Edexcel GCSE Business – Paper 1
revision guide
1. Dynamic nature of business
Products and services
Products are tangible items that are capable of satisfying customer needs.
Services are intangible acts performed by a business in exchange for a cost.
WHY business ideas come about
New business come about due to:
changes in technology
change in customer wants/needs
products and services becoming obsolete
The invention of the internet has allowed businesses to find a cheaper and easier way to reach
customers: online.
Changing technology
Changing technology means that products and services can be:
faster
smaller
cheaper
easier to use
safer
Customer wants and needs
Customer needs are products or services that are essentials to the customer.
Customer wants are products or services that are desired by the customer, but not essential.
Consumer wants change due to:
changes in fashion, tastes and trends
changes in economy
changes in lifestyle
changes in technology
,Products and services becoming obsolete
When something is obsolete, it is no longer used or is out of date.
We can make a product obsolete by replacing it with something better.
Changes in customer wants can lead products to become obsolete.
HOW business ideas come about
Original ideas
Spotting a gap in the market
Adapting existing products/services
Original ideas
Original ideas are ones that haven't been used before.
They may be found by the entrepreneur having a passion/interest, or spotting a problem.
Spotting a gap in the market
A gap in the market is where there is no existing product or service for a particular want or need.
Filling this gap gives the business an advantage, as there will be no close competitors who offer the
same product.
Adapting existing products/services
A business could create a new product by:
mixing and matching the best parts of different products
improving an aspect of an existing product
making a cheaper version of an existing product
2. Risks and rewards
Risks
Business failure
If a business fails to plan for the future, it may fall behind its competitors.
A business must have a clear strategy and plan if it is to survive in today's dynamic business world.
Reasons for business failure include:
too much competition
burden of regulation
not enough government support
, lack of bank lending
too much red tape (paperwork taking up time and money)
cashflow issues
costs of running the business
Financial loss
Starting a business can be a financial risk for the owner.
They may put in their own cash and other assets into the business.
If the business doesn't do well, they could lose what they invest - and more if they have unlimited
liability.
Financial loss usually decreases quality of life due to decreased living standards.
Lack of security
Starting a business often involves the owner quitting their job.
This is a huge risk, as the owner will have no guaranteed income - and they will likely have expenses
like bills to pay.
Rewards
Business rewards are different for different people.
For some it may be financial , for others non-financial ; or both.
Business success
Business success involves many things, such as awards, fame and growth.
Having success is very satisfying for the owner - as they have built this success for themselves.
Business success also involves financial gain.
Profits
PROFIT = TOTAL REVENUE - TOTAL COSTS
A reward is that you get to keep the profit that you make from your business.
If successful, you can make more than you would ever be able to from a job as an employee.
Increased income increases standard of living, and so usually quality of life.
However, some of your profit may need to be reinvested, or it will need to be shared if there are
multiple owners.
Independance
, As a business owner, you are your own boss.
You get to make major decisions, and change the business in any way that you want.
This is satisfying, and so the control that entrepreneurs get is a motivating factor for many people to
start their own business.
3 – Business Enterprise
Enterprise
Enterprise involves:
taking the risk of starting a business
being creative and innovative
organising recourses
using initiative to make business decisions
Entrepreneur
An entrepreneur develops a business idea and then organises the factors of production to carry out
the business activity.
An entrepreneur does 3 things:
takes risk
organises recourses
makes business decisions
4 factors of production
The purpose of business activity is to produce goods and services.
To do so requires 4 things:
Land: somewhere to produce the goods
Labour: people to work in the business
Capital: money to get the business started
Enterprise: drive or motivation from the owners to start a business
Added value
Added value is the difference between what a business buys its products in for and what they sell it
for.
There are 5 methods of adding value:
Branding: promotion of a product by advertising its brand
Design: designing products which suit customer needs/wants
revision guide
1. Dynamic nature of business
Products and services
Products are tangible items that are capable of satisfying customer needs.
Services are intangible acts performed by a business in exchange for a cost.
WHY business ideas come about
New business come about due to:
changes in technology
change in customer wants/needs
products and services becoming obsolete
The invention of the internet has allowed businesses to find a cheaper and easier way to reach
customers: online.
Changing technology
Changing technology means that products and services can be:
faster
smaller
cheaper
easier to use
safer
Customer wants and needs
Customer needs are products or services that are essentials to the customer.
Customer wants are products or services that are desired by the customer, but not essential.
Consumer wants change due to:
changes in fashion, tastes and trends
changes in economy
changes in lifestyle
changes in technology
,Products and services becoming obsolete
When something is obsolete, it is no longer used or is out of date.
We can make a product obsolete by replacing it with something better.
Changes in customer wants can lead products to become obsolete.
HOW business ideas come about
Original ideas
Spotting a gap in the market
Adapting existing products/services
Original ideas
Original ideas are ones that haven't been used before.
They may be found by the entrepreneur having a passion/interest, or spotting a problem.
Spotting a gap in the market
A gap in the market is where there is no existing product or service for a particular want or need.
Filling this gap gives the business an advantage, as there will be no close competitors who offer the
same product.
Adapting existing products/services
A business could create a new product by:
mixing and matching the best parts of different products
improving an aspect of an existing product
making a cheaper version of an existing product
2. Risks and rewards
Risks
Business failure
If a business fails to plan for the future, it may fall behind its competitors.
A business must have a clear strategy and plan if it is to survive in today's dynamic business world.
Reasons for business failure include:
too much competition
burden of regulation
not enough government support
, lack of bank lending
too much red tape (paperwork taking up time and money)
cashflow issues
costs of running the business
Financial loss
Starting a business can be a financial risk for the owner.
They may put in their own cash and other assets into the business.
If the business doesn't do well, they could lose what they invest - and more if they have unlimited
liability.
Financial loss usually decreases quality of life due to decreased living standards.
Lack of security
Starting a business often involves the owner quitting their job.
This is a huge risk, as the owner will have no guaranteed income - and they will likely have expenses
like bills to pay.
Rewards
Business rewards are different for different people.
For some it may be financial , for others non-financial ; or both.
Business success
Business success involves many things, such as awards, fame and growth.
Having success is very satisfying for the owner - as they have built this success for themselves.
Business success also involves financial gain.
Profits
PROFIT = TOTAL REVENUE - TOTAL COSTS
A reward is that you get to keep the profit that you make from your business.
If successful, you can make more than you would ever be able to from a job as an employee.
Increased income increases standard of living, and so usually quality of life.
However, some of your profit may need to be reinvested, or it will need to be shared if there are
multiple owners.
Independance
, As a business owner, you are your own boss.
You get to make major decisions, and change the business in any way that you want.
This is satisfying, and so the control that entrepreneurs get is a motivating factor for many people to
start their own business.
3 – Business Enterprise
Enterprise
Enterprise involves:
taking the risk of starting a business
being creative and innovative
organising recourses
using initiative to make business decisions
Entrepreneur
An entrepreneur develops a business idea and then organises the factors of production to carry out
the business activity.
An entrepreneur does 3 things:
takes risk
organises recourses
makes business decisions
4 factors of production
The purpose of business activity is to produce goods and services.
To do so requires 4 things:
Land: somewhere to produce the goods
Labour: people to work in the business
Capital: money to get the business started
Enterprise: drive or motivation from the owners to start a business
Added value
Added value is the difference between what a business buys its products in for and what they sell it
for.
There are 5 methods of adding value:
Branding: promotion of a product by advertising its brand
Design: designing products which suit customer needs/wants
