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1.1.1 The Dynamic Nature of Business

New business ideas often come about due to changes in technology, changes in consumer wants, and existing products becoming obsolete. The case study of Swoon Editions illustrates these concepts. Debbie started Swoon Editions after recognizing customers wanted affordable handmade furniture but through an online process, adapting an existing furniture service to a new market and delivery method using new technologies. The business has since grown significantly due to filling this consumer need.

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141 views

1.1.1 The Dynamic Nature of Business

New business ideas often come about due to changes in technology, changes in consumer wants, and existing products becoming obsolete. The case study of Swoon Editions illustrates these concepts. Debbie started Swoon Editions after recognizing customers wanted affordable handmade furniture but through an online process, adapting an existing furniture service to a new market and delivery method using new technologies. The business has since grown significantly due to filling this consumer need.

Uploaded by

ryan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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GCSE Business

Theme 1.1.1 – The dynamic nature of


business
Booster Booklet
Specification
Subject content What students need to learn:
1.1.1 The dynamic nature of This is the starting topic of the GCSE Business
business course. It provides an opportunity for students
to consider what is a business and where do
Why new business ideas come ideas for businesses come from. Students need
about: to understand that business ideas often come
• Changes in technology from change. Consumers needs change
• Changes in what constantly and businesses need to respond to
consumers want this. The ability of businesses to produce
• Products and services products and services also can also change due
becoming obsolete to new technology and better ideas replacing
existing products and services.
How new business ideas come
about: Students also need to learn that business ideas
• Original ideas stem from two main sources. A business idea
• Adapting existing could be original, and never have been thought
products/services/ideas of before. Alternatively, many business ideas are
based on existing products and services, with
entrepreneurs finding ways to adapt and
improve them.

Key terms in this topic:

 Enterprise – entrepreneurial activity. Can also refer to a business or company.


 Entrepreneur – someone who creates a business, taking on financial risks with
the aim of making a profit from the business
 Consumer – someone who buys and uses goods and services.
 Obsolete – out of date or not used anymore
Key terms – examples
In the space below, write examples to illustrate the key terms

Key term Examples


Enterprise

Entrepreneur

Consumer

Obsolete

Summary of the topic


Businesses are dynamic. This means they respond to what consumers want. Some
business ideas are formed by entrepreneurs spotting possible gaps in the market.
Others are formed by entrepreneurs believing they can offer better than what
already exists in the market. Students should be able to give examples of why new
business ideas come about due to:

 Changes in technology

 Changes in what consumers want

 Products/services becoming obsolete.

The rise of web technologies and the use of smart phones create opportunities for
new business ideas. There are many examples of new businesses that use web-
based technologies, such as web development, photo editing and printing, and
specialist retail businesses. Consumer taste changes impact on the popularity of
goods and services. Think of local examples where new businesses have opened up
and how these might reflect changing consumer preferences. For example, high
streets now tend to have lots of coffee shops and cafés, consider whether this is a
consumer trend. As people increasingly become interested in keeping fit and
healthy, so opportunities for individuals to become personal trainers increase. As
products become obsolete these give rise to new business ideas. For example,
many petrol station forecourt car washes have closed and have been replaced by
car washing enterprises. New business ideas can come from original ideas or from
adapting existing products/services/ideas. Try to find examples of both to compare.
Synoptic links to this topic
This topic links with the following areas of the specification:

 1.1.2 Risk and reward


 1.1.3 The role of business enterprise
 1.2.1 Customer needs

This topic has direct links with all areas of the specification and is a foundation for
the course. The title for theme 1 of the GCSE Business course is called Investigating
small business. All small businesses stem from business ideas by entrepreneurs,
and when investigating the topics in theme 1 you will explore the issues and skills
involved in starting and running a small business. Coming up with a good idea for a
business is the starting point for any entrepreneur to be successful when running a
small business.

Case study: Swoon Editions: The Story


In 2012 Debbie Williamson quit her job in digital product development to start her
own business, an online furniture manufacturer called Swoon Editions. The aim of
the business was to enable its customers to buy hand-made furniture at cheaper
prices than the mainstream market, along with the convenience of using an online
process.

The business idea came about by Debbie and her friends recognising that, when
renovating their homes, the cost of buying new furniture was too expensive. ‘Every
idea starts with a problem’, states Debbie. She went on to create a business to solve
this problem.

The ‘Eureka moment’ for Swoon came when she was on holiday in India. She met
the furniture manufacturers behind one of the upmarket UK high street interiors
brands, and realised the extent of the profits they were making on each item.

The brand name has become established in the market. Swoon Editions has gained
over £5 million in venture capital investment over the past three years. The
business has seen a 300% growth in sales and employs 60 staff across London.
Debbie was awarded the prestigious title of Women in Business at the Startups
Awards 2015.

Source: www.swooneditions.com/about/our-story
How this case study illustrates/exemplifies the specification content:

The case study illustrates the ‘the dynamic nature of business’ in a number of
ways:

 Customers wanted something different than already existed. They wanted


hand-made furniture but at cheaper prices.
 Technology has changed allowing the convenience of buying the furniture
online.
 Debbie’s new business idea came from how she thought she could adapt
an existing service. She created the business to solve a problem of the high
price of furniture when people were renovating their homes.

Check your knowledge:

1. State three reasons why new business ideas come about.


2. Identify one business idea that has come from an original idea.
3. Why would a business adapt an existing product or service to come up with a
new business idea?

Command Word corner


This section will provide you with information on how a specific command word is
used in the exam, and what you can expect. It will offer you advice on how to
structure your answer and what examiners are looking for when marking questions
with this command word.

Common misconceptions

1. Why new business ideas come about? - It is a common misconception that


an entrepreneur has to have lots of experience in coming up with new ideas.
Many ideas come from satisfying what customers want and are usually not
complex. Business is dynamic and changing all of the time, so new
opportunities for business ideas will always happen.

2. How new business ideas come about? – It is a common misconception that


all new business ideas are original and involving an entrepreneur coming
with an idea for a brand-new product. In reality, most business ideas come
from thinking of how to improve or change existing products and services.
Also, many business ideas do not change anything. They simply take an
existing idea and offer it new customers.

What have you remembered so far?


Question True False
Changes in technology does not influence new
business ideas
Obsolete means that something is now out of date
All new business ideas replace existing products and
services

Exam Questions

1. Multiple choice

Which one of the following is a reason why new business ideas come about?

Select one answer

A Identify a market segment


B Increase business costs
C Products and services becoming obsolete
D To increase the qualifications of the owner

2. Outline one impact of new technology on the idea to start Swoon Editions. (2
marks)

3. Explain one advantage of adapting existing products when coming up with a


new business idea. (3 marks)

4. Discuss the impact of new technology on the reasons for new business ideas
(6 marks)

5. Analyse the impact on Debbie starting Swoon Editions of changes in what


customers want (6 marks)

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