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Types of Business ActivityThere are 3 sectors of the economy – primary, secondary and tertiary.

GCSE Business: Year 10

Homework BookletA292: Business and People

Primary is the first stage – the extraction of raw materials, e.g. fishing, farming and mining.

The secondary sector is where the raw materials are manufactured into finished goods, e.g. Kellogg’s, BMW and Samsung.

The tertiary sector ids the final stage where products are sold to customers or a service is provided, e.g. Tesco, banks and hairdressers.

All of these are interdependent which means one sector cannot produce without work done in another sector.

Employment in the primary and secondary sectors in the UK is declining, while employment in the tertiary sector is increasing. The large reduction in the importance of the secondary sector is known as de-industrialisation.

QuestionA&W is a partnership, which sells clothes that they have designed and made themselves. Explain why A&W is part of both the secondary and tertiary sectors. (2 marks)

Teacher feedback

Corrected answer OR Extension question

QuestionLeightons plc is said to be in the secondary sector as it makes sportswear. Describe how and why Leightons plc is dependent on businesses in both the primary sector and tertiary sector.

Primary

Secondary

(4 marks)Teacher feedback


Business Objectives

All businesses have one or more objectives, which will vary depending on the size and situation of the business. As a business develops over time the objectives will change. Sometimes certain objectives will have conflict with each other.

Generally a new business has an objective of survival. Once they have achieved this they will aim to profit maximise. If they generate profit they will then aim for growth.

Businesses in the public sector (controlled by government) and not-for-profit organisation are different. Their main objective may be to provide a service to their customers.

QuestionWisdom & Molars Partnership (WMP) is a dental practice, which opened in 2014. Its objective for the first year was to survive.

Explain one reason why WMP’s objectives may have changed after its first year of business. (2 marks)

Teacher feedback


QuestionChoc-bloc plc makes and sells chocolate to customers around the world.

Two of their objectives are: 1) Improving the motivation of their employees 2) Maximising profit.

Explain how these 2 objectives may conflict with each other. (2 marks)

Teacher feedback


Stakeholders

A stakeholder is an individual or group of people who have an interest in business. They will be affected by decisions made by a business. Stakeholders have differing interest in businesses and there may be conflict between different stakeholder groups who have different objectives.

Some of the main stakeholder groups in business are: employees, customers, owners, government, local community, suppliers and competitors.

QuestionAirjet plc is an airline, which flies customers to destinations across Europe. Explain why the following stakeholders will have an interest in Airjet plc:

Employees

Customers

The Government



Question

Fizz plc makes carbonated drinks, which it sells through supermarkets in the UK. Two of their main stakeholders are their employees and the shareholders.

Explain how these two groups may have conflict between their objectives.



Growth & Integration

A business can grow in 3 main ways: through merging with another business, taking over another business (integration) or by internal (organic) expansion (growth).

A business may decide to integrate in a certain direction: horizontal (same stage of production), backwards vertical (stage behind of production), forwards vertical (stage ahead of production) or diversify (unrelated business activity).

QuestionTeachTec Ltd has decided to merge with one of its competitors called Wires Ltd.

State which type of integration describes TeachTec Ltd merging with Wires Ltd. (1 marks)

Explain why TeachTec Ltd decided to merge with Wires Ltd rather than take over the business.



Location

Choosing a location for a business to set up is a tough decision and there are a number of factors they need to consider. For example: cost (rent), access to markets (customers), availability and access to raw materials, infrastructure (transport links), competition and the labour market.

QuestionTrendy Tops is a well-known clothing manufacturer. They are considering relocating their manufacturing factory outside of the UK. State and explain two reasons why Trendy Tops might want to relocate their factory outside the UK.

Reason 1

Reason 2



QuestionCharlie’s Corner shop looked at many locations before the business opened in 2013.

Explain 2 factors that Charlie’s Corner shop may have taken into consideration when locating its business.

Factor 1

Factor 2



Sole Proprietors and Partnerships

These are the two forms of unincorporated business ownerships. Setting up as a sole proprietor (one owner) or a partnership (2-20 owners) is ideal for particular types of businesses and the process is very easy. The main disadvantage for both of these types of business is ‘unlimited liability’ which means the owners of the business are liable for all the debts of the business and risk losing personal possessions if the business fails. However, the owners get to keep all of the profit they make. Partnerships need to draw up a ‘Deed of Partnership’ to set out how much each partner invested, what share of the profits they will take and what responsibilities they have.

QuestionJames owns Viva, a business which provides household services such as plumbing and building work. James operates the business as a sole proprietor.

State and explain one advantage and one disadvantage to James of operating as a sole proprietor.

Advantage

Disadvantage

(4 marks)James is considering taking on a partner as he needs further invest to expand his business and offer electrical work to customers as well. Peter has offered to join Viva as a sleeping partner.

Explain what a sleeping partner means.

(2 marks) Teacher feedback


Private (LTD) & Public (PLC) Limited CompaniesThese are two forms of incorporated business ownerships. Both businesses are owned by shareholder. In an LTD the shareholders are family and friends, as you must be

invited to buy a share. In a PLC anyone can buy a share, as they are for sale on the stock market. Limited companies are more complicated to set up than sole proprietors and partnerships but benefit from being able to sell shares and generate larger amounts of capital. The shareholders benefit from ‘limited liability’ where the shareholders only lose the money invested in the business should it fail, their personal possessions are protected. The profit is shared amongst the shareholder of the business. This payment is called a dividend.

QuestionBig Burger Ltd is an upmarket fast-food chain which now has 8 stores across London. It has been suggested to the Board of Directors that it should change ownership from an Ltd to a PLC. Not all of the directors agree.

Identify a feature of an Ltd. (1 mark)

Explain one reason why Big Burger Ltd might want to change their ownership from an Ltd to a PLC.

(2 marks)Explain one reason why some directors might be against this change.



Other types of business organisationsCo-operative: Trading organisations where a number of independent producers work together and trade as though they are a single larger seller.

Franchise: A marketing agreement that allows another business to trade in the same style as an existing business.

Multinational companies: A company with facilities in several different countries.

Social Enterprise: The name given to a business enterprise that is run for the benefit of the community with any profits that are made being put back into community projects.

QuestionViva, a business which provides household services such as plumbing and building work, is in competition with Delto, a social enterprise which specialises in household repairs for the elderly.

Explain how the objectives of Viva, a sole proprietor, may differ from those of Delto, a social enterprise.



QuestionThe Lunch Box is a sandwich based franchise, which has stores across the UK.

State and explain two reasons why a person would want to buy a franchise rather than setting up

their own company.

Reason 1

Reason 2



Employment and Retention

Workers are often the most important resource to a business so selecting and keeping the best ones is an important yet expensive process. The department that deals with issues relating to employees is called Human resources (HR). Firstly, a business will need to analyse what kind of employee they will need. They can advertise the position but must do so carefully so that only people who are suitable for the position apply. Once applications have been received the business will need to shortlist the applicants so they can decide who to interview, which is one form of selection. If a business does not have the time to go through this whole process they can employ a recruitment agency to carry out the task on their behalf. Although this saves time, it can be very expensive.

There are two methods of recruitment: Internal (from within the business) and External (from outside the business).

Make notes of the advantages and disadvantages of both methods in the table below:

Advantages Disadvantages

QuestionViva wants to employ a new trainee to assist with the plumbing and electrical work they carry out.

State and explain 2 ways in which Viva could advertise the new trainee job.

1 ……………………………………………………………..Explanation

2 …………………………………………………………….Explanation



MotivationThere are many reasons why people work (it’s not just about money!!!) and there are different kinds of needs that can be satisfied by work, as noted by Maslow in his hierarchy of needs.

A motivated work force can help a business to achieve their objectives.

There are two types of motivators: Monetary (e.g. pay rise, overtime, bonus, commission) and Non-monetary (e.g. fringe benefits, job rotation, job enlargement, job enrichment, team working, employee of the month and promotion). Non-monetary methods are considered to have a much longer term impact on employees’ motivation.

Maslow’s Hierarchy of Needs

In the table below, explain how employees can achieve the different levels in Maslow’s hierarchy at work.

Question

Lynn, the HR manager of Crown Foods Ltd, was asked to look at different methods of motivating the production workers, who work on the production line making ready meals in the factory. She is considering the following methods:

Introducing a bonus scheme Introducing an ‘employee of the month’ award Introduce job rotation

Recommend which one of the methods above should be introduced to improve worker motivation at Crown Foods Ltd. You should refer to each method in your answer.



Leadership Styles

Leadership is about motivating others to perform well and contribute towards the objectives of the business. Some leaders motivate by inspiring people; others may bully and threaten.

The main leadership styles are:

Autocratic – Leader makes all the decisions and expects workers to carry out all tasks with no discussion about the work.

Democratic – Leader will discuss plans with workers and ask for their opinions and ideas, but ultimately, the leader makes the final decision.

Laissez-faire – Leader decides the main objective but then gives workers the responsibility for deciding how they achieve those objectives.

Question

Chris has become the new manager of Film UK Ltd, a production company. He has been described as having a very laissez-faire style of management.

Discuss the effectiveness of such a leadership style on the employees of Film UK Ltd.



Training

Training is about developing the knowledge, skills and abilities of workers and is usually quite costly.

Training falls into two categories:

On-the-job – this is training that takes place where the worker works. This could be shadowing an experienced employee, mentoring or coaching.

Off-the-job – this is training that takes place away from the workers place of work. This could be a college course or a seminar.

Businesses use staff appraisals as a way of identify the training needs of their workforce.

Question

For all new employees, Goodchilds uses both on-the-job and off-the-job training.

Explain one advantage to a business such as Goodchilds of providing on-the-job training.



Question

Explain two reasons why all new employees at Goodchilds need some form of training.

Reason 1

Reason 2



Employment Law

Employment law deals with relations between workers and employers. Many laws are designed to protect workers from employers who might treat them unfairly in some way. There are lots of laws that exist but the Equality Act 2010 covers a majority of the laws. A worker can take an employer to an employment tribunal if they feel they have been treated unfairly.

Make notes on the main points of the employment laws in the table below:

Minimum Wage Act

Sex Discrimination Act

Equality Act

Working Time Directive

Disability Discrimination Act

Question

Ollie works as a telephone sales representative for Atlas World Ltd at its call centre. His regular daily work means he spends two hours at a time looking at his computer monitor as he transfers passenger details onto the computer system.

Explain whether Ollie’s rights are being denied. Give reasons for your answer.



Question

Atlas World Ltd have advertised a position for a trainee sales representative. Terry, the sales manager, has received an application from Chris, who has a disability. Terry is unsure whether to shortlist Chris because of his disability.

Advise Terry on whether or not he should shortlist Chris. Give reasons for your answers.



Trade UnionsTrade Unions exist to help represent the interest of workers and to deal with employers. Trade Unions increase the power of workers because they represent the views of many people, this is called collective bargaining. Unions help workers with all kinds of issues, for example, pay, pensions and working conditions, and if they cannot resolve a dispute they may advise workers to take industrial action such as going on strike or work to rule, but this will cause costs to workers, customers, the business and the economy. In some places of work several different unions may exist which can be quite complicated. In some places of work there is a single union agreement where all workers agree to be a member of the same union, which will make negotiations much easier. If disputes cannot be resolved then ACAS can step in as an impartial party to help mediate and settle disputes.

Question

AirJet Plc is an airline, which flies customers to destinations throughout Europe. The majority of the workers employed by AirJet Plc are members of a national trade union.

Due to a recent disagreement with managers about working conditions and pay the members of AirJet Plc’s trade union are considering going on strike. Explain two likely impacts of strike action on AirJet Plc.

Impact 1

Impact 2



Question

After the industrial action at AirJet Plc there was still no agreement reached.

Explain how ACAS could help both parties come to an agreement.



Business CommunicationGood communication is essential to businesses.

Communication falls into two main categories:

Internal – communicating with employees within the business.

External – communicating with people outside the business, e.g. customers and suppliers.

There are many kinds of communication, verbal, written or visual, and developments in technology are making it quicker and easier for communication to take place, e.g. email.

There can be many barriers to communication such as language, timing or the attitude of the sender. For communication to be effective it is important that the correct method is used.

Question

The Managing Director of Atlas World often wants to discuss common issues with all 10 of the overseas directors at the same time. In order to do this he uses video conferencing.

Explain one advantage and one disadvantage to Atlas World of using video conferencing to communicate with overseas directors.

Advantage

Disadvantage



Question

Good communication is an important aspect of business success. However, many businesses are not good at communicating with their customers.

Explain two possible effects on a business of having poor communication with its customers.

Effect 1

Effect 2



Organisation ChartsOrganisation charts can take very different forms depending on the type of business and the objective that the business is trying to achieve. They allow a business to see worker roles and responsibilities and how departments are linked together.

In the boxes below, draw an example of a flat and a tall structure:

Flat Structure Tall Structure

There is a lot of terminology associated with organisation charts. Define each of the key terms in the table below:

Chain of command

Span of control

Delegation

Hierarchy

Subordinates

Line of communication

Questions

The diagram above shows part of the internal organisation structure of BetaBuys Ltd.

1. What is the Managing Directors span of control? (1 mark)

2. Use an example from the diagram to explain what is meant by chain of command. (2 marks)

3. Use an example from the diagram above to explain delegation. (2 marks)

4. Explain one benefit to BetaBuys Ltd of having an internal organisation chart. (2 marks)

5. Explain why businesses such as BetaBuys Ltd have a Finance department. (3 marks)

Teacher feedback


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