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Edexcel GCSE Business 1.1.2 risk and reward


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Edexcel GCSE Business PowerPoint on risk and reward - part of an entire teaching pack for the two year course, available now from Revisionstation

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Edexcel GCSE Business 1.1.2 risk and reward

  1. 1. 1.1.2. Risk and reward
  2. 2. Worksheet
  3. 3. From Edexcel The impact of risk and reward on business activity: •Risk: business failure, financial loss, lack of security •Reward: business success, profit, independence
  4. 4. Lesson objectives • To be able to discuss the impact of risk and reward on business activity
  5. 5. Starter • How many shops do you think closed in the UK Jan – June 2016? A. 19 B. 254 C. 2,656 D. 20,000
  6. 6. •Risk: business failure, financial loss, lack of security
  7. 7. Business failure • If a business fails to plan for the future it may risk losing out to competitors • A business must have a clear strategy and plan if it is to survive in a today’s dynamic business world • For example Blockbuster failed to take up the Netflix offer as they had no digital strategy Watch this video
  8. 8. Why businesses fail
  9. 9. What is the chance of failure in a new start-up? • More than half of new businesses don’t survive beyond five years, with the UK tax system, a lack of bank lending and the cost of running a business given as the top reasons for failure. • Survival rates are lower than before the financial crisis in 2008 , research by the British commercial insurer RSA suggests.
  10. 10. Business failure - retail High streets across the UK are under pressure from a shift in spending from physical shops to online, a squeeze on household income, and increases in business rates and the national living wage, which has increased costs.
  11. 11. Business failure video
  12. 12. Financial risks • Starting a business can be a financial risk for the owner • The owner may put their own cash and other assets (e.g. a van) into a business • If the business is sole trader or partnership then they have “unlimited liability” which means they could lose their personal assets to pay the business debts
  13. 13. Lack of security • If an entrepreneur has a regular job, and they decide to leave that job to open their own business this is a huge risk; • They may have a mortgage, a car and other bills to pay • Also there may be insecurity of sales with falling consumer incomes
  14. 14. •Reward: business success, profit, independence
  15. 15. Define business rewards • Not everyone defines reward the same way. For some it might be seeing a new venture grow and succeed. For others it may be conquering the unknown and striking out on their own • A business reward is a benefit that it brings to the owner e.g. better working conditions • VIDEO HERE
  16. 16. Business success • The rewards of a good business is success • This may mean; awards, fame, survival, growth or making more money than they would working for someone else • Watch the video, how many people does Jamie employ?
  17. 17. Keep all the profit • Profit = Total revenue – Total costs • A reward of setting up your own business is you get to keep all the profit that the business makes • In time equipment may break or get old and you may need to invest some of your profit back into the business • If you take on a business partner you may also need to share the profits with them
  18. 18. Independence • A reward of setting up your own business is that you could be your own boss • Being your own boss means you get to make the major decisions in the business • You can also change the business if you want to • Many people would like to have this degree of control in their working lives, which motivates them to start their own business This is Caroline Lake she is the boss of Caroline’s cars which is a women only car service business. She is her own boss.
  19. 19. Plenary Which business was “saved” and by which other company?
  20. 20. Sample question 1
  21. 21. Answer question 1
  22. 22. Revisionstation Written by Sarah Hilton ©