AQA business A level, section 1, What is business?
This document neatly summarises the key concepts in this section, ranging from aims and objectives to shareholders, to revenue, costs and profits.
WHAT IS BUSINESS 1) Gain expertise - Cut taxes on income ↑ spending
2) Raise capital + increase profits - Taxes on products to influence demand (cheap = EVs
Costs 3) ↑ market share (Expansion) + reputation - ↓ interest rates (cut mortgages)
- TC = FC + VC 4) Buy out shareholders (PLC to ltd) privatisation
- Fixed costs (rent, wages), Semi vary costs (phone) Economic
- VC = cost per unit x quantity sold (raw materials) Shareholders - Administration = insolvent, administrator runs ops
- Revenue (turnover) = unit price x quantity sold - Own a share of the company, provide funds - Disposable income = money left after taxes
- Profit = TR – TC - Limited liability - Discretionary income = money after taxes + necessiti
- Annual General Meeting (AGM) – shareholders vote - Economy growth, wages ↑, price ↑ to maintain profi
Importance of profits - Rising income, ↑ luxury, essential demand same, rec
1) Motivate people – profit sharing + dividends Reasons for investment for demand, ↑ wages, stock shortage ↑ price
2) Source of finance – grow, not pay back interest 1) Right to receive dividends - Falling income in recession, excess stock sold ↓ price
3) Attract stakeholders – dividends, suppliers, skilled staff 2) Capital gain (buy price low + sell when high) profits, cheap alternatives, cost saving (training, dela
4) Measure of success – compare competitors 3) Financial support to business (survival, growth) - Interest rates = bank of E, cost of borrow, saving retu
5) Guide for internal investment – profitable 4) Venture capitalists = potential to succeed - Low = ↓ FC, ↓ unit cost, ↑ profit, ↑ comp, expand,
risk, large financial reward, limited liability demand as saving less attractive, loan repayments ↓
Forms of business 5) Gain control / involved in running the business discretionary, cheaper to purchase on credit, ↑ inve
Public sector = gov owned, services, tax, not profit vote on resolutions at AGM, inspect records - High rates = FC on LT loans ↑, ↑ unit cost, ↓ profit m
Private sector = individually owned ↓ competitiveness, ↑ interest on savings, ↓ disposa
Share prices as save, ↓ demand, borrow expensive, produce chea
Companies run by directors Ltd = control over share price as private investment
- Small ltd = directors are shareholders PLC = price by supply + demand (stock market) Social
- Large ltd = directors elected by shareholder board > LT investors = not highly impact, profits fluctuate so - Demographics = changing, adapt product for demand
- Plc = owners not necessarily control (divorce of O+C) changeable dividends - Ethnically diverse population (15% not born in UK), ↑
> Companies act 2006 – docs before trading, produce > ST investors = share price ↑, capital gain if sold / if cultural ingredients, migrant work for less, ↓ costs
annual reports of financial activities prices ↓ they make loss or hold on till increases - Labour supply – high unemployment = good supply, h
easily low wages, low unemploy = training costs
Profit firm = go bankrupt + close if no profit Factors influencing supply + demand - UK aging population – ↑ retire accounts, doctors, ↓
Non-profit organisations = benefit community - Performance of company – ↑ profits, dividends labour turnover, ↑ wages, ↓ productivity if elderly i
1) Charities = donations + get tax reductions - New product launches ↑ share price - Ethical – child labour, sweatshop, fair trade USP, ↑ c
2) Social enterprises = beneficial social activities - Sell shares if rumour of liquidation - Gain good reputation = ↑ demand
3) Mutual organisations = reinvest profits, ↓ price - Current share price = capital gain
- Interest rates (financial > interest in bank) Technology
Unlimited liability (unincorporated business) - Strong economy = confident get good return - Improves cheap marketing + targeting so ↑ demand
- Business + owner seen as one identity by law - Weak economy = more shares to ↑ demand - Gather information to help target right audience
- Business debts = sell personal assets, risky - Proposed takeovers – current shareholder offered to - ↑ production efficiency (reduce long term costs)
buy shares from takeover business - Ethical issue, less jobs available = negative image
Limited liability (incorporated business)
- Not personally responsible for business debts Ordinary share capital = money from selling shares Legal
- Separate legal identity (shareholders know risk) - Long term investment – permanent - Business enforces controls + legislation
- Lose money invested – insolvency + liquidation - Dividends = return for investment - Fined if not meet pollution targets (cheaper?)
- Fixed amount per share
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller katieg1500. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $6.72. You're not tied to anything after your purchase.
