What is a business (copy)

1.1 Oxford textbook

What is a business?

A business aims to meet the needs and wants of individuals and organisations

Added value

changing inputs to create a desired output.

Resource Inputs

Human - the right quality (skills) and quantity of people required to make a product/provide a service.

Physical - the right quality/quantity of materials, machinery and land space to make/produce a product/service.

Financial - right amount of cash/financial resources to create a product/provide a service.

Enterprise - also known as entrepreneurship. The business idea and determination to turn an idea into a business.

Production processes

Capital Intensive

Labour Intensive

Product outputs

Goods and services

Business Functions

human resources, finance and accounts, marketing, operation management and productions.

Human resources

Ensure the right people are employed and properly paid.

Recruit people, train them or dismiss them.

Marketing

Ensure the business offers a product or service desired by a sufficient number of people in order to gain a profit.

Must appropriate strategies to promote, price, package and distribute the product/service.

Finance and accounts

Ensure appropriate funds are available to make the product/service.

Must forecast requirements, keep accurate records, ensure proper payment for goods and services needed to run the business.

Operations managements or production

Ensure appropriate resources are used to make the product/service.

Must control quantity/flow of stock, determine methods of production and ways to produce the good or service more efficiently.

What are the four sectors of production and a simple definition for each.

Primary sector - acquisition of raw materials

Secondary sector - processing raw materials, creating a product.

Tertiary sector - most service businesses

Quaternary sector - service that sells knowledge/info.

3 reasons for starting a business

Rewards - deciding your own wage.

Independence - being your own boss.

Necessity - can't find work.

Challenge - challenge themselves.

Interest - want to do it.

Finding a gap - nothing similar in the market.

Sharing an idea - find people with interests/share interests.

Business idea

The fundamental activity that the business will do

Process of starting a business

1. Organising the basics

2. Researching the market

3. Planning the business

4. Establishing legal requirements

5. Raising the finance

6. Testing the market

USP

unique selling proposition

5 reasons a new business might fail

Location was wrong

Structure of business didn't work

Supplies weren't reliable.

The research was done poorly

Sources weren't accurate

Not convincing

Goals were too vague

Registration was too difficult

Tax obligations were not fulfilled.

Start up wasn't raised enough

Accounts weren't kept properly

Pilot launch failed

Entrepreneur

An entrepreneur is a person who is willing to seize opportunities to start/run a business and is prepared to take risks in hopes of obtaining a profit.