business mid/final sheet

chapter 8 : decision on location

proximity to market,labor,materials and competitors :
1. proximity to the market: if a business has large or
heavy products they have to settle somewhere
closer to customers to keep transport costs low.

2. proximity to labour: labour means numbers of

workers so a business should consider a place
where labour costs are low.

3. proximity to materials: businesses that use larger

amounts of raw materials that are difficult to
transport may choose to locate very close to their
sources.

4. proximity to competitors: most businesses like to

locate where competition is lower, but some choose
locations where competition is high since it is
possible to catch the excess demand from existing
businesses.

nature of business activity :

1. services: when choosing a suitable location
businesses have to keep in mind about the access
to the area and parking facilities a solution for
fast-food places could be drive throughs.
 2. office-based businesses: financial service, customer
service, creative marketing and business activity
are all office-based businesses.

3. manufacturing and processing: different types of

manufacturing have different needs. If a
manufacturer that produces coal needs to locate
somewhere where coal is always available.

4. agriculture:Most farmers need different types of

land/soil for their own produced goods. Example if
tropical fruits such as mangos can only be grown in
tropical regions.

impact of internet on location decision :

* Many people are switching to online-shopping rather
than going to shops. The development of
online-shopping means the entrepreneurs are a lot more
flexible on location decisions.

2 reasons governments may try to influence the location

of a business:
1. To avoid congestion
2. minimize the impact business might have on local
communities
3. to encourage manufactures to locate where
unemployment is high
4. to attract foreign manufacturers into the country
chapter 9 : globalization
MCQ:
1.a reason for increasing globalization?
DECREASED REGULATION SUCH AS PRIVATIZATION.
2.a feature of globalization?
FREE FLOW OF GOODS AND SERVICES ACROSS
INTERNATIONAL BORDERS.
3.opportunity for businesses that might result from
globalization?
LOWER COSTS FROM ECONOMIES OF SCALE.
4.threat to businesses that result from
globalization?
INCREASED COMPETITION.

the concept of globalization :

1. goods and services are traded freely across
international borders
2. people are free to live and work in any country they
choose
3. there is a high level of interdependence between
nations
4. capital can flow freely between different countries
5. there is a free exchange of technology and
intellectual property across borders

reasons for globalization :

1. development in technology
2. international transport networks have improved
 3. huge amount in deregulation
4. an increase in tourism
5. many firms want to sell abroad

2 ways a government’s commitment can support

globalization :
1. countries cannot trade if governments have closed
borders
2. international trade will be very limited if there is
trade barriers
3. firms cannot develop their business overseas if
planning permission is denied

opportunities of globalization on businesses :

1. access to larger markets
2. lower costs
3. access to labour
4. reduced taxation

threats of globalization to businesses :

1. competition
2. international takeovers
3. increased risk of external shocks

ONE WAY TO MEASURE SUCCESS?

1. growth
2. market share
3. revenue
ONE WAY SHAREHOLDERS MEASURE PROFIT?
BY DIVIDENDS ITS WHERE THE MONEY INVESTED IN
SHARE IS MINUSED BY THE SHARE RECEIVED AFTER.

chapter 10 : multinationals

How have multinationals developed ?

1. Economies of scale is lower costs
2. Marketing is where a business has effective
marketing.
3. Technical and financial superiority: quality of being
better in both technologies and finances.

benefits to a business of becoming multinationals :

1. larger customer base
2. lower costs
3. higher profile
4. avoiding trade barriers
5. lower taxes

benefits of a multinational to a country :

1. increase in income and employment
2. increase in tax revenue: tax revenue improves gov.
services.
3. increase in exports: this increases foreign currency
reserves.
4. transfer of technology: better high technology helps
a business by buying resources fastly
 5. improvement of the quality of human capital: human
capital is people and their skills so the multinational
should train their employees as best as they can.

6. enterprise development: enterprise is the starting

and running of a business so multinationals try to
motivate countries for more enterprise.

possible drawbacks of multinationals :

1. environment damage
2. exploitation of less developed countries
3. repatriation of profits
4. lack of accountability

MCQ:
1. What is a benefit to a business of becoming a
multinational?
. ACCESS TO WIDER MARKETS.
2. A benefit to a nation that hosts a multinational?
. HIGHER TAX REVENUE.
3. A disadvantage to a nation that hosts a
multinational?
. EXPLOITATION OF WORKERS
4. What is something some multinationals may do
to avoid accountability?
. ATTEMPT TO EVADE OR MANIPULATE LAW.

chapter 11 : international trade and exchange rate

international trade : it allows businesses to grow,
increase competition, and provide more consumer
goods.

visible and invisible trade :

● visible trade involves trade in physical
goods(clothes)(manufactured aircraft components)
● invisible trade involves trade in
services(tourism,insurance, banking)
● goods and services sold overseas are called
exports
● these bought from other countries are called
imports
● exchange rate is value of one currency in terms of
another
● invisible export: example:incoming tourists and the
sale of financial services abroad.
impact on exports
fall in exchange rate : the exports are likely to rise
cause they are now cheaper than they were before
the change in exchange rate.
impact on imports
fall in exchange rate : the imports are likely to fall
because they are dearer

impact on exports :
rise in exchange rate : the exports are likely to fall
because they are dearer
 impact on imports :
rise in exchange rate : the imports are likely to rise
because they are now cheaper than they were
before the change in exchange rate.

exchange price of demand of price of demand of

rate exports exports imports imports

falls falls rises rises falls

rises rises falls falls rises

international competitiveness and exchange rates :

● sustained changes in the exchange rate can
have an impact on the international
competitiveness of a country.
● If it falls this means countries will sell their
goods cheaper abroad. This has a positive
impact on the country’s economy.
● higher export sales means more employment,
income and tax revenues for the country.
RESOURCE DEPLETION: RUNNING OUT OF
RESOURCES.

chapter 12 : government objectives and policies

Money spent on different services varies between
governments. Such as Sweden has to pay a lot of
money to keep hospitals going whereas Nigeria does
not need to pay for hospitals since it is not an
established country

Taxation: is money used by a government to help fund

its spending on public services.
Income tax: personal income.
Corporation tax: paid on company profits.
VAT: is paid when buying goods and services

Fiscal policy: using changes in taxation and

government expenditure to manage the economy and
has impact on business:

1. If income tax is lowered there would be more

spending in the economy.
2. Businesses may respond to higher corporation
tax by cutting investment.

Constraints on public spending: one reason for this

act is because countries built up mass debts which
resulted in a financial crisis. The effects of this act:

1. Public sector organizations that supply services

directly may get their funding cut; this results in
the demand falling and business will fail.
2. Private sector businesses that rely on the public
sector will be hit meaning they will lose
revenue.
 3. There will be cuts in pensions and other
government payments.

-INFRASTRUCTURE PROVISION:
The government is responsible for developing and
maintaining the nation's key infrastructure. If
infrastructure fails the government loses a lot of money
due to the investment on it.

-LEGALISATION:
Without government help some businesses may not
meet certain stakeholders. The main role of the
government is to provide a legal framework in which a
business can operate and ensure that vulnerable groups
are protected.

-CUSTOMER PROTECTION:
Customers want to buy good quality products at a fair
price and have good customer service. This means that
the government has to regulate the businesses that sell
good products. if government does not help these may
happen:
1. increase in prices to higher levels than they
would be in a competitive market.
2. price fixing
3. restricting consumer choice by market share
4. raising barriers to entry

-CONSUMER ISSUES COVERED BY LEGALISATION:

 1. info given about products
2. trading and age restriction
3. prices
4. customer payment methods
5. consumer rights
6. the way product is produced
7. safety of products
8. quality of products
9. the promotion of products

-COMPETITION POLICY:
Governments try to promote competition this prevents
anti-competitive practises and consumer exploitation:
1. Encourage growth of small firms
2. Lower barrier to entry
3. Introduce anti-competitive legislation

-ENVIRONMENTAL LEGALIZATION:
Business activity can have a negative impact on the
environment. For example, air pollution can be caused
by a business releasing wasteful and toxic gasses into
the air.

-TRADE POLICY:
1. protects jobs if foreigners compete threaten the survival of
domestic producers
2. protect new industries( infant industries)
3. prevent dumping( where foreign producers sell goods below
cost in a domestic market)
 4. raise revenues from tariffs.

-GOVERNMENT CAN USE TRADE BARRIERS TO

RESTRICT:
1. tariffs: tax on imports
2. quota: physical limit on the amt. allowed in the country.
3. subsidy: giving of financial support
4. administrative barriers: use of strict health and safety.

-TRADE BLOC:
When a group of countries from the same geographical
region sign a trade agreement to remove/reduce trade
barriers, these are the main benefits:

1. access to wider markets

2. lower costs
3. protection from large multinationals
4. opportunity to specialize in the production of those goods.

-EFFECT OF INTEREST RATES ON BUSINESS:

Interest is usually the cost of borrowing money and the
reward to savers so interest rates are controlled by the
authorities and can change it. Higher interest rates
means that it is more expensive to borrow money so
demand is likely to fall.

MONETARY POLICY:using changes in interest rates and the money

supply to manage the economy.
CONS OF HIGH INTEREST RATE:
1. When the interest rate rises , costs will increase for any
business that has already taken out a loan.

2. Purchase of capital goods funded by borrowing is

discouraged because it is more expensive meaning a
business can't keep up to date with new tech and losing over
competitors.

3. A higher interest rate usually means that demand in the

economy will fall.
MCQ:
1. An example of a trade barrier?
TARIFF(a tax or duty to be paid on a particular class of
imports or exports)
2. What effects are likely to result from lower
interest rates?
CONSUMER SPENDING MAY RISE.
3. What measures might help a company
manufacturing power boats?
LOWER LEVELS OF CORPORATION TAX.
4. What is likely to rise when taxation is
decreased?
BUSINESS INVESTMENT.

chapter 13 : external factors

the nature of external factors :
1. social :
 ● increased consumer awareness
● changing demand patterns
● increased numbers of woman at work
● more part-time workers

2. technology :
● In primary sector : use of tractors
● In secondary sector : introduce of robots
● The use of technology has reduced costs in
services industries
● The use of IT has helped to reduce
administration and communication costs in
businesses
● Changes in tech can shorten the amount of
time products can be marketed for
● The development of social media has helped to
improve communication between businesses
and customers.

3. environment :
● global warming
● habitat destruction
● resource depletion
● sustainable development

4. political: some countries are politically unstable to

be developing interests such as Syria and Iraq.

MCQ:
 1. What is one external factor that is likely to help
reduce production costs?
Technology
2. What is a possible social factor that might affect
businesses?
Attitude towards saving.
3. The formation of a pressure group campaigning
for manufacturers to use less sugar in products
is an example of which type of factor?
Political .
4. A rise in the number of retired people making
themselves available for work is an example of
which factor?
Social.
5. What is meant by external factors?
Things outside a business that will have an
impact on its success. Their impact can be
positive or negative. A business cannot control
external factors. All it can do is react to them and
make decisions to help it remain successful.

chapter 14 : measuring success in business

measures of success :
1. revenue: the amount of revenue is generated by a
business is a guide to its success.
2. market share: larger market share will dominate the
market.
3. customer satisfaction:business pay attention to
make customers happy so they have loyal
customers and a good customer base.
4. profit: to have higher profits you will need to have
competition , profit depends on the size of business
, profit should be compared by the same business
industry, profit is only measured by measuring
success.
5. growth:
● Turnover or Revenue: revenue of a business
could be used to measure size.
● Number of Employees: A business with
thousands of employees is considered to be
large.
● Market Share: a business with 43 percent
market share is successful.
● Amount of capital employed: capital employed
is the amount of money is invested in a
business.
● EU definitions of size: the EU defines the size
of firms according to turnover.
6. owner/shareholder satisfaction:
● Public limited companies buy shares with the
aim of making some money, they focus on
dividends and share prices.
● Successful companies are those that increase
dividends each year.
● Private limited companies: tend to be family
owned and like to be fully involved in the
 running of the business. Success to them might
mean survival in the market, rising salaries or
business growth.
7. employee satisfaction: employees want high good
salaries, good working skills and good training.
MCQ:
Shareholders measure the success of a business
by?
DIVIDEND GROWTH.
What helps measure customer satisfaction?
ONLINE SURVEY.
Employees might measure the success of a
business by looking at?
JOB SECURITY.
What must be taken into account when using profit
to measure the success of a business?
THE SIZE OF THE BUSINESS.

chapter 15 : reasons for business failure

cash flow problems :
1. overtrading: funding large production with
insufficient cash.
2. investing too much in fixed assets
3. allowing too much credit
4. overborrowing: more loans taken out interest costs
rise.
5. seasonal factors: happens in agriculture often.
 6. unexpected expenditure: examples are equipment
breakdowns, tax demands.
7. external factors: outside the control of the business.
8. poor financial management

lack of finance :
● Both new and established businesses may fail if
they cannot attract funding because their track
records are poor.

not competitive :
● Some businesses fail because they are unable to
compete effectively in the market.
● new entrants that are competitors :
1. bring out superior products
2. read market conditions more effectively
3. charge lower prices because their costs are
lower
4. use ‘destroying pricing’ (very high discounting)

● ineffective cost control :

1. too small to exploit economies of scale
2. they may be wasteful
3. paying too much for some resources
4. minimizing labor costs
5. costs might also rise owing to external factors

● lack of business skills

● poor leadership
 MCQ:
What can cause possible failure owing to
ineffective marketing?
CHARGING HIGH PRICES
What term describes a business that begins
trading with insufficient capital.
UNDER CAPITALIZED
What is most likely to cause cash flow
problems?
SPENDING TOO MUCH ON FIXED ASSETS.
Overtrading might occur if a business tries to
do…?
EXPAND TOO QUICKLY

chapter 16:
Communication is about sending and receiving
information.
The process of communication consists of a
SENDER sending a MESSAGE to the RECEIVER and
the receiver giving back a FEEDBACK.

Messages:
1. Downward communication: involves managers
giving information or instructions to their
subordinates. This allows managers to
command,control,organize and allow decisions.
2. Upward communication: involves workers giving
feedback to managers, however it might involve
 requests from workers. upward communication is
helpful because it helps managers understand
views and needs, and makes them aware of any
problems and makes staff feel valued.

3. Horizontal communication: occurs when workers on

the same level in the organization exchange
information.
4. Internal communication: takes place inside a
business between employees, example: manager
giving a warning to a subordinate for lateness.

5. External communication: occurs when businesses

exchange information with people and organizations
outside the business, example: statement from a
credit card company.

6. Formal communication: when people use

recognized channels.
7. Informal communication: through non-approved
channels. examples: non-official information such
as gossip and rumors. example: employees who
meet outside work, families and close friends.

8. face to face communication:

ADVANTAGE DISADVANTAGE
saves time negative body language
more cooperation non-relevant topics
 new ideas come freely poor listening
fast feedback limits to the no. reached

9. Written communication:
● letters: flexible way of sending information
● reports: communication by important
information in a formal manner.
● short written notes: internal communications
only.
● forms: communicate route information
● noticeboards: pass info to a large group of
people.
10. Electronic communication:
● Email: allows businesses and individuals to
communicate by sending text or images via
computer or phone. however they might get
ignored.

● Internet: the internet can be used for internal

and external use. examples: market production,
buying productions,general information,
advertisement.
● Mobile phones: easy access to send and
receive information,instructions and memos
● Social media: websites and applications that
focus on communication, community-based
input, interaction, content-sharing and
collaboration. People use social media to stay
 in touch and interact with friends, family and
various communities.

● Intranets: a private network contained within an

enterprise that is used to securely share
company information and computing resources
among employees.

● Video and Tele- conferencing:

Videoconferencing is when people in different
locations have face to face meetings while
Teleconferencing calls are linked by telephone.

● Public address systems: often used in

factories, hotels and shops to pass on
information to staff or customers.The message
is broadcasted on large speakers.

● Electronic notice boards: same function as the

public address systems but by using written
messages, pictures, videos.

● Director to Marketing manager= Vertical

communication.
● Production manager to Marketing manager=
Horizontal communication.
● Production manager to production worker=Vertical
communication
 ● Production workers to each other= Horizontal
communication

Effects of Poor communication:

● mistakes occur
● costs rise
● decision making slows down
● staff motivation suffers

MCQ:
An example of external communication.
SENDING A CUSTOMER INFO ABOUT A SPECIAL
OFFER
A disadvantage to face to face communication
NEGATIVE BODY LANGUAGE
An example of upward communication.
BOARD DIRECTORS ADDRESSING SHAREHOLDERS.
Most likely to require written communication?
INVITING A JOB APPLICANT FOR AN INTERVIEW.

chapter 17:
Barriers to communication: obstacles that one may
face when attempting to effectively communicate
with another person:
● Lack of clarity: unclear information or instructions
can lead to lack of expressed messages.
● Technological breakdown: if technology is faulty,
communication may become unclear or breakdown,
 example: emails cant be sent if there is a poor
internet connection.
● Poor communication skill: when people can't
understand you because they have limited
vocabulary, poor listeners (zoning off), written
messages can be written grammatically wrong or
mispelled.
● Jargon: jargon is vocabulary used and understood
by a specific group.
● Distractions: communication may be poor if there is
noise or something distracting the persons
communication process.
● Business culture:some businesses may develop a
culture of poor communication, this affects the
whole organization.
● Commands: if there are too many layers of
management in the organization the commands and
messages will take longer to pass through and may
be unclear along the way.
● Using the wrong medium: different methods by
which messages can be sent are called
communication media. Some examples of
appropriate use of communication media:
1. Confidential information: peoples details should
be sent using letters.
2. Sensitive information: should be talked face to
face.
3. Job offers should be discussed by documents
or letters
 4. Complex information is best communicated in a
report.
● Different countries, languages and cultures:
If a big organization hires people who speak, acting
differently can cause communication more difficult.

Ineffective communications in Business:

Ineffective communication in a business can result in
expensive problems such as Higher staff turnover,
staff absences, poor customer service and lower
profits.

● Ineffective external communication can

damage relations with customers and
suppliers. This leads to miscommunication,
misunderstanding and poor-quality customer
service.
● Ineffective internal communication can
result in low motivation, conflict ,mistakes and
injuries.

How can barriers to communication be removed?

● Recruitment: businesses should recruit staff with
good communication skills. This is shown in job
applications and verbal communication skills.
● Training: businesses must train staff in
communication to overcome misunderstood
barriers.
● Written communication: one way to remove the
barriers created by poorly written communication is
to provide standard company letters.
● Technology: If a business suffers from faulty
technology which makes them have barriers to
communication they should fix or purchase in new
updated technologies.
● Chain of command: If this is too long a business
may need to fire some people in the management
area. A shorter chain of command means that
information can pass through an organization more
quickly.
● Social events: internal communication may improve
if social events are organized for staff. This provides
more opportunities and getting to know your
colleagues well.
● Culture change: if a business has a culture of poor
communication it will be important to make
changes. a business might have to introduce some
formal communication and an open policy inorder to
create a good working area without any barriers.

MCQ:
Which of the following is the most appropriate
method of communication for requesting an
urgent delivery of components?
TELEPHONE CALLS.
Which of the following communications needs
to be supported with a document?
A JOB OFFER.
Which of the following is most likely to be a
barrier to communication?
HEAVY RELIANCE ON ELECTRONIC
COMMUNICATIONS.
A business with a flatter organization will
experience…?
QUICKER COMMUNICATION THROUGH THE
CHAIN OF COMMAND.

GOOD LUCK