Key Stage 4 Government & Democracy
Years 10 and 11 Consumers, Business and the Economy
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Lesson Plan
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Teachers Notes
How do business decisions affect our economy?
Background Notes
Economics is basically the study of how society decides what and how it produces and while it is believed that our wants are infinite our resources are actually limited. All consumers, therefore, have to make a series of choice about what they want to buy and own.
There are many different factors that affect the economy as a whole such as:
- unemployment levels
- inflation rates
- interest rates
- balance of payments
- the rate of economic growth
Each Government will have a series of economic policies and they have 4 main objectives: low unemployment, low inflation, high economic growth and an equlibrium for balance of payments. By looking at these 4 factors, performance of the UK's economy can be assessed.
The Bank of England website (www.bankofengland.co.uk/) contains information on the work that they do as well as monetary policy, financial markets and financial stability.
All companies are part of the economy within the UK and they are, therefore, affected by both internal and external factors. The internal factors are in the Companies' control - staffing levels, costs, etc, however external factors influence the companies' success but are outside of their control.
Suggested Teaching Activity
Further Information
The HM Treasury website (www.hm-treasury.gov.uk/) contains details of its history as well as information about its Aims and Objectives
(www.hm-treasury.gov.uk/About/about_aimsobject.cfm).
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What are the differences between the private and public sectors?
Background Notes
The UK is described as a mixed economy because we have both a private and a public sector.
The public sector provides goods and services to the community through public corporations, local government and other statutory agencies. There is no real profit motivation as funding comes from taxes and government borrowing.
The private sector consists of businesses that are owned by private individuals who use their ownership to achieve objectives such as income through profits.
There are different forms of business within the private sector such as:
- sole traders - simplest kind of business as it is set up and run by an individual on their own. Examples: - plumber, newsagent.
- partnerships - where more than one person shares control in the company and contributes to the capital. Example - solicitors.
- private limited companies - a company which is registered under the Companies Act and is regarded as a separate legal entity. Example - AAABBB Limited.
- public limited companies - companies that are floated on the Stock Exchange, so that shares can be sold to the public to raise funds. Example - AAABBB Plc.
Suggested Teaching Activity
Project Work
Ask the students to research the 4 different types of private sector business listed above. If they were going to start a business, what would be the advantages and disadvantages of each type?
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What effect does competition have on business?
Background Notes
A major influence on any business is the level of competition within a particular industry. Competition is good for consumers as it helps to regulate the prices that businesses charge for the goods and services they sell. The competition that a business faces constantly changes as new businesses join or leave the industry.
There are different levels of competition:
- Perfect competition - there are a large number of buyers and sellers and individual firms or consumers do not affect the market price.
- Oligopoly - only a few firms producing goods so there is a real push to secure consumers' interest.
- Monopoly - only one firm producing goods/services and which therefore controls the market.
There is a body of law in place that seeks to counter any attempt by firms to reduce or eliminate competition. Competition is good for the consumer and there are therefore laws which prevent anti-competitive practices and which regulate any reduction in the number of businesses in competition (eg The Restrictive Trade Practices Act and the Competition Act).
Suggested Teaching Activity
Research work
Ask your students to research into competition law that is currently in force. Who enforces these laws and how are they regulated?
Tell the students to start their research by looking at the website for the Office of Fair Trading (www.oft.gov.uk/).
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What methods do business use to promote their products?
Background Information
Marketing is very important to all companies as they need to sell their products and in order for consumers to buy, they need to be aware of what exists.
Businesses will develop a corporate strategy or marketing plan that sets out exactly what they wish to achieve. In order to produce this a company may undertake market research to collect information about the market they wish to serve.
Advertising
This is the main way in which businesses try to draw consumers' attention to the products that they are selling and to encourage them to buy those products.
A lot of advertising is concerned with capturing the interest of the audience rather that telling them all about the product. They may use persuading tactics such as:
- Better Lifestyle - if you buy their product your life will be better for it.
- Fear - you need this product to keep you safe.
- Romance - you will be attractive to the opposite sex if you buy this product.
- Personality - uses famous stars to encourage you to buy.
There are many different types of advertising medium that a business can use and they will choose the ones that they consider to be most suitable for what they are trying to achieve:
- Television
- Radio
- Magazines
- National and local press
- Road-side posters
There are controls on advertising designed to protect the consumer from untrue or indecent advertising. There are controls laid down by criminal legislation such as The Trade Descriptions Act, The Obscene Publications Act and the Children and Young Persons (Harmful Publications) Act. Protection also exists in civil law through The Control of Misleading Advertisements Regulations.
The majority of businesses in the UK also adhere to the voluntary Code of Practice policed by the Advertising Standards Authority. The guiding principles of the Code of Practice is that all advertisements should be 'decent, honest, legal and truthful'.
Adverts on television and radio are controlled by the Office of Communications (OFCOM) (www.ofcom.org.uk/).
The Advertising Standards Authority website contains guided tours through Advertising Control; Taste and Decency; Social Responsibility and Children and Advertising.
(www.asa.org.uk/ASA_2004_Rebuild/ASAAppBase/SchoolsCollegesTour/index.html)
Suggested Teaching Activity
Project work
Ask the students to look at a range of different adverts in papers and on television. Which adverts make them want to buy the products? Is the product aimed at their age group? If not, who do they think the adverts are aimed at?
Roleplays and Worksheets
The Smart Shopper's Guide was written by Essex County Council Trading Standards and has been adapted for the Internet by Oxfordshire County Council Trading Standards Service. It contains a section on Advertising which contains teaching notes, roleplays and worksheets.
(www.tradingstandards.gov.uk/schools/smartshoppersguide/
goto.cfm?dir=%2F&page=Advertising/Advertising%20Menu.html)
Teaching Notes and Activities
Consuming Passions (www.citizen.org.uk/education/resources/consumer.pdf) is a FREE teaching pack designed specifically for teaching Consumer Education to Key Stage 4 students that has been developed by the National Consumer Council in conjunction with the Institute for Citizenship. It contains a wealth of useful teachers' notes and teaching activities to ensure that you can offer your students a complete consumer education package as part of the Citizenship curriculum.
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