Edexcel Business A Level Revision

Production - A process of workers combining various material inputs and know-how in order to make something for consumption by the customer, known as the output. Production can also be defined as the total amount of output produced in a time period. The more that can be produced in a specific period of time, the more efficient the business becomes in using its resources. There are 9 factors that have to be considered when assessing a country as a production location; Costs of production Skills and availability of labour force Infrastructure Location in trade bloc Government incentives Ease of doing business Political stability Natural resources Likely return on investment COSTS OF PRODUCTION In highly competitive mass markes, having low costs of production will be a significant advantage. This means low wage cost will see FDI to the country in order to take advantage of the labour force and its low wage costs. This allows businesses to drive costs down, allowing the...

Protectionism - is any attempt by a country, trade bloc or region to impose restrictions on the import of goods and services. Government legislation - legislation imposed by the government in order to both protect consumers and restrict imports. This might be complex legal forms, health and safety inspections and specific product specifications. Benefits of government legislation is that it allows domestic firms to flourish in the market, but it may provoke retaliation from another country is the ban is seen as unfair. Domestic subsidies - are payments to encourage domestic production by lowering their production costs and improve competitiveness. Low or no interest loans can be used to fund the dumping of products in overseas markets. Well-known subsidies include the Common Agricultural Policy in the EU, or cotton subsidies for US farmers and farm subsidies introduced by countries such as Russia. Advantages of subsidies include; The protection of local jobs and indust...

Stakeholder - is any individual or group with an interest in the actions and decision making of the business. A SHAREHOLDER IS A STAKEHOLDER INTERNAL STAKEHOLDER EXTERNAL STAKEHOLDER Employees Customers Managers Suppliers Owners Shareholders Shareholders Government Local community Society Creditors (owes money to a business) STAKEHOLDER MAIN INTERESTS Shareholders/owners Return on investment and profits and dividends Success and growth of the business Proper running of the business Managers/employees Rewards, including basic pay and other financial incentives Job security and working conditions Promotion opportunities and job satisfaction and status – motivation, roles and responsibilities Customers Value for money Product quality and customer service Suppliers Continued, profitable trade with th...

Taxation - Charges on individuals and organisations by governments. Direct Taxation - This includes income tax, National insurance and corporation tax - direct taxes are charged on earnings. Indirect Taxation - This includes VAT, excise duties (e.g. on petrol and alcohol), car tax, insurance tax and others. In 2015, the government raised a total of £647 billion from taxation. 94% came from central sources such as income tax, corporation tax and indirect taxes , just 6% came from local taxation (council tax) Direct taxation is levied on earnings and will affect the level of a consumers' disposable income. For example, an increase in income tax will reduce sales of many products and services, with some expectations. Indirect taxation such as VAT will have a similar effect; an increase in the rate of VAT will increase prices (although food eaten at home and a few other products such as housing, books and children's clothes carry no VAT). This will reduce consum...

Grants -  Are fixed amounts of capital provided to business by the government or other organisations to fund specific projects. This could be in the form of actual monetary grants, subsidies and tax relief schemes. This method of finance operates both on a national and regional level. This can be really useful for new small businesses. Certain factors do come along with grants to see if you qualify for receiving one, such as; Locate in an area of high deprivation Provide employment Reduce negative environmental impacts Support a good cause This is also good for businesses needing a large sum of capital to injected into their businesses.