Section 1: Is it the end for Bowton?

Worksheet

Lesson Objectives

• analyse and discuss the need for, and use of, finance

• evaluate sources of finance

• analyse and discuss influences on the choice of finance.

• discuss how business might be affected by changes in the level of government spending and taxation

• discuss how business might be affected by rising, and falling, consumer incomes

• discuss how business might be affected by changes in the level of employment

Starter

• Read Section 1 – Is it the end for Bowton and answer the questions below – true or false

• 1) By the start of 2018 7,000 jobs had been created in the town

• 2) Incomes fell by 10%

• 3) Critics of the plan have complained about the cost of the grants

Introduction - Bowton

• The case study focuses on the regeneration of the town of Bowton.

• Bowton is a town in the County of Moorshire in the north west of England.

• Bowton and Moorshire are not real places, they are made up by your examiners to help you pass the exam.

Introduction - Regeneration

• Regeneration means to improve a location which has been in a period of decline

• This may include encouraging shops and cinemas to start up in the area

• Watch the video on regeneration – if it doesn’t play copy the URL into explorer and play it that way

Introduction – two businesses

In particular this case study focuses on Tom’s Toys, which is a small toy shop located in Bowton, and a large toy manufacturer, GG Toys plc. Tom’s Toys is a small business, GG Toys is a large business.

Timeline

• There is information in the case study from 2008 to 2022

• It may help your understanding of the case study to create a timeline and write on all the events

Unemployment

Unemployment - definition

Unemployment is defined as the number of people who are jobless, actively seeking work, and available to take a job

Unemployment in Bowton

Between 2008 and 2011… unemployment rose by 6000, meaning that by 2011 14,000 out of a workforce of 80,000 were out of work.

How many people in

Bowton were

unemployed in 2008?

A

What % of the

workforce were

unemployed in 2008?

B

What % of the

workforce were

unemployed in 2011?

C

Answer to A

• How many people in

Bowton were

unemployed in 2008?

• 14,000 – 6,000 = 8,000

Answer to B

• What % of the

workforce were

unemployed in 2008?

• 14,000 – 6,000 = 8,000

• 8,000 / 80,000 x 100

• 10%

Answer to C

• What % of the

workforce were

unemployed in 2011?

• 14,000 / 80,000 x 100

• 17.5%

What impact will this rising unemployment have on businesses in Bowton?

Positive impacts Negative impacts

Positive impacts of rising unemployment

• If there is high unemployment in Bowton then there will be more workers available to apply for any jobs that are advertised at Tom’s Toys or GG Toys plc.

• This means that Bowton businesses will have a greater choice of candidates for each vacancy and may be able to pay lower wages

Negative impacts of unemployment

• If there are a high number of unemployed people in Bowton then this may mean that customers to Tom’s Toys may choose to buy from cheaper shops instead e.g. Poundland, Home Bargains etc.

• GG Toys’s plc however sell to retail outlets, supermarkets and department stores all over the UK, so may not suffer such a dip in demand

Incomes

Incomes

• Between 2008 and 2011 Incomes in Bowton fell by 8% on average • As unemployment is rising and

incomes are falling this is bad for the businesses of Bowton as demand will fall which will make it harder for them to sell their goods and services

What does this mean

for the businesses of

Bowton?

Businesses opening and closing

• In the same period of time, 42 businesses closed and only 15 start-ups occurred.

What will this mean

for Bowton as a

location to live in?

• Bowton will become less appealing for consumers to live in. If there are no jobs, low incomes and no shops, customers who live in Bowton may either shop elsewhere or consider moving out of the area.

Bowton News

The Bowton News

• The Bowton Telegraph published an article in 2011 with the heading, ‘Is it the end for Bowton?’

To what extent do

you agree with this

headline?

2014 Growth

Growth in business

• By 2014, there had been some growth in business activity in Bowton and employment had increased though most of the increase was in low paid, part-time jobs.

• Can you divide this up into good news and bad news?

Rise in sales of goods

• In 2014 It was forecast that there would be a rise in the sales of goods in Bowton.

• Demand is important to business survival. If sales are forecast to rise this means that demand is rising, which means that customers will start to buy the goods and services sold by the businesses of Bowton again

• This may result in a multiplier effect which people in Bowton earning and spending more money

What does this

forecast mean for

Bowton?

Regeneration plan

What is a regeneration plan?

• A regeneration plan is a set of drawings and reports which outline how an area could be improved.

• For example; Bowton wanted a cinema, new houses and shops to open in the area. If they open it will encourage other businesses to also move to Bowton and will also provide jobs for local workers

What kinds of jobs are being created?

Regeneration plans

Two videos to watch about regeneration plans in Birmingham

Bowton Town Council

• The Bowton Town Council ‘Regeneration Plan’ for business activity was implemented in 2012.

• It was to be implemented over a period of 10 years, ending in 2022. Implemented means to put a plan into action.

2022

End of the

Regeneration

Plan

2012

Start of

Regeneration

Plan

10 year plan

Council grants to attract businesses

• The Council had decided to encourage businesses in Bowton by offering grants to those that wanted to locate or expand in the town.

• A grant is a sum of money given to a business by a council or the government to encourage them to set up in a certain location

• The grant reduces the cost to the business of setting up or moving, which makes the location more attractive

• Grants do not usually need to be paid back but must be used for a specific purpose

What is a

grant?

Michelle Gledhill

• This is Michelle Gledhill and she is the spokesperson for the Bowton Town Council

• Watch the videos on the next couple of slides where Michelle discusses the Bowton Town Council Regeneration Plan

Michelle Gledhill video 1

• Michelle Gledhill, spokesperson for Bowton Town Council

• Watch the video – this is her first quote from the case study in section 1 – line 17.

• If you have time – why not make your own movie?

Michelle Gledhill video 2

• Michelle Gledhill, spokesperson for Bowton Town Council

• Watch the video – this is her second quote from the case study. Taken from Section 1 line 18 onwards.

In your opinion, using information from the case study, was the

Bowton Town Council regeneration plan a success?

Was the regeneration plan a success?

Support for the plan

• By the start of 2018 over 7,000 jobs had been created in the town.

• A new multiplex cinema, three new housing developments and a shopping development had been built

• Prices of commercial properties and houses are rising in the town

Criticism of the plan

• Critics of the Regeneration Plan have complained about:• the cost of the grants,

• the rises in council tax,

• the high rate of business rates imposed by Bowton Council.

The new Bowton

3 new housing developments

• A shopping development

Multiplex cinema

Plenary quiz

1. What did incomes fall by? 6% 8% 10%

2. How many businesses closed? 40 42 44

3. How many start-ups occurred? 12 15 17

4. What year did the headline “is it the end for Bowton” appear? 2010 2011 2012

5. When employment increased, what kinds of jobs were there?

Low paid, part-time or High Paid, full time

6. By the start of 2018 how many jobs had been created in the town?

Over 7,000 Over 8,0000 or Over 9,000

Plenary answers

1 Incomes fell by 8%

2 42 businesses closed

3 15 start-ups occurred

4 The article was published in 2011

5 Low paid, part-time

6 Over 7,000 jobs had been created by 2018

Glossary

• Regeneration; To improve a location by making it more economically active or successful

• Unemployment; When those who are actively seeking work are unable to find work

• Income; Money received on a regular basis from work

• Grant; A sum of money given my a government to help and encourage a business locate in a certain area, this often does not have to be paid back

Sample Questions

Sample questions are adapted and taken from past papers

Explain how rising unemployment and falling consumer incomes might affect Tom’s Toysa) on sales

b) on prices[4 marks]

Samplequestion1

Answer sample question 1

• Sales of toys will fall (1) because people would not have as much money to spend (1) on luxuries / hobbies or expensive goods, and will save their money for essentials

• Tom’s Toys would have to reduce its prices (1) because people would not be able to afford the higher prices (1) as they have less to spend (1) and to encourage more people to buy the toys (1)

• Prices may rise (1) if Tom’s Toys wants to maintain its revenue, so he can still make a profit or does not make a loss (1)

• Prices may fall (1) as costs have fallen as incomes have fallen (1) and Tom’s Toys will still be able to make a profit (1)

The statements below are about the effects which giving grants to businesses may have on the community in Bowton. Tick (√) against each statement to show if it is true or false.

[3 marks]

Samplequestion 2

Statement True False

To cover the costs of the grants there may be a rise in

council tax

To cover the costs of the grants there may be a rise in

business rates

To cover the costs of the grants there may be a reduction

in local services

Answer sample question 2

• To cover the costs of the grants there may be a rise in council tax (true)

• To cover the costs of the grants there may be a rise in business rates (true)

• To cover the costs of the grants there may be a reduction in local services (false)

• 1 mark per correct answer