1. Chapter 20
Business, the Economy
&
Community Development
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2. Key Areas
• What is an Economy SQ
• Types of Economies SQ
• Factors of Production (Review… done before)
• Economic Variables NB. NB. NB. NB
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3. Key Areas
• What is 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
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6. What is an Economy?
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.
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7. What about us.
What kind of
economy do we
have?
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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
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9. New terms…SQs maybe…Topical
Economic Growth…refers to any increases in
financial value of all G & S produced from a
country’s resources.
Boom, Recession, Depression
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11. Example Q: Analyse how the economic variables/factors in the
Irish economy impact on Business
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12. Economic variables impact on
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
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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
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14. http://cso.ie/en/media/csoie/releasespublications/documents/latestheadlinefigures/l
reg_oct2012.pdf
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18. Answering a Q
• Sales
• Costs
• Business Confidence
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19. Inflation
• % increase in 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
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20. Effect of Low inflation rates
• Businesses are prepared to borrow and
expand
• Increased tax revenue
• Wage costs stay same
• Improved competitive position in international
trading
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21. http://cso.ie/en/media/csoie/releasespublications/documents/latestheadlinefigures/c
pi_oct2012.pdf
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24. Answering a Q
• Sales
• Costs
• Business Confidence
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25. Interest Rates
• Price of 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
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26. Answering a Q
• Sales
• Costs
• Business Confidence
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27. Exchange Rates
• The price 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
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29. Answering a Q
• Sales
• Costs
• Business Confidence
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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?
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31. Answering a Q
• Sales
• Costs
• Business Confidence
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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
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34. How does business activity 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
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Handout

35. Key Areas
• What is an Economy
• Types of Economies
• Factors of Production
• Economic Variables
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36. Chapter 20
Community Development
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37. Key Areas
• What is 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
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39. What is Community Development?
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
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40. 2011 Mark Scheme
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41. 2003 Mark Scheme
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42. Examples of Local Development 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
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43. Benefits of Business to 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
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44. 2003 Q:
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45. 2003 Mark Scheme
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46. OL Q
What factors can influence a business’s
decision to locate in a local community?
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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
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48. Answering a Q on 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
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49. 2011 Mark Scheme
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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”
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52. The APC provides funds 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
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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
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55. Westmeath community
development Ltd
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See Handout

56. FAS
• Foras Aiseanna Saothair(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
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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
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58. Agencies that assist Community Development
• Enterprise Ireland • Bord Bia
• Bord Failte • CERT
• Bord Iascaigh Mhara • Crafts Council of Ireland
• Bord Glas • Teagasc
• Business Innovation
Centres
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