Business in the Real World — AQA GCSE Business
This unit introduces what business is about: why businesses exist, how they start, and how they are owned and located.
The purpose of business and enterprise
Businesses exist to provide goods and services to meet customers' needs and wants and to make a profit. An entrepreneur takes a risk to set up a business, spotting a gap in the market and organising the other factors of production. The dynamic nature of business means it must respond to change.
Factors of production
The resources used to make goods and services: land, labour, capital and enterprise.
Business aims and objectives
Businesses set aims (long-term goals) and objectives (specific targets), such as survival, profit maximisation, growth, market share, customer satisfaction and social/ethical objectives. Objectives differ between businesses and change over time.
Business ownership
- Sole trader — one owner, easy to set up, but unlimited liability (personally responsible for debts).
- Partnership — 2+ owners sharing responsibility; usually unlimited liability.
- Private limited company (Ltd) — shares owned privately; limited liability.
- Public limited company (plc) — shares sold on the stock exchange; limited liability.
Limited liability means owners can only lose what they invested; unlimited liability means personal assets are at risk.
Setting business aims and location
Choosing a location depends on proximity to the market, labour, materials, competitors, transport links and costs. The growth of e-commerce means many businesses can locate anywhere.
Business planning
A business plan sets out the idea, aims, market research, finance and forecasts. It helps obtain finance and reduces risk. Stakeholders (owners, employees, customers, suppliers, government, local community) have different interests in the business.
Exam tips
- Learn the factors of production and the role of the entrepreneur.
- Distinguish ownership types and explain limited vs unlimited liability.
- Know why a business plan matters and the influences on location.
- Identify stakeholders and their (sometimes conflicting) interests.