AS Edexcel Official Business Unit 1: Marketing and people - 19th of MAy Watch

Midnight1811
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(Original post by ZULU-WARRIOR)
This is pretty big but can any of you guys answer these questions.Explain the effects on a business if inflation changes//
Explain the effects on a business if exchange rates change/
/Explain the effects on a business if interest rates change//
Explain the effects on a business if taxation and government spending change//
Explain the effects on a business if the business cycle changes//
Describe the effect that economic uncertainty has on a business//
Describe legislation to include consumer, employee and environmental protection/
/Describe the effect on a business of competition policy/
Describe key components of health and safety legislation//
Identify the competitive environment including competition and market size//
Explain the effects on a business if inflation changes -

If inflation increases, then the value of money also increases. Due to this, the price of goods increases. (Think of a Freddo bar, it was like 15p in my day, now it's 25p)
This means that consumers will have to spend more for that good. If the good is price elastic (not a luxury good), then demand will decrease. A fall in demand harms a business since it means less revenue, which could mean reduced profits, if any.

Also, if inflation increases, then certain businesses will have to change prices. E.g. a takeaway may have to reprint new menu's if the price is outdated, and doesn't match that of inflation. This is costly, since it costs to reprint the menus while throwing away the old ones.

If inflation decreases, known as deflation, then the value of money decreases. Here, price of goods falls. This means the business will gain less revenue per product, but perhaps it'll see a large volume of items being sold, enough to counter the decrease in inflation. However, worth noting that in deflation, since the prices are decreasing, then perhaps people will delay purchasing products as they could get the same product at a cheaper price at a later date. Businesses don't get revenue, which hampers their profit margins as well as not being able to cover their fixed costs.

Explain the effects on a business if exchange rates change

If the currency rates becomes appreciated, then it's value increases. This results in imports becoming cheaper, so their demand increases; while exports become more expensive so the demand falls. This means businesses can buy things from other countries at a cheaper rate, than what it would cost in England. Also, if the £ is appreciated, this means it becomes stronger. A strong £ will mean exports will be more expensive, since there prices of a product increases, it will cost the foreigners more to buy the same good.

The same is true in reverse, a weaker pound will see the rate become depreciated so the exports becoming cheaper, leading to an increase in demand; while import becomes more expensive (as it costs more to get the same item).


I'm yet to cover the other topics lol
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ZULU-WARRIOR
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(Original post by Midnight1811)
Explain the effects on a business if inflation changes -

If inflation increases, then the value of money also increases. Due to this, the price of goods increases. (Think of a Freddo bar, it was like 15p in my day, now it's 25p)
This means that consumers will have to spend more for that good. If the good is price elastic (not a luxury good), then demand will decrease. A fall in demand harms a business since it means less revenue, which could mean reduced profits, if any.

Also, if inflation increases, then certain businesses will have to change prices. E.g. a takeaway may have to reprint new menu's if the price is outdated, and doesn't match that of inflation. This is costly, since it costs to reprint the menus while throwing away the old ones.

If inflation decreases, known as deflation, then the value of money decreases. Here, price of goods falls. This means the business will gain less revenue per product, but perhaps it'll see a large volume of items being sold, enough to counter the decrease in inflation. However, worth noting that in deflation, since the prices are decreasing, then perhaps people will delay purchasing products as they could get the same product at a cheaper price at a later date. Businesses don't get revenue, which hampers their profit margins as well as not being able to cover their fixed costs.

Explain the effects on a business if exchange rates change

If the currency rates becomes appreciated, then it's value increases. This results in imports becoming cheaper, so their demand increases; while exports become more expensive so the demand falls. This means businesses can buy things from other countries at a cheaper rate, than what it would cost in England. Also, if the £ is appreciated, this means it becomes stronger. A strong £ will mean exports will be more expensive, since there prices of a product increases, it will cost the foreigners more to buy the same good.

The same is true in reverse, a weaker pound will see the rate become depreciated so the exports becoming cheaper, leading to an increase in demand; while import becomes more expensive (as it costs more to get the same item).


I'm yet to cover the other topics lol
Thanks man. Need cover legislations as well lol
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Midnight1811
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/Explain the effects on a business if interest rates change//

A decrease in interest rate means that it costs consumers less to borrow money (less interest is being applied on the cash than when there's higher interest paid on it) which see's consumer spending increase. More money being spent will positively affect businesses since they can gain more revenue, if more of there products are being sold. A decrease in interest rate, will also see
pound becoming weaker, which as mentioned above leads to export becoming cheaper, thus benefiting foreign businesses, while the cost of import becomes more expensive.

An increase in interest rate means that it costs consumers more to borrow money (higher interest rate being applied on the cash than when there's low interest rate). This see's consumer spend decreases, meaning there's less demand on goods which see's there being less sales. An increase in interest rate will see the £ becoming stronger, therefore the demand for imports will increase, since they become cheaper, while exports become dearer; results in fall in demand in foreigners buying UK goods.
A decrease in interest rate, will also see pound becoming weaker, which as mentioned above leads to export becoming cheaper, thus benefiting foreign businesses, while the cost of import becomes more expensive.
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Haarryboy
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(Original post by Midnight1811)
What do you mean by effect?
what effect does ur point have on the business

eg increases sales ,minimises waste
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Haarryboy
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guys what does turnover mean
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Midnight1811
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(Original post by Haarryboy)
guys what does turnover mean
another word for revenue. this is what the business makes.

I sell lucozade for £1. That £1 is my sales revenue (or you could use the word turnover instead but I prefer Sales Revenue)
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Midnight1811
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(Original post by Haarryboy)
what effect does ur point have on the business

eg increases sales ,minimises waste
Wow thats awesome.. So PEACH

Could you please give us an example of this in action? As it's bloody amazing.
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Haarryboy
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(Original post by Midnight1811)
another word for revenue. this is what the business makes.

I sell lucozade for £1. That £1 is my sales revenue (or you could use the word turnover instead but I prefer Sales Revenue)
thx man
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Haarryboy
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(Original post by Midnight1811)
Wow thats awesome.. So PEACH

Could you please give us an example of this in action? As it's bloody amazing.
u can have a look for yourself, our teacher recommended it and i think it works quite well.
http://www.tutor2u.net/business/blog...of-a-paragraph
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Haarryboy
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i know this is a stupid question but was topic do u guys think is likely to come up for the 20 marker
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Midnight1811
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(Original post by Haarryboy)
u can have a look for yourself, our teacher recommended it and i think it works quite well.
http://www.tutor2u.net/business/blog...of-a-paragraph
What's the difference between application & context using that PEACH guideline?

In which bit does analysis fit in?
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Haarryboy
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(Original post by Midnight1811)
What's the difference between application & context using that PEACH guideline?

In which bit does analysis fit in?
Application is using quotes or data from the extract/source

Context is making sure ur answer is always linked to the business context so that includes focusing on target market etc,
for example a car manufacturing company is really different to a bakery producing factory and both target different markets so instead of mentioning "the business" ur answer should link to the business named in the question such as "Approved Foods Ltd" this will give u more marks as the examiners can see that Ur answer in contextualized

I hope that makes sense i got confused at first to because they are fairly similar
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Midnight1811
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(Original post by Haarryboy)
Application is using quotes or data from the extract/source

Context is making sure ur answer is always linked to the business context so that includes focusing on target market etc,
for example a car manufacturing company is really different to a bakery producing factory and both target different markets so instead of mentioning "the business" ur answer should link to the business named in the question such as "Approved Foods Ltd" this will give u more marks as the examiners can see that Ur answer in contextualized

I hope that makes sense i got confused at first to because they are fairly similar
Thanks. So application is the analysis segment (using stats to back up your point), while context is where the answer is tailored towards that business. I shall try this out tmrw. Good luck mate. This PEACH mnemonic is amazing, shame I didn't find it sooner
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Haarryboy
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(Original post by Midnight1811)
Thanks. So application is the analysis segment (using stats to back up your point), while context is where the answer is tailored towards that business. I shall try this out tmrw. Good luck mate. This PEACH mnemonic is amazing, shame I didn't find it sooner
Thats fine....its a shame u didnt see it earlier oh well better late than never

i hope u find it usefull good luck with tommorow every1 i hope we all do well or all do bad so the grade boundaries are low too
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TS21
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does anyone know what cell production is? and how to describe batch production?
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Haarryboy
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(Original post by TS21)
does anyone know what cell production is? and how to describe batch production?
Batches is when the production/manafacturing process is split into batches/groups of stages for eg a car

Cant remember cell from the top of my head
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hw1221
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Good luck everyone today
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Bruce267099
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(Original post by Haarryboy)
Batches is when the production/manafacturing process is split into batches/groups of stages for eg a car

Cant remember cell from the top of my head
I think cell production is when people are split into teams and each team is responsible for completing a part of the production process.
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Bruce267099
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(Original post by hw1221)
Good luck everyone today
Going to need it , i really hope liquidity or working capital doesn't come up.
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TS21
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Anything on legislation or competitive environment and im screwed


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