Pearson Edexcel GCSE Business (Theme 1) Question with complete solution 2023

Pearson Edexcel GCSE Business (Theme 1) Question with complete solution 2023Unlimited liability The owner is responsible for the businesses debts 3 disadvantages of a partnership 1. unlimited liability 2. profits are shared 3. there may be disagreements 4. 20 people max. 5. partnership ends when one partner leaves 6. decisions made by one partner can affect all partners 3 disadvantages of a franchise 1. unlimited liability 2. franchisees need to pay an initial fee as well as ongoing fees (royalties) and/or shares of their profits 3. less control for the franchisee as they will have to run the promotions currently being advertised 4. cannot made independent decisions 5. brand reputation can be damaged by other franchisees 3 advantages of a franchise 1. lower risk as business model is already successful 2. support and training provided by the franchisor 3. franchisees benefit from national marketing campaigns 4. market research done at head office level, the business will get the benefit of the promotional activity and signage all done on a national level 5. less competition as territories are divided up 3 advantages of a partnership 1. very few procedures to set up 2. partners may have a wider expertise and can share ideas 3. decision making is shared 4. financial information is kept private 5. more sources of finance 6. risk is shared 7. easier to raise finance to establish or grow a business Partnership A business owned by 2-20 people who share the financial risk, decision making, and the profits Franchisor The person or business who offers to franchise other businesses its trading methods, products, and business logos Royalty A payment made to the franchisor based on the sales turnover of the franchise Sole trader/proprietor A business owned by one person who has unlimited liability Franchisee A person or business buying the franchise 3 advantages of sole proprietorship 1. they make all decisions 2. no disagreements and quick decisions 3. they keep all the profit 4. quick and easy to set up 5. all financial information kept private 3 disadvantages of sole proprietorship 1. unlimited liability 2. may be difficult to raise money to start or grow a business 3. a lot of pressure on just one person 4. difficult to run if the sole trader is sick or needs time off Franchise One business gives another business permission to trade using its name and products in return for a fee and a share of its sales Private Limited Company (Ltd) A company made up of people who know each other and with limited liability Limited liability Risk is limited to the amount of money invested into the business. Personal assets are not at risk. 3 advantages of a private limited company 1. limited liability 2. term 'ltd' makes the business seem bigger or a more long-established business 3. can be easier to raise finance to establish or grow the business 4. business continues to trade even if the shareholders change 3 disadvantages of a private limited comapny 1. more complex to set up than a sole proprietorship or partnership 2. disagreements between share holders 3. financial information is published 4. more requirements to report information to organisations such as HMRC and Companies House Business Risk The possibility that an enterprise may have lower profits than expected or experience a loss A business could create a new product by... 1. mix and match 2. new version of an old product/service 3. cheaper version of an old product/service Service An act that a business person carries out for you in exchange for money Product Anything capable of satisfying customer needs What is the key reason for business failure? Poor cash flow - inflows are lower than expected or outflows are higher than expected 3 main risks are... 1. business failure 2. financial loss 3. lack of security (entrepreneur) Name 3 changes in technology and why new business ideas have developed 1. The invention of the internet. Businesses have found a new cheaper way to reach the consumer - online 2. New tech in VR means there are lots of new products on the market. 3. Advancements in new products (e.g robotics) Explain how changes in what consumers want can develop new ideas. (3) POINT - Consumers want organic, free range, sustainable, eco-friendly products LINK 1 - Therefore, there is a gap in the market for these products LINK 2 - As a result, businesses will spot this and come up with new ideas to fill this new gap E-commerce Purchasing and selling goods through a laptop, iPad, etc. M-commerce Purchasing and selling goods through a mobile device. Why do original ideas come about? 1. To solve problems 2. An entrepreneur has a passion or interest 3. A business carried out research into the wants and needs of shoppers and created products to meet those ends 4. A gap in the market may have been spotted Business reward A business reward is a benefit that it brings to the owner. For example, better working conditions. 3 aspects of business reward 1. Business success 2. Profit 3. Independence Profit Total revenue - total cost 3 purposes of business activity 1. Produce goods and service 2. Meet customer needs 3. Add value 4 things needed to produce goods/services 1. Land - somewhere to produce the goods 2. Labour - people to work in the business 3. Capital - money to start the business 4. Enterprise - drive/motivation by the owner Added value The difference between what a business pays its suppliers and the price it is able to charge for its product/service 5 ways to add value 1. Branding 2. Design 3. Unique selling point 4. Quality 5. Convenience 3 roles of an entrepreneur 1. To organise resources 2. To make business decisions 3. To take risks 4 customer needs 1. Price 2. Quality 3. Choices 4. Convenience 4 ways to generate sales 1. Lower prices 2. Promote the product through advertisement 3. Run a competition or other promotional activity 4. Improve the product 2 step plan for business survival 1. Find out what the customers want and need from a product and service 2. Provide that product or service The purpose of market research 1. To identify and understand customer needs 2. To identify gaps in the market 3. To reduce risk and make informed business decisions