have high motivation amongst employees production or service provided.
● To maximise profits ○ E.g: Costs of buying raw material, Fuel
● To increase market shares Costs, Utilities such as gas, electricity
● To grow in size ( Sales, Employees. etc) and water, wages for casual staff,
● To sell abroad Telephone bills, Stock.
● To make returns to shareholders.
A.+B./ Fixed + Variable costs = Total Costs
B.Non-Financial
TC = FC + VC
● Personal satisfactions
● Challenge
● Independence
Revenues - Turnover - Sales Revenue - Total
● Control Receipts
● Helping others ● Revenue is the amount of income a business will
● Using your kills earn over a period of time like a week or year.
● Being your own boss (desire)
● Something to be proud of ( for building it) To predict the total revenue, a business has to predict how
many sales it will make (Sales Volume) and what the
Business objectives must be SMART average price charged per product will be.
1. S- Specific=​ Objective must be specify what/why
they want to achieve. Total Revenue = Price x Quantity Sold
2. M- Measurable=​ You should be able to measure
whether you are meeting the objectives or not.
TR = P X Q
3. A- Achievable= ​Can the objectives be met by
your business? E.g Is it to big? ​Nope,never. Profit/ Loss = Total Revenue - Total Costs
4. R- Realistic=​ Can you realistically achieve the
objectives with the resources you have?
P / L = TR - TC
5. T- Timed=​ When do you want to achieve the set
objectives?e.g:Within 12 month 17. The role of cash in a business

16. Cost,revenue, profits Importance of cash

Estimated Costs
● All businesses will have a number of different
costs associated with running their business.
● Cost are separated into FIXED AND VARIABLE
COSTS.
● On a day to day basis cash is more important to
a business than profit.
● Cash refers to all money that a business has that
it can use to pay its bills, wages and rent.
● It can be; notes, coins, debit cards, credit cards,
and cheque payments.

A.Fixed Costs Three problems when managing cash.

● Costs that do not change ​with the output produce 1. Seasonal sales ​- many toy shops do 50% of their
of service provided.​ Fixed costs will remain the sales in the month leading up to Christmas, they
same​ and have to be paid regardless of whether have to plan how​ ​they will use this cash wisely to
the business is busy or not. spread over the year.

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 2. A few large customers -​ if they do not pay on time
these stretches the cash that is available. Long and Short Term Sources
3. New businesses - ​have many start up costs to
●
Long Term​ - This is source that is used for the
cover which are usually very expensive
long term plans of the business.
The money will ​be used within the business for more than
Ways to manage cash a year and it will be a large amount.
● Negotiate ​a generous overdraft facility. ● Short Term - ​This is a source that is used for the
● Keep costs under control -​ try to cut costs where short term plans, such as paying for stock.
possible, pay bills on time. The money will be spend within a year and it is usually not
● Keep the cash coming in ​- try generate as many a huge amount.
sales as possible and make sure customers who
pay on credit pay their bills on time. Internal and External Sources
A. Internal Sources -​ this is money that comes from
18. Cash Flow Forecasts INSIDE the business.
Cash Flow Forecasting is concerned with predicting all the Advantages
money coming into a business (Cash Inflows- Income )
and all the ​money going out of a business ( Cash 1. The money is ready and available immediately.
Outflows- Spending) 2. It does not have to be repaid there is no interest
payments.
Cash Flow Forecasts - the key terms 3. It is less time consuming and less hassle.
Disadvantages
1. Receipts / Total Receipts / Cash Inflows ​- This
simply refers to all the cash ​that is coming into
1. The money that is available may not actually be
the business.
enough.
2. Payments / Total Payments / Cash Outflows -
2. There is less available in the future in case of an
This simply refers to all the cash that is ​going out
emergency.
from the business.
3. Net Cash Flow - ​This is the ​difference between
B. External Sources - ​this is money that comes from
receipts and payments (Receipts - Payments ).
OUTSIDE the business.
4. Opening Balance - ​How much cash the business
Advantages
has at the beginning of the month.
1. Allows access to a large amount of money.
5. Closing Balance -​ How much cash the business
2. Borrowing from a bank is safe and secure.
has at the end of the month( Net Cash Flow +
3. Venture capitalists can provide knowledge and
Opening Balance)
experience.
Disadvantages
Cash Flow and Insolvency 1. It has to be repaid with interest added on.
Insolvency -​ This means a business is ​likely to go 2. Shareholders will take a share of the profits
bankrupt,​ this happens when a business does not have 3. Shareholders/Venture capitalist will also have a
enough cash flow available to pay​ all of its ​outflows​, such say in decision making.
as rent and staff wages
Solvent - This is the opposite , a business has the cash 20. Type of ownership
available to ensure it runs effectively
A. Sole Trader
19. Obtaining Finance ● A business ​owned and runned by one person.
Finance refers to the ​different ways in which a business ● It tends to be a small local business​ - E.g
can access money ​which can be used for the following: hairdresser, newsagent, fish and chip shop.
● Paying for any cash outflows ● The​ finance to start the business ​will usually
● Used for expanding the business come from the owner.
● Pay for marketing the business - promotions

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 ● Can have a few employees​ but all the main
decision ​will be made by the owner. Anticipating customer needs:
● Know what it's customer want as early ​as
B. Private Limited Company possible to make the product as soon as
● This tends ​to be a large business. possible.
● It is owned by shareholders ​- the shareholders
are​ just family and friends​ and there is a limit of Meeting customer needs:
50 shareholders.
● Meet the customer needs by providing ​the best
● The main shareholders and managers will make
quality product/ service at the best price.
the decisions.
● They sell new shares ​in order to raise finance -
share capital.
22. The Marketing Mix
● A tool used by businesses to ensure when they
C. Public Limited Company launch a new product it is a success.
● The marketing mix is made of 7 Ps
● A large Business
● It has 4 key elements : ​Product, Price, Place and
● It is owned by shareholders - no matter of their
Promotion.
origin, it can be trade online .
● It is extended to 7 by adding 3 in the 1981 by
● The main Shareholders and managers ​will make
Booms & Bitner :​ People, Processes, Physical
the decisions
Evidence
● They sell new shares in order to raise finance-
Share capital
Product
21. Customer Focus ● After careful market research ​a business should
be able to develop a product that ​will appeal to
● Spending time with customer can allow a
the target market.
business to learn ; Niggles​/ Weaknesses
● This is considered the most important P.
● Find out what your customers see​ you in relation
● Does it fits the customer need at ​THIS TIME?
to you competitors.
● What else the customer ​want.
Key Elements
● What customer ​do not want.
● Design
Everything about them. It is all about you (Selfish.)
● Technology
● Usefulness
The importance of staff ● Convenience
● Staff must be trained to believe​ in the importance ● Value
of customers - the customer is always right. ● Convenience
● Use market research to continually find out about ● Packaging
customer thought . ​(PR-SR) ● Branding
● Get senior managers to act as​ ‘mystery ● Accessories
shoppers’. ● Warranties
● Make sure​ staff targets ​are based around
satisfied customers.
Price
Identify Customer needs : ● Refers to the pricing strategy a company uses to
● Understand what a customer needs, ​from a sell their products - how much is the customer
product. Different types of customers have willing to pay.
different needs. ○ E.g: Perceived quality?, Customer
activity?
● Customers expect the value for the money they
give.

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 ○ E.g : People will want cheap ○ E.g: Online shop, street trial, town shops
butter/sugar type of products, however Key Elements
people are willing to pay more for ● Wholesalers
products such as baby food and ● Own Sales
perfume. ● Direct Sales =​ A channel that
Price maker or price taker you sell your products
● Online Sales
Most business when they launch a new product will either ● Party Plans
be a Price Maker or Price Taker. ● Mail Order
Price Makers​ - have the power to set prices that other
products will have to follow.
E.g: Chanel Perfume or Innocent Smoothies. Promotion
Price Takers ​- a products that is priced in relation to how
● This all to do with how you communicate with
other similar products are priced.
your customers - how do you tell them about your
E.g: Petrol
product or service.
Key Elements
● This is also the process that is making the your
● Cost Plus = ​Total cost of
customers believe and feel your company. So do
producing +getting it out to the
not fuck up.
customer + your percentage.
● Consumer-Led = ​Researching
Key Elements
the target customer base and
consider what they will find a
● Advertising
fair price.
● Public Relations
● Competitive =​ ​about supplying
● Sponsorships
the service at a price that is
● Sales Promotion
competitive to other business
● Personal Selling
that have a similar
● Direct Mail
product/service.
● Digital Content
● Penetration =​ ​Looking to obtain
● Social Media
market share in a target market
place and enter with a low
These tools should be used to put across the
price and once you obtain the
organisation’s message to the correct audiences in the
market share you scale your
manner they would most like to hear, whether it be
price.
informative or appealing to their emotions.
● Skimming =​ ​Have a high price
and this is reducing over time,
Promoting for the long term rather than
mostly used by technology
the short term
companies.
● Businesses will look to promote for the long term
● Premium =​ ​High pricing to
( to ensure sales continue for years to come )
reflect luxury or social desire.
rather than promoting individual products
● Economy =​ Such as cheap
repeatedly.
flights.
● Short term promoting can sometimes be at the
expense of the brand image. This is a risk
Place businesses are not willing to take.
● Refers to where and how the product is
distributed so that customers can get the product People
when they need it.
● Mass market use as much distribution as
● People that are involved in the selling or support
possible. or your product or service .
● How is it found?and Purchased?

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All companies are reliant on the people who run them from
front line Sales staff to the Managing Director. Having the 1.4 Making an effective start-up
right people is essential because they are as much a part
of your business offering as the products/services you are 23. Customer Satisfaction
offering.
Key Element ● This​ must ​be a ​the core of every business if it is
to be successful.
● Advice and Sales support ● A dissatisfied customer will share their
● Customer Service experience with friends and family - therefore the
● After Sales Backup business’ reputation is at stake.
● Front Line Sales Staff Making them feel good about themselves when they buy
● Managing Director your service or products or are in one of your places.

Process Customer Service

● The delivery of your service is usually done with ● Refers to the ​experience a customer has when
the customer present so how the service is dealing with a business ​- if it is positive it means
delivered is once again part of what the that customer expectations have been met or
consumer is paying for. exceeded.
● Business​ use customer service to attract
This is all about looking at: customers​ and then hang on them.
● It covers many areas, such as; the way the
1. How everything fit together? customer is treated / greeted; the quality of
2. How your product and service get to the products; knowledge of staff and post purchase
customers? treatment.
3. How successful those process are managed?
Here is where Quality Assurance and Quality Repeat Business / Repeat Purchase
Management. ● Many business ​rely on repeat business / repeat
purchas​e - this is when customers buy from them
Physical Evidence time and time again.
● The evidence that proves that your marketing is ● What supermarket do your parents use ? Do they
successful and then your product is definitely out change supermarkets?
there and doing what it should. ● A business will ​put a plan into place​ to ensure
that customers continue​ to buy from them​, for
Key Elements example;
● Packaging ○ A loyalty card
● Paperwork ( Invoices / tickets / ○ Fast deliveries
despatch notes ) ○ Easy to use website
● Vehicle Signage ○ Promotions aimed​ at existing customers
● Internet/ Web Pages - 20% of your next shop
● Furnishings
● Brochures Write a customer service policy
● Uniforms ● Using the template provided ​- write a new
● Buildings ( Offices / customer service policy for Primark, a business
Headquarters ) which is renowned for terrible customer service.
● Awards ● It need to be aimed at ​creating customer
satisfactions.
USP - Unique Selling Point ● For example, ​Primark will give out a loyalty card
This is the way that you sell what you sell in order leave a in order to encourage repeat purchases.
mark on the mind of a customer.

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24. Ownership and Limited Liability
UNLIMITED Liability​ = There is NO limit on owners legal
responsibility to repay their debts. This means they have
to repay all debts even if it means selling their house !
LIMITED Liability​ ​= When shareholders liability is limited (
restricted ) only to the amount of money they invested in
the business.
Sole trader
● Owned by one person but can employ workers.
● Small or local businesses.
● The owner has to put money in the business him
/ her self.
● Simple procedure to start.
● Decisions​ are made by the​ owner only​.
● The owner keeps the profit​ after paying all the
costs and tax
● The business and the owner exist together
● Unlimited liability.
Advantages of being a sole trader
● Total control
● Cheap and easy to start up -​ few forms
to fill in and to start trading. ST just has
to set up a bank account and inform the
inland revenue.
● Keep all the profits ​- as the owner, all
the profit belongs to the sole trader.
● Business affairs are private -
competitors cannot see what you are
earning.
A sole trader may have one or more employees. It is the
most common form of ownership in the UK.
Disadvantage of being a sole trader
● Unlimited liability
● Can be difficult to raise finance.
● There is a problem of continuity if the
sole trader retires or dies ​- what
happens to the business next?
Private limited company
● Owned by shareholders,​ people who have
invested in the company.
● Usually have “LTD” at the end of their name
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● The company needs to be ​registered with the
Companies House.
● A lot of paperwork must be in place.
● They have to ​publish their accounts every
year.
● Shareholders get​ dividend ​if the business has
made profit.
● Limited liability
Differences between Private Limited Companies
and Sole Traders.
1. Risk
Limited liability means​ owning a company is less
risky than being a sole trader.
​2. Control
A sole trader would be in the​ total control of his
business​ as he owns all the shares. In a LTD if
there​ is a majority shareholder, they have control.
​ 3. Profits
Higher number of share = ​more profits.
Sole traders retain all their profits.
​4. Privacy
LTD must​ file their accounts​ each year with a
government agency called​ COMPANIES
HOUSE.​ ​Sole traders ​can kept their ​accounts
private.
Public Limited Company
● Owned by shareholder​s, people who have
invested in the company,
● Usually have “PLC” at the end of their name.
● Similar to private limited company, however,
PLCs can trade their share on Stock Exchange.
● Higher amount of capital required​ before
companies can become PLCs
● Anyone can buy shares from a plc.
● Limited Liability
Partnership
● Owned by at least two people.
● The owners share responsibilities and profits.
● They share their expertise in the business.
● Decision making is shared as well.
● People usually draw up a ‘Deed of Partnership’.
● The owners are personally responsible for any
debts.
● Unlimited liability.
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 ● A fee is charged by the brand owner​ trading
Franchise under their big names.
● The franchisee has to pay some of their profit to
● It is like a contractual agreement between the
the franchisor.
Franchisor​ ( people who own the brand name
● Training and advertising is provided by the
and the Franchisee ( people who use this
franchisor
establish brand name)).

25. Ownership comparison table

Sole Trader Partnership Private limited Public Limited Franchise

Company Company

Number of 1 2+ up to 20 1+ 2+ 1+
owners :

Who gets the The owner Partners Shareholders Shareholders Franchisee and
profit? take their % take their % Franchisor
invested invested

Source of finance Bank loan. Each partener. Family and Any public From different
used : Personal Bank loan. friends buying shareholders. Franchisee.
savings. Personal. shares.
From friends. Banks.
Overdraft. Bank overdraft.

Liability? Unlimited Unlimited Limited Limited

Who is Owner Parteners Founder CEO and Franchisee

responsible for Directors
the day-to-day
running?

26. Start-up legal and tax issues Vat - Value Added Tax (VAT)
● A tax value on the value ​of the sales a business
Business name
makes.
● Name should be different from any other ● The amount of VAT a business​ must pay
business. depends on a businesses sales.
● If you are setting up a company this will be
checked at ​Company House. ● There are 3 VAT rate:
● If you are a sole trader it should not be the same ○ Standard rate - 20%
as any in the local area. ○ Reduce rate - 5%
● The name should promote the business ○ Zero rate - 0%
● A business only ​has to pay VAT if its sales are
HM Revenue & Customs more than £69,000 ​( Below this it pays 0% )
The government authorities in the UK ​responsible for
collecting tax. Income Tax
● Paid by anyone who has an income - ​both
employers and employees.

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 Income rates 1.
Identify Vacancy
2. Write Job Description
❖ Basic rate 20% - £0 to £31,865 3. Write Person Specification
❖ Higher rate 40% - 0 to £150,000 4. Advertise the Job
❖ Additional rate 45% - Over £150,000 5. Send Application Forms
6. Receive Applications
National Insurance Contributions ( NIC ) 7. Shortlist Candidates
8. Interview
● These taxes ​are linked to government benefits
9. Selected Best Candidate
such as​ ; ​state pension and incapacity benefit.
10. Make Jobs Offer
● A business ​that employs workers​ will have to pay
2 types of NIC
1. It will deduct NIC from its employees
Documents in the recruitment process
pay packet. 1. Document Advert -​ a brief description of the job &
2. It has to pay Employers National skills needed.
Insurance Contributions - flat rate %​ . 2. Job Particulars -​ more detailed information about
the business & the job - ​what is expected of the
Corporation Tax applicant, condition of work, rate of pay, holidays
& how to apply.
● A tax paid by limited​ companies on the profits of
3. Jobs Description - ​a document describing the
the company.
duties​ of a worker and his / her status in the firm​.
● Corporation tax is a tax on the profits of a
This contains :
company​, as Sole traders ​pay income tax they do
a. Job Title
not need to pay this.
b. Purpose of the Job
● Currently the corporate ​tax rate is set at 20%​ for
c. Place in the organisation
small businesses.
d. Specific duties of the job
e. Other responsibilities of the job
27. Recruiting & Training Staff f. Location of the job
g. Hours of work
Recruitment and Selection h. Working conditions
Is the process of i​dentifying the need for a job​, defining the 4. Personal Specification -​ A profile of the skills and
r​equirements of the position and the job holder, qualities of a person needed to do the job.
advertising the position​ and choosing the ​most appropriate 5. CV’s ( Curriculum Vitae ) - ​Summary of one’s
person for the job. education,skills, employment and experience.
Application form - The form which the applicant
Retention fills in with their personal details.

Ensuring ​that once the best person has been recruited,

the stay with the business​ and are not “poached” by rival
companies.

Skills employers look for - the 10 key attributes

The recruitment process
● Recruitment is one ​of the main objectives of
management​ as the success of any business Skills Description
depends to a large extent on the quality of its
staff. Communication Wrriten,verbal and
● Recruiting employees ​with the correct skills can presentation skills.
add value to a business​. Employees ​should
Teamwork Team player with ability to
therefore be ​carefully selected, managed and manage others.
retained​, just like any other resource.
Negotiation & Being able to get ‘Your

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19
 3. Location
persuasion own way’ but
understanding other 4. Brief Description
perspectives. 5. Qualifications and Experience Required
6. Address and / or Contact Details
Problem Solving Analysis & logical thinking 7. Organisation Identity and Logo

Leadership Motivating a team,

assigning tasks and
.meeting deadlines.
Organisation Prioritising workload and
time.
Ability to meet Efficiency and time
deadlines management.
Ability to work under Calm in a crisis, not
pressure becoming stressed.
Confidence In yourself, colleagues
and the company.
Commercial awareness Knowing what makes a
company tick.
Advertising the job -Where?
Selection
● Once a job has been advertised and ​details sent
out to prospective employees, the applicants will
return their CV / Jobs Applications.
1. Application
2. Selection
3. Decision
4. Results are in!
How do firms select?
● Once applications​ have been received a firm
must short-list​, or ​select the best 4 or 5.
● There are a number of tools that can help :
○ Curriculum Vitae ( CV )
○ Letter of Application
○ Numeracy Tests
○ Visual Tests
○ Aptitude Tests
○ Interviews

Selection
● Selecting is about ​choosing the right person to do
the job.
● A business will draw up a​ shortlist of candidates
who will be invited to interview.
● Interview are an important part of the selection
p​rocess as they allow the business​ to find out
more about the candidate and​ find out whether
the person is appropriate for the business.

References
● ​Job centers ● The final part of the ​selection process is to
●
Internally receive the references​ from the candidate.
● Trade journals ● This can be ​from a personal source
● Newspapers & Magazines ( teacher etc.. )
● Internet ● Or it can ​be a professional reference
( manager at your current or last job )
What should the ad say?
What happens next?
1. Job Description
2. Basic Salary / Wage Information ● A ​candidate is selected and a job offer is made​.

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 ● A firm then asks for references - ​what referees
write is confidential and must be accurate.
● Assuming references are ok ​- the candidate will
start work.
● Within 13 weeks of employment they must
receive a ​CONTRACT OF EMPLOYMENT.
The Contract of Employment
● This is ​legal document
● Is should contain the :
○ Name of employer and employee
○ Date on which employment started
○ Job Title
○ Rate of pay, frequency of pay and
payment method
○ Normal hours of work
○ Holiday entitlement & Holiday pay
○ Conditions relating to sickness and
injury
○ Pension arrangements
○ Length of notice required by both parties
○ Disciplinary rules and procedures
○ Arrangements for handling problems.
Skills versus attitude
● This refers to​ the extent to which a business has
control over their employees
● An employee can be fully qualified and have all
the right skills however, they ​must have the right
attitude toward work.
● Are they positive? Are they motivated?Do they
get along with colleagues?
YOU CAN TRAIN SOMEONE WHO DOES NOT
HAVE THE SKILLS BUT YOU CANNOT TRAIN
SOMEONE TO HAVE A BETTER ATTITUDE.
Motivation
● This refers to what a ​business can do make sure
its employees work to the best of their ability​ and
are committed to the business.
● Workers can increase motivation by ;
○ Paying decent wages
○ Decent working conditions
○ Keep employees informed
○ Give workers decision making authority
○ Sympathetic about time off for personal
reasons
○ Be consistent with rules that are laid out.
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Training
● Once workers have been found they must be
introduced to their ​new working environment.
● This is done​ through training,
● There are usually​ 4 reasons why training will take
place :
○ Induction
○ Upgrading skills
○ Re-Training
○ Multi-Skilling
● In the modern​ working environment employees
will regularly receive training​ - small businesses
sometimes find it hard to afford it.
On the job training -​ training and learning as employees
work.
Off the job training -​ larger businesses use this,
employees get trained away from their workplace.
● Small businesses tend to use ON-THE-JOB
TRAINING.​ This is where a worker re​mains at
their usual place of work and learns ​how to do
their job.
○ E.g : ​Doctors, Teachers.
● Larger businesses​ tend to use OFF-THE-JOB
TRAINING.
○ This is where​ a worker is trained away
from their usual workplace
○ This might be at : ​Training center,
University, College.
Problems with training staff
● It is expensive !
○ Off- the job is more expensive because
■ Courses must be paid for
■ The worker is not producing
anything
■ The worker will still have to be
paid
● Small firms ​are often unable to afford training.
● This is​ why government set up Training and
Enterprise Councils ( TECs )
○ These provide help and advice to small
businesses in a local area
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 ● Workers may have access to a pension from their
Key Employment Legislation employer - this is often paid into by employees as
they work
● Race Relations Act
● Sex Discrimination Act
● Disability Discrimination Act
Other rights
● Employment Equality ( Age ) Regulations ● The impact of laws can be greater on smaller
● Equal Pay Act businesses than large businesses
● Employment Protection Act ○ For example, a small business may only
employ 3 / 4 people - if one goes off on
Induction maternity leave, this can be disruptive
and difficult to manage.
● This i​s programme aimed to introduce a new
● Other things to consider are ​EU rules such as,
employee to a job
Working Time Directive​ - this outlines the number
● It is used to :
of hours a worker should ​have to work over a
○ Familiarise the worker with their job.
certain period of time.
○ Make the employee as efficient as
● All laws are time consuming and expensive to
possible.
implement into a business.
○ Encourage new workers to be
committed to the organisation.
● Think back to your induction​ day at school:
○ What was good about it? Unit 3 - Marketing and Customer
○ What was bad about it? Needs
○ How would you improve it?

28. The Law 29. Marketing

● Over the years ​Parliament has passed many
legislations ​( laws ) that give ​employees
protection at work​.
Appointment and training of staff
● Workers ​cannot be discriminated against on the
grounds of their
○ Age
○ Sex
○ Race
○ Disability
● A business cannot reject a perfectly good
application from on these grounds either.
Protection at work
● Worker​s must be protected under the Health and
Safety Act
● Workers can also join Trade Unions
Leaving work
● Workers are protected from ‘unfair dismissal’ la​w
● They cannot lose their job without valid reason
What is marketing?
● Anticipating and meeting customer needs.
● Product / Service should meet customers​ need
and the customer is willing to pay for it.
The need for Market Research?
● Gaining information a​bout customer,competitors
and market trends ​-​ collected through Primary
and Secondary Research.
● This help to ​identify customer needs and desire
and also help to identify ​when they are change so
a business can anticipate and make change in
their business.
Stage of Market Research
❖ Designing the research
➢ What is the research trying to achieve?
➢ How should the research be conducted?
➢ Should we gather primary and
secondary research?
➢ Survey or observation?
➢ Qualitative or Quantitative information?

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 ❖ Undertaking the research Systematic sampling method
➢ Completing the design research, getting
access to the right respondents and ● This is where, for example, every 3rd
carrying out said research. person from a list of names is chosen ​to
❖ Analysing the information participate -​ this is quick and cheap to
➢ Did people says the same things or use.
different? Quota sampling method
➢ Is there any trends or patterns in the
data? ● This is ​where the respondents are
➢ Is the data useful enough for the chosen​ with the use of specific
business to make a decision in order to requirements,​ for example, a business
make their product / service better and may want to conduct research on 100 ,
more successful? 20-30 years old females.
Primary Research - ​This is carried out by the business to
meet its specific needs, e.g. observations, surveys and Decisions
experiments.
● The whole purpose of market research​ is to allow
Secondary Research -​ Information that already exists such
a business ​to make better and more informed
as,​ accounts and sales figures, internet and newspaper
decisions about ​their business activities.
articles and government statistics.
● It should answer the following types of questions
Quantitative data - ​data that can be ​expressed as
:
numbers and statistically analysed.
○ Is there any problems with our
Quantitative data -​ data about ​people’s opinions,
marketing mix?
judgements and attitudes.
○ Which particular elements of the
marketing mix are failing?
Surveys ○ Why sales falling?
● A survey usually involves asking questions to ○ If we launched this new product, will it
respondents -​ people or businesses who reply to be successful?
asked questions.
● Differents kind of surveys: 30. Product Life Cycle
○ Postal Questionnaires
○ Telephone Surveys
○ Personal ( face to face) interviews
○ Consumer panels - where groups of
people meet to discuss and
sometimes try a new product.

Sampling
● This is a small group out of the total population
which is selected to take part in a survey
● In order for the sample to be useful it must be
representative of the target market​ - no use
just asking the males as this means ​valuable
female input would be missed.

Random sampling method.

● Every potential response has an

equal chance of being picked ​( like
picking out of a hat )

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The Development Stage
● The Research and Development team within in
any business will spend long time​ ( sometimes
years ) to create a new product
○ 15 years - the director waited until the
technology had caught up with his ideas
“the movie with blue people and
animals”
Launching the product
● Once the product has been developed ​it is ready
to be launched.
○ What do you think will accompany the Cash has to be paid out to workers and for materials.
launch of a new product?
Product Maturity
● The product has reached ​its peak in term of
sales.
● Research and Development costs​ are likely to
have been paid off.
● Many buyers are ​likely to repeat purchase​ and
there is customer loyalty.
● Manufactures are ​likely to extend this stage for
as long as possible.
● They do this​ through the use of extension
strategies
● This involves slightly ​changing the product to give
it fresh appeal to the target market.
● Extension strategies can aslo help ​a product
appeal to a new segment of the market.
Extension strategy
● This is when something new is done with an
existing product​ in order increase the​ life of the
product and prevent it falling into decline.
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Saturation and Decline
● At the end of the maturity phase​, the market
becomes saturated. ​Competitors bring out
products that takes sales away.
● Consumers have lots ​of choice and it becomes
difficult to grow sales
● Eventually, a product is​ likely to go into decline
and there are a big fall in sales.
31. Cash Flow through the Phases
1. Development Phase:
During this phase​ the Net Cash Flow will be negative.
However,​ no cash is coming in from sales ​as the product
is not currently for sale.
​ 2. Launch Phase :
During this phase ​the Net Cash Flow is still negating​. A
business will have​ to pay considerable costs, such as
promotion​, these will outweigh the cash coming in from
sales.
​ 3. Growth Phase :
During this phase​ the Net Cash Flow is likely to be positive
but smal​l.​ As sales grow and cash inflows increase the
business will experience ​more cash being available, on
the other hand the cost of the production during this phase
will be high.
​ 4. Maturity Phase :
During this phase​, saturation and decline, Net Cash Flow
is likely to be positive.​ Startup and development costs
have been paid. ​The value of sales exceeds costs. When
extension strategies are used, Net Cash Flow is likely to
dip as such a strategy will cost money to implement.
32. Product Portfolio Analysis
● A business has to make decisions ​about
its product portfolio.
● Analysing the different products in the
portofolio helps​ a business make
decisions about the future of the
products
○ Do some products need more
advertising?
○ Should we take a product off the
market?
○ Which products are doing really
well?
24

Product Portfolio or Product Mix
● This is the combination or range of different
products that a business sells.
○ E.g :Unilever has a lot of products with
other companies and a lot of other
companies.
The Boston Matrix
● This is a method of conduct product
portfolio analysis.
● In the Boston Matrix a product is described in two
ways.
○ How fast the market for that product is
growing?
○ What market share does the product
currently have?
33. Product Trial and Repeat Purchase
Product trial
● This is when a customer purchase a new good
for the first time ​and decides whether they will
purchase it again.
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● This is also linked to​ creating customer loyalty
● There are many ​different ways that a business
can get customers to trial a product.
E.g of product trial
● Free Samples =​ In a supermarket there
may , sometimes, be a special stand
that has samples of a new product that
customers can try out.
● User Testing = ​With some products it is
not possible to give out free samples.
● Low Trial Prices =​ Business may chose
to launch a new product at an
introductory low price.
● Targeting Trade Buyers = ​Big business
not always sell directly to customers.
Free Publicity
● This is also called Public Relations (PR) ​-
businesses that are launching a new product will
want newspapers, internet websites, magazines
and television ​shows to write about their new
products.
● Therefore, ​businesses will invite such journalists
long to product launches​ and they will decide
whether they wish to write about it in their
publication.
Viral Marketing
● When individuals use their social networking
pages to spread the ​message about a new
product or service.
● Sometimes a business can pay popular ​Youtube
to endorse their products on their channels.
Repeat Purchase and Customer Loyalty
● The cost o​f attracting new customers is muc​h
greater than the cost of ​getting existing
customers to become loyal​. If customers build
loyalty to a brand they will ​purchase from the
business repeatedly.
34. Branding and Differentiation
Branding
● A strong brand is what all businesses ​will try to
achieve.
25
 ● A strong brand is something that customers can
relate to and it will create a ​positive link between Stock Control - JUST IN CASE
the customer and the business.
● One business​ will aim to develop ​many different
brands.
○ E.g : Apple, VaynerX

The advantage of Branding

● Premium Prices
● Greater Customer Awareness
● Increased Sales and Market Share

Product Differentiation
● Producing a RANGE​ of products allows a
business to differentiate its products.
● Product differentiation ​also allows a business to
stand out​ from its competitors.

Different ways to differentiate a product

❖ Minimum stock levels: ​This is the lowest level of
● Design
stock that a business wants to keep and hold at
● Formula
any given time period. It is sometimes called
● Function
buffer stock level. If stock falls below this level or
● Name
if a business receives an unexpectedly big order,
● Packaging
it may struggle to meet this demand.
● Differentiating across the value chain = ​This
❖ Re-order level ​: This is the level that a business
refers to all the stages a product goes through
will re-order stock into the business.
before it gets to the customer.Therefore, if a
❖ Maximum Stock Level : ​This is the largest
business manufactures a product in a unique way
amount of stock that a business decides to keep
then it creates differentiation over competitors.
at any one time.

Strongs brands : Rolls Royce, BMW, England, U.S.A ,

NASA, TESLA, COCA COLA ETC..
35. Managing Stock
Stock
● Most businesses hold stocks in some form, there Just in time stock control
are 3 ways in which a business can hold stocks:
○ Stock of materials :​ These are materials
that have been bought in form other
businesses - for example, buying raw
materials.
○ Stock of semi - finished materials :
These are stocks of products that are
waiting to be finished by producer.
○ Stock of finished goods : ​These are
goods that are completed and waiting to
be delivered to the customer.
Uncertainty
In practise, ​stocks and production do not change exactly
as planned or in a neat and concise pattern. This is due to
the fact that many businesses will have different levels of
production on a week to week basis.
● Holding ​stock in costly for any business
therefore, some businesses have changed their
stock management system.
○ With JIT a business​ hold NO stock
whatsoever.
○ When raw materials or components are
needed they are delivered to the
business ​at exactly the time they will be
used.
○ Car production ​firms use this ​method a
lot.

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 ○ It means there are a ​frequent deliveries
of stock.
36. Quality
● In a business, q​uality refers to comparing
products​ to a particular standard.
● A good quality product will meet the standards
that are set by customers.
Traditional Quality Control
❖ Step 1 : Product would be designed​ and material
chosen.
❖ Step 2 : The design team would decide how it
should be made​ and then start making it.
❖ Step 3 : Quality inspectors would then check the
product and if a product did not meet standards
they would order it to be altered and re - made.
Inspectors would also check the quality of the
materials that are brought in.
responsibility as it is their role to ensure that
workers have full training and development in
their particular job. This should mean that zero
defects are created throughout the production
process.
Quality Standards
British Standards Institute ( BSI ) ​- products with
Kitemarks show that they have met standards set.
● There are also standards for the quality of the
production systems that are used to make
products.
● I​SO - International Organisation for
Standardisation : ISO 9000 i​s the basic standard
for quality management systems. ISO 9001
covers quality assurance in design, development
production, installation and servicing.
Economic Context

Quality Assurance 37. Demand and Supply

● This is more of a modern way of control the
quality of products or services​ made in a
business It relies on building quality into every
stage of the production process.
● It should therefore create a​ ‘no - faults ‘ product
and the business an assure customers of this.
The process of Quality Assurance
1. A part of every process = ​Quality must be build in ❖
to the production process and not just checked at
certain stages.
2. Everyone’s job =​ Every employee is responsible
for assuring quality - it may be stages that were
not being checked before are now being
checked. It may be that team working is used to
check quality.
3. Kaizen =​ This means ‘ continuous improvement ‘ Supply
- Japanese. In order to achieve the highest level
of quality a business must seek to make itself
better and better on continuous basis.
4. Zero Defects = ​A business may set itself regular
targets where it aims to reduce the number of
errors or defects - the ultimate goal is that the
production process ultimately runs with no
defects at all.
5. Management =​ Although workers have an
individual responsibility, managers have a level of
● Many commodities are traded on organised,
global commodity markets ​where buyers
( DEMAND ) and sellers ( SUPPLY )​ come
together to agree prices.
Demand
❖ The amount that buyers are willing to able to
purchase at​ any given price.
Wheat is used to make products such as bread,
rice and pasta - ​demand for it is impacted by
many businesses and individuals worldwide.
❖ If demand rises what do you think will happen to
price?
➢ China is fast growing economy, as
people have higher incomes.
❖ The amount sellers are willing and able to sell at
any given price.
❖ There are hundreds of thousands of growers of
wheat - t​he supply depends on the price farmers
think they will get compared to other products
they could grow.
❖ It also depends upon ​weather conditions ; pests
and diseases ​- all of which will impact the
harvest.

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Difference between Markets
● In recent years the price of oil has changed
dramatically - ​rising quickly and sharply, but then
falling just as quickly.
● However, in shops prices do not change like this
- this i​s the difference between commodity
markets​ and a goods market.
● Customers do not want prices to change ​-
therefore businesses are under pressure to
maintain prices - the cost of regularly changing
prices can also be high.
38. The impact of changes in Exchange
Rates
Exchange Rates
● The exchange rate is the amount of currency you
can buy with one​ unit of another currency.
● For example, ​how many American Dollars will
you get for one English Pound.
● Businesses and consumers​ that buy or sell with a
foreign country will need to be aware of the
exchange rate.
Calculating the cost of Foreign Exchange
1. Step 1 : You must know ​the exchange rate.
2. Step 2 : How much have we sold? ​For example,
we have sold £10, 000 worth of goods to an
American buyer, we multiply the value of sales by 39.The impact of interest rates
the value of the American currency = 10,000 x
1.2 = $12,000
3. Step 3 : Coming back to British Pounds. ​For
example, imagine we sold $24,000 worth of
goods to an American buyer, to find out how
much this is worth in pounds we divide the value
of sales by the American currency = 24,000 / 1.2
= 20,000
Fluctuating Exchange Rates and Prices
● As exchanges rates fluctuate, ​the price of imports
and exports will also fluctuate regularly.
● If the value of the pound falls then foreign
countries will get more British products for their
money = a fall in prices of UK exports.
● If the value of the pound rise then foreign
countries will get less British products for their
money = a rise in prices of UK exports.
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● If the value of the pound rises the price of imports
that UK customers buy will fall​ - this is a good
thing
● If the value of the pound falls the price of imports
that UK customer buy will increase​ - this is bad
thing.
Impact of a fall in the value of the pound on
small businesses
● For a firm that exports -​ a fall in the value of the £
makes products cheaper to foreign markets. As a
result, they should be able to sell more and be
more price competitive.
● For a firm that imports -​ a fall in the value of the £
makes imported good more expensive. This
increase in price may have to be passed on to
customers - who will then have to put higher
prices for their usual purchases.
Impact of a rise in the value of the pound on
small businesses
● A business that exports - ​a fall in the value of the
£ is a bad things as the price of their goods will
rise for foreign customers, so they will buy less.
● UK based businesses -​ the price of imports will
fall, meaning that more foreign products will
come into the country. Therefore, UK based
businesses will become less price competitive
and may lose sales.
Key terms to understand
❖ Bank of England : The central bank for the UK.
Responsible for banking in the UK, it is
responsible for setting interest rates in the UK​.
❖ Interest Rate : The % reward or payment over a
period of time​ that is​ given to savers or paid by
borrowers​ on saving or a loan.
❖ Variable Interest Rates : These are rates that can
change​ ​over the lifetime of a loan - depends on
what is happening in the economy.
➢ This type of rate makes it difficult for
business to predict the cost of
borrowing.
❖ Fixed Interest Rates : These are rates that stay
the same​ ​over an agreed period of a loan
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 ➢ This makes the borrowing a lot less ● Economic Growth - ​this is a ​rise in the rate of
risky for small businesses economic activity in an economy. ​It is measured
by calculating the value of sales in an economy
Credit over a period of time.

● Credit is a term used to describe the different

ways in which a business can borrow money
The Business Cycle
○ What are some long term ways to fund a ● As we have discussed in some years economic
business? activity​ is different and changes occur - this is
○ What is an overdraft? known as the business cycle.

The cost of borrowing for small businesses

● Banks change interest on the money they lend
ou​t, it is sometimes known as the price that has
to be paid to borrow money.
● For example, a business may charge 10% a year
to borrow money on an overdraft.

Research
● Go on to different banks’ websites and locate
their loan calculators
Boom - when the line reach the Peak
● Have a play around with different loan amounts
and interest rates to see how it impacts the ● During ‘Boom’ the level of economic activity is
monthly repayment amount. strong and increasing.
● Type into Google (Bank Name ) loan calculator. ● Consumers feel more confident and are more
likely to spend on large / luxury items, such as
40. The impact of the Business Cycle cars, furniture and holidays abroad.

The Economy Slowdown / Downturn - when the line goes

down and reach the Trough
Economic Activity - ​This is the amount of buying and
selling that takes place in a particular period of time. ● This is economic activity begins to slow down.
The Economy - ​This is a term used to describe all the ● In this situation consumers feel less confident
people and businesses in a country that engage in buying and are less willing to borrow from banks.
and selling.
Recovery - when the line start from the Trough
● Sometimes buying and selling will increase,​ this to the Peak which is going up.
is when people feel confident in their jobs and
● Eventually, an economy will begin to recover.
they may see their income rise ( Economy is
● Economic activity will begin to increase,
expanding )
consumers will​ feel more confident and borrowing
● On the other hand, when there is news of job
from banks will increase.
losses people can worry.​ This will cause them to
● Recovery ​from a recession is a lengthy process.
think more carefully about their spending.

Economic Growth
● The reason we are able to live the way we do
now is because of Economic Growth.

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