Starter http www youtube comwatch vnVb MYB 6

Starter http: //www. youtube. com/watch? v=n_Vb. MYB 6 o. Xk&feature=youtu. be What do you think this lesson is going to be about?

1. 1. 2 Risk and Reward

• To understand the principle of risk and reward of business activity • To apply the concept of risk and reward in business decision making. • To appreciate the impact of risk and reward to a business activity Learning Objectives

MATCH THE TERM TO THE CORRECT DEFINITION… is about putting a numerical value or probability on the risk. CALCULATED RISK PROBABILITY the downsides of a course of action, including what can go wrong. REWARD the advantages of a course of action, including what can go right RISK is the likelihood of something happening in the future.

Your Task… Consider the cards that have been placed around the room. You need to correctly identify which statement relates to a risk and which relates to a reward for a business and write these in your book. Remember: A RISK is the downsides of a course of action, including what can go wrong A REWARD is the advantages of a course of action including what can go right

https: //www. youtube. com/watch? v=w. VGm. P 6 Qluf. Y http: //www. youtube. com/watch? v=Uxi 8 db. RVsh. I YOUR CHALLENGE…

Lucky Break Wishbone Eco Goat Momen Citi. Kitty Doggles Business Ideas DRAGONS: You are required to think about BUSINESS ENTREPRENUERS: You are required to the RISKS of the business ideas think about the REWARDS of your new business idea

You have 10 minutes. . http: //www. online-stopwatch. com/countdown-clock/full-screen/

1. Lucky Break 2. Doggles 3. Citi. Kitty 4. Eco Goats 5. Momen Pitches…

Feedback…

What happened to Lucky Break… Lucky Break has been an incredible success in America. At thanksgiving many families now buy a pack of lucky breaks with turnover in excess of $3 m. It seems like this business is still growing and they are in talks with Wal-Mart and Cost-co for them to stock Lucky Breaks. . .

What happened to Citi. Kitty. . . Citi. Kitty has successfully launched in America. Turnover this year is expected to reach $1 m, though it is yet to be seen how sustainable this will be. . .

What happened to Doggles… Doggles managed to reduce their costs of production and increase the quality of their products. They have successfully franchised their business internationally and the annual turnover is over $5, 000.

What happened to Eco Goat. . . Eco goat is still successful and its new herds are fully booked. However, many competitors have seen how popular they were and have now entered the market. For eco-goat it does not seem like there is much further room for expansion. . .

What happened to Momen. . . Momen completely failed after initial success. The entrepreneurs lost all money which was invested into the business. After some time the owners entered problems and had to file for bankruptcy. Mo-Men

Test your knowledge What is meant by a calculated risk? A) The probability of a negative event occurring B) The probability of a positive event occurring C) The probability that the business will succeed D) A quantitative approach to business planning

Test your knowledge Marcus Rampaul works for the Metropolitan Police Force. He wants to set up an advisory security service to businesses in South London. Using his experience of crime against businesses, he plans to sell advice to help businesses protect against crime and save money. Marcus reckons his chances of success are quite high, at 80%. He also thinks that he could make about £ 50, 000 profit per annum once the business is established. The initial research, marketing and setting-up costs would amount to £ 15, 000. The risk of failure is only 20% However he would sacrifice a good job paying £ 32, 000 a year.

Test your knowledge Which one of the following would be an example of a calculated risk for Marcus’s business? A) 90% of Marcus’s customers will be in South London B) If the business succeeds it will make £ 50, 000 profit a year C) If the business fails Marcus will lose £ 15, 000 D) There is a 20% chance that Marcus’s business will fail

Test your knowledge Which two of the following are disadvantages for Marcus’s business? A) There is an 80% chance that the business will be successful B) There could be many competitors selling security advice C) The £ 15, 000 set-up costs are quite low D) Marcus has valuable experience in security and crime against business E) Businesses generally will not be interested in protecting themselves against crime because they think it will be a waste of money.

Past Paper Question – 6 marks Discuss the likely rewards a business may face when starting up a business (6 marks).

What are we looking for in a 6 mark answer? Remember, no counter argument!

Structure…? ? One point with 5 sentences to develop Two points, with 5 sentences developing 2 different points

Peer Assessment Does the answer show knowledge of business reward and risk? Does the answer have 5 strands of analysis/development of answer? Target for improvements?

Peer Assessment

What have you learnt… Teacher Bingo. I am going to talk for 1 minute about today’s lesson. You have to write down 6 key business terms that you think I will say. As I say them you can tick them off. The first to finish shouts “BINGO!”

Checkpoint – ‘I can…’ Describe a reason why a business might decide to change a brand name Describe what is meant by the phrase ‘product adaptation’ Explain why a fast-food restaurant might offer different products in different countries Analyse why businesses take social factors into account when considering business ideas Choose a well-known British business and identify one of its products that could be adapted for a new market. Outline the potential advantages and disadvantages of a business proposal