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Section 1 - Why Some Businesses Fail

The document outlines an assignment focused on understanding business activity, particularly the causes of business failure. It includes tasks such as researching smartphone market shares and analyzing case studies of failed businesses, emphasizing the importance of management skills and market conditions. Additionally, it discusses economic factors affecting a specific business case involving a wedding dress designer facing losses.

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2 views

Section 1 - Why Some Businesses Fail

The document outlines an assignment focused on understanding business activity, particularly the causes of business failure. It includes tasks such as researching smartphone market shares and analyzing case studies of failed businesses, emphasizing the importance of management skills and market conditions. Additionally, it discusses economic factors affecting a specific business case involving a wedding dress designer facing losses.

Uploaded by

s201601153
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Homework!!!

What is the
biggest smartphone company?
Create a Word document or use your notebooks to fill in the
following into a table:
 Find the most recent list that shows the market share for each
Smartphone company. Remember that the percentages
should all add up to 100%.
Then find the following for each of the companies?
 What is the value of output (sales revenue)?

 What is the total number employed?

 What is the capital employed?

 What do you think is the biggest smartphone company?

(Explain your answer once you have completed your table)


Section 1:
Understandi
ng Business
Activity
Why some businesses
fail?
Learning
Objectives:
Why some (new or established)
businesses fail:
 Causes of business failure, e.g.
lack of management skills,
changes in the business
environment, liquidity
problems
 Why new businesses are at a
greater risk if failing
What Causes Businesses to
Fail?

Local Grocery Store Local Tailor Shop


Activity – Work in Pairs or Small Groups
Read the following articles about business failures. For each business, discuss and
write notes on what you think were the main causes of their failures.
Article A Article B
1time Airline was the second largest low-fare Zambezi Airlines’ aircraft were repossessed by
private airline in South Africa by market share.the owners, General Electric Commercial
It was one of the three low-cost airlines Aviation Services (GECAS) for failing to pay
operating in South Africa. arrears amounting to more than US$2m. The
previous year, the government had
In November 2012, the airline stopped all its suspended Zambezi Airlines operating
flights. They were no longer able to operate at certificate because of safety concerns.
profitable levels.
Article C Article D
Pacific Blue stopped flying domestic routes in At the end of January 2012, Malev Hungarian
New Zealand. It had been difficult to make Airlines announced that it would no longer
any money on these routes. Aviation analyst, fund its operations. It ceased all flight activity
Rob Mercer, was not surprised by the news. on 3 February 2012, after 66 years if
‘The New Zealand market wasn’t big enough continuous ooeration. The airline’s total debts
to support three domestic carriers,’ he said. were $270.5m at the time of the shutdown
Some More Business
Failures
Hong Kong’s first bike-sharing service,
Gobee.bike, has gone bust just over a year after
launching due to losses and high maintenance
costs.
SCMP

We thought that we could use $9 billion RMB in


cash to solve all the problems. But we made
some mistakes and it turns out that it (the
money) is not enough.
Jia Yueting
Founder of the Beijing-based LeEco
Some More Business
Failures
ATV’s reputation was badly damaged after its false report of
former leader Jiang Zemin’s death on July 6, 2011. Financial
difficulties and constant rows among shareholders which led
to chaotic management and the deterioration of programme
qualities contributed to the station’s liquidation. There are
also many who believe the eccentric style of ATV’s mainland
investor, Wong Ching, was to blame.
SCMP

Four reasons Toys R Us failed:


• Out-of-town
• New kids on the block
• Priced out
• Lack of imagination
BBC News
What Causes Businesses to Fail?
Activity Related to Topic
Apply what you have learnt:
a) Identify 2 causes of business failure. Provide an example on how they could cause business
failure and think of possible solutions to fix those problems.
b) Why are new businesses more likely to fail than businesses that have existed for a long time?

Case study: Misaki is worried. Her business, designing and selling wedding dresses, has
made a loss for the first time in 12 years. She knows her dresses are more expensive than
those of her main competitors, but her customers have always been prepared to pay a little
more to have the dress of their dreams!
She has telephoned her accountant for some advice. He told Misaki ‘the economic
conditions are not good. Many people are losing their jobs and those that are still working are
having to pay higher taxes on their earnings.’
‘But people are still getting married,’ said Misaki.
‘Yes they are, but they have less money to spend on dresses and other wedding
items,’ he replied.
Answer the questions based on the case study above:
c) Identify 2 economic factors that may have affect Misaki’s business.
d) Identify and explain 2 reasons that might explain why Misaki’s business has made a loss.
e) Do you think that Misaki’s business is at risk of failure? Justify your answer.

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