Chapter 20 lc business business the economy com dev
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The document provides an overview of community development and economic concepts. It discusses what an economy is and different types of economies. It also examines factors of production and various economic variables that impact businesses. Community development is defined as efforts by local communities to solve economic and social problems. Examples are given of local development projects and benefits they provide. Several organizations that support community development through training, grants and other assistance are also outlined.
Chapter 20 lc business business the economy com dev
- 1. Chapter 20 Business,the Economy & Community Development D. Dempsey
- 2. Key Areas • Whatis an Economy SQ • Types of Economies SQ • Factors of Production (Review… done before) • Economic Variables NB. NB. NB. NB D. Dempsey
- 3. Key Areas • Whatis Community Development? • Examples of local Development projects • Benefits of Business Enterprise to local Community • Community Development Organisations: – Leader Plus – FAS – County Enterprise Boards – Area Partnership Companies D. Dempsey
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- 6. What is anEconomy? An economy is a system that uses the 4 factors of production to produce goods and services demanded by consumers. Free market/Capitalist/Free Enterprise Private ownership of the factors of production and the means of distributing goods and services. Consumer decides what is wanted not the state Controlled Economy Government tries to control economic activity by owning all the factors of production. D. Dempsey
- 7. What about us. Whatkind of economy do we have? D. Dempsey
- 8. Factors of Production 1.Land – Refers to all the natural materials used in the production such as land itself, mineral wealth, water, timber, coal, natural gas, sun wind, fishstocks 2. Labour – Physical human effort involved in production or providing a service 3. Capital – Anything manmade that helps to produce goods and services. Machinery, buildings, factories, tools etc, aswell as finance itself 4. Enterprise – Practiced by an Entrepreneur.. Enterprise coordinates the other 3 factors into a successful business venture D. Dempsey
- 9. New terms…SQs maybe…Topical EconomicGrowth…refers to any increases in financial value of all G & S produced from a country’s resources. Boom, Recession, Depression D. Dempsey
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- 11. Example Q: Analysehow the economic variables/factors in the Irish economy impact on Business D. Dempsey
- 12. Economic variables impacton 3 key areas of business • Business Sales Your answer has these points • Business Costs • Business Confidence…in the future which influences their willingness to invest or expand D. Dempsey
- 13. Employment & Unemployment •Unemployed people have less disposable income…Think about the effects • Only purchase essentials • Sales & profits decrease therefore reduced job security…downward spiral • Tax rates increases • Social Problems • Reduced revenue to Gov • Workforce becomes de-skilled D. Dempsey
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- 18. Answering a Q •Sales • Costs • Business Confidence D. Dempsey
- 19. Inflation • % increasein prices of goods from year to year. • Measured by CPI… average family spending Impact of high inflation on business • Higher cost of raw materials, less competitive • Imports become cheaper option • Reduced entrepreneurship • Wage increases • Less competitive internationally D. Dempsey
- 20. Effect of Lowinflation rates • Businesses are prepared to borrow and expand • Increased tax revenue • Wage costs stay same • Improved competitive position in international trading D. Dempsey
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- 24. Answering a Q •Sales • Costs • Business Confidence D. Dempsey
- 25. Interest Rates • Priceof money • If low then money is cheap • If high then money is more expensive and therefore people are more reluctant to borrow • Irish interest rates are set by ECB Impact of increase on Irish Business • Reduces profits • Halt expansion, miss opportunities • Discourage people from setting up business • Higher inflation, less disposable income, reduced demand D. Dempsey
- 26. Answering a Q •Sales • Costs • Business Confidence D. Dempsey
- 27. Exchange Rates • Theprice of one currency against another. NB… Short Q The general rule for exchange rates when an exchange rate falls: • Exports = cheaper • Imports = dearer • Home tourism benefits • It leads to import inflation as we have to import essential raw materials and finished goods. These are now more expensive therefore leading to higher prices in Ireland D. Dempsey
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- 29. Answering a Q •Sales • Costs • Business Confidence D. Dempsey
- 30. Taxation Contribution to the state by its people and businesses. • What happens when there is an increase or decrease in… – Corporation tax – PAYE – PRSI – VAT How does this affect business? D. Dempsey
- 31. Answering a Q •Sales • Costs • Business Confidence D. Dempsey
- 32. Subsidies and Grants •A Subsidy is a payment from the government to a firm. Opposite of tax. • Allows the firm to provide unprofitable services by providing price top-ups • EG. CIE • A Grant is a non repayable amount of money from Gov’ and EU… DON’T WRITE FREE MONEY D. Dempsey
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- 34. How does businessactivity impact on overall development of the Economy? Positive Impact Negative impact • Jobs • Large firms can have very • Tax revenue strong influence • Reinvest profits • Increased inflation • Economic growth • Difficult cycle to break • Multiplier effect • Controlling inflation • Pollution • Reduced Social welfare • Competition can cause job • Local communities losses • Standard of living/Quality of • Social cost of Business life D. Dempsey Handout
- 35. Key Areas • Whatis an Economy • Types of Economies • Factors of Production • Economic Variables D. Dempsey
- 36. Chapter 20 Community Development D. Dempsey
- 37. Key Areas • Whatis Community Development? • Examples of local Development projects • Benefits of Business Enterprise to local Community • Community Development Organisations: – Leader Plus – FAS – County Enterprise Boards – Area Partnership Companies D. Dempsey
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- 39. What is CommunityDevelopment? Refers to the efforts by local communities to solve their social and economic problems by developing entrepreneurship among local people. Community enterprise initiatives are an essential element in tackling local economic stagnation or decline. NB… Start of every answer D. Dempsey
- 40. 2011 Mark Scheme D. Dempsey
- 41. 2003 Mark Scheme D. Dempsey
- 42. Examples of LocalDevelopment Projects: • Building Holiday cottages to rent out • Opening a community sports facility • Setting up a skills training for local people • Setting up a childcare service • Forming a Local Tidy Towns Association • Establishing a Credit Union • Restoring an old Historic Building • Cleaning up a local river/restocking it with fish • Starting a local festival or summer school • Creating tourist hiking or walking trails D. Dempsey
- 43. Benefits of Businessto local Community • Job Creation • Emigration is reduced • Improvement of commercial life of the area • Improved standard of living/quality of life • Greater demand for housing-construction and spin off employment • Encourages local entrepreneurs More on Page 363 • Creates wealth Signs of a strong and • Helps communities plan vibrant local community. • Sense of identity and pride Same as benefits • Tax revenue D. Dempsey
- 44. 2003 Q: D. Dempsey
- 45. 2003 Mark Scheme D. Dempsey
- 46. OL Q What factors can influence a business’s decision to locate in a local community? D. Dempsey
- 47. County Enterprise Boards •35 CEBs in Ireland • Introduced to provide support and advice to small businesses throughout Ireland. • Small Business with <10 employees • Each CEB has an evaluation committee responsible for making decisions on how much Fin’ Aid to give a project. • Provide a mentor for new Business • Grants…Capital, Feasibility, Employment • Training courses for business Owners/Mgrs D. Dempsey
- 48. Answering a Qon CEBs The aim of CEBs is to help small and start up enterprises locally. ie – to encourage local iniative tin order to stimulate economic activity at local level. Done by offering financial support. • Advice • Training See Handout • Grants • Mentoring D. Dempsey
- 49. 2011 Mark Scheme D. Dempsey
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- 51. Area Partnership Companies Are organisations that help local communities set up businesses in their area. Each APC develops an Action plan to help its community address problems of disadvantage that it faces: Galway City Partnership Tallaght Partnership Funded by EU and Irish Gov Ballymun Partnership Waterford Area Partnership Set up under the Governments “Partnership 2000” D. Dempsey
- 52. The APC providesfunds for a range of services including: Training: Enterprise, Job and Mgmt skills Personal Development training Grants, Loans, Mentoring Premises for new projects called “enterprise incubation units” Access to further Education Access to affordable community childcare D. Dempsey
- 53. Leader Plus Liasons Entre Actions de Development de l’Economie Rurale (Links between activities for the development of the rural economy) An EU Funded scheme designed to help rural communities to implement business plans for development of their areas according to their own priorities • Rural Tourism 35 Leader + schemes in Ireland • Training + Recruitment • Provides technical support to rural Dev projects and promotes innovation Funding is from EU and Irish Gov 70:30 • Small Firms/Crafts/Local Services • Agri/Forestry/Fishery Products • Green Initiatives Grants of up to 50% of the cost of the project is available D. Dempsey
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- 55. Westmeath community development Ltd D. Dempsey See Handout
- 56. FAS • Foras AiseannaSaothair(Training & Development Authority) • Services cover Small, Medium, Large, Indigenous, Foreign, and those in the sector of industry and services • Enterprise Scheme – Encourage unemployed to set up own business • Training Programme – Equip unemployed with new skills, help find job • Community Enterprise Scheme – Help community based groups with plan to provide employment…Advise, Training and Financial aid D. Dempsey
- 57. Functions of FAS – Training & Retraining – Employment Schemes – Placement and guidance services – Assistance to community groups + worker co-ops towards the creation of jobs – Assistance to people seeking employment in other EU countries D. Dempsey
- 58. Agencies that assistCommunity Development • Enterprise Ireland • Bord Bia • Bord Failte • CERT • Bord Iascaigh Mhara • Crafts Council of Ireland • Bord Glas • Teagasc • Business Innovation Centres D. Dempsey